A new report by the Institute for Energy Economics & Financial Analysis (IEEFA) has assessed the feasibility of deploying small modular nuclear reactors to meet increasing energy demands around the world. The report, “Small Modular Reactors: Still Too Expensive, Too Slow, and Too Risky” asks if continuing to pursue small NPPs is worthwhile in terms of meeting increasing global energy demands. demand for more energy around the globe.

The 23-page report notes: “The rhetoric from small modular reactor (SMR) advocates is loud and persistent: This time will be different because the cost overruns and schedule delays that have plagued large reactor construction projects will not be repeated with the new designs,” says the report. “But the few SMRs that have been built (or have been started) paint a different picture – one that looks startlingly similar to the past. Significant construction delays are still the norm and costs have continued to climb.”

On costs, the report looks at three operating SMRs worldwide—two in Russia [possibly just one – the Akademik Lomonosov, which has two reactors] and one in China, the demonstration High Temperature Gas-Cooled Reactor-Pebble-bed Module (HTR-PM) at the Shidaowan site in Shandong province. It also considers a fourth – the CAREM-25 SMR under construction in Argentina.

It says costs for all four [three] have been significantly higher than originally planned. “The takeaway is that the projected costs significantly understated actual construction expenditures.” However, the report does not take into account that these are all first-of-a-kind (FOAK) designs and have become the basis of further plants. Russia is already building several SMRs (both floating and land based) in almost series production using upgraded reactors based on the Akademik Lomosonov experience, the costs of which will be greatly reduced. China’s HTR-PM has become the basis for a novel district heating scheme and a larger HTGR is now being developed based on this experience. The CAREM 25 has faced delays and cost overruns but is now expected to begin operation in 2027. Both Russia and Argentina expect their designs to be the basis for lucrative exports in the future.

IEEFA says two other SMRs currently under construction in China and Russia are also years behind schedule. “Russia’s BREST-300 lead-cooled reactor is now scheduled for completion in 2026, even though announcements in the early 2010s had indicated it would be operational by 2018. Similarly, China’s ACP100, a 125MW pressurized water SMR that has been under development since the early 2010s, is now not scheduled to begin commercial operation until 2026.” These are also FOAK designs for which delays are par for the course and will ultimately offer opportunities for replication and exports.

IEEFA notes that similar significant cost increases have occurred at proposed projects in the US, citing the cancellation of NuScale’s planned facility in Idaho in cooperation with the Utah Associated Municipal Power Systems (UAMPS).

The report notes: “NuScale’s problems are not unique. US SMR developers have consistently sought to shield their construction cost estimates, but information about two other prominent projects shows that the estimated costs for these projects also have skyrocketed. The cost increases for the X-Energy and GE-Hitachi SMR projects occurred well before either had secured licensing approval from NRC [National Regulatory Authority], let alone begun construction. IEEFA believes this should be a red flag for utilities, regulators and investors.

IEEFA says the cost debate “inevitably includes Westinghouse, the developer of the two AP1000 reactors recently brought online at Georgia Power’s Vogtle nuclear facility”, which was more than $20bn over budget and took more than six years longer to complete than forecast. “Undaunted by that debacle, Westinghouse has now jumped into the SMR market, introducing a 300MW unit (the AP300) that it says it can build for $3,333 per kW- even though the final cost of the Vogtle reactors was more than $20,000 per kW in 2023-year dollars. Even if Westinghouse’s projected AP300 cost is just an overnight estimate that excludes escalation and financing costs, that is a spectacular projected cost reduction for a facility that is still not licensed and far from breaking ground for construction.”

In terms of the projects being “too slow”, the report, referring to the same projects, notes that they all took longer to build than planned. Again, with respect to the Russian and Chinese plants, this was not a real consideration as it is expected for FOAK projects.

However, for those still in the design stage, IEEFA may have a point. “Despite this real-world experience, Westinghouse, X-Energy and NuScale, among others, continue to claim they will be able to construct their SMRs in 36 to 48 months, perhaps quickly enough to have them online by 2030,” the report notes. “GE-Hitachi even claims it ultimately will be able to construct its 300MW facility in as little as 24 months. Admittedly, there is a not-zero chance this is possible, but it flies in the face of nuclear industry experience, both in terms of past SMR development and construction efforts and the larger universe of full-size reactors, all of which have taken significantly longer than projected to begin commercial operation.”

As to the projects being “too risky”, IEEFA simply says the cost increases and construction delays that have plagued the SMR sector already “will push enormous financial and time risks onto

customers, potentially undercutting their interest and ability in pursuing such projects. Aware of these risk-related problems, the Department of Energy has floated several ideas to get the government involved in the buildout of the SMR sector. These include providing “cost overrun insurance,” other undefined financial assistance, becoming an owner or serving as a buyer for the power. None of these options would reduce the development risk—they would simply transfer those risks and the associated costs to US taxpayers

In conclusion, IEEFA says it released its first analysis of the SMR sector more than two years ago, “concluding that the much-hyped resource would be too slow, too expensive and too risky to help in the transition away from fossil fuels”. It added: “We stand by that conclusion.”

The report notes: “Perhaps most concerning is the risk factor, especially when compared to the known costs and construction timelines for readily available wind, solar and battery storage resources. … At least 375,000 MW of new renewable energy generating capacity is likely to be added to the US grid in the next seven years. By contrast, IEEFA believes it is highly unlikely any SMRs will be brought online in that same time frame. The comparison couldn’t be clearer. Regulators, utilities, investors and government officials should acknowledge this and embrace the available reality: Renewables are the near-term solution.”

The report makes several recommendations:

  • Regulators who will be asked to approve utility or developer-backed SMR proposals should craft restrictions to prevent delays and cost increases from being pushed onto ratepayers.
  • Utilities that are considering SMRs should be required to compare the technology’s uncertain costs and completion dates with the known costs and construction timetables of renewable alternatives. Utilities that still opt for the SMR option should be required to put shareholder funds at risk if costs and construction times exceed utility estimates.
  • Investors and bankers weighing any SMR proposal should carefully conduct their due diligence. Things will go wrong, imperiling the chances for full recovery of any invested funds.
  • State and federal governments should require that estimated SMR construction costs and schedules be publicly available so that utility ratepayers, taxpayers and investors are better able to assess the magnitude of the SMR-related financial risks that they may be forced to bear.
  • Finally, it is vital that this debate consider the opportunity costs associated with the SMR push. The dollars invested in SMRs will not be available for use in building out a wind, solar and battery storage resource base. These carbon-free and lower-cost technologies are available today and can push the transition from fossil fuels forward significantly in the coming 10 years—years when SMRs will still be looking for licensing approval and construction funding.

IEEFA says its mission “is to accelerate the transition to a diverse, sustainable and profitable energy economy”. It adds that its market-based research “shows how the rise of the new energy economy, where renewable energy sources are steadily eroding reliance on fossil fuels, makes financial sense for investors, governments, businesses, communities and ratepayers”.

In line with this mission, the new report says: “The dollars invested in SMRs will not be available for use in building out a wind, solar and battery storage resource base. These carbon-free and lower-cost technologies are available today and can push the transition from fossil fuels forward significantly in the coming 10 years – years when SMRs will still be looking for licensing approval and construction funding.”