Small Modular Reactors: Winning the race in securing access to low-carbon energy
While nuclear technology has been around for decades, it is only recently, in the last few years, that there has been somewhat of a global appreciation for the role of nuclear energy as a crucial pathway to realizing a net-zero world. COP28 was historic for nuclear, for the first time since 1995, when climate conferences began, nuclear energy was recognized by almost 200 countries, who have called for the acceleration of low-carbon energy sources to meet climate and decarbonization goals, including nuclear. (IAEA).
The need for nuclear to achieve the net zero target
A successful energy transition requires a pragmatic approach to solving the components that make up the energy trilemma:
- energy security: the energy supply must be reliable and continuous,
- environmental sustainability: energy production must be as carbon-free as possible,
- the cost of energy: the sale of energy must be done at an affordable cost for industries and customer populations to ensure economic stability
Orchestrating a solution around these three components is complex, as advancements in one area can often pose challenges to another. For example, the ambitious deployment of intermittent renewable energy may be affordable and deliver low-carbon energy, but also affect grid stability and, therefore, affect energy security.
In this context, nuclear energy has the potential to work alongside other low-carbon technologies and by providing a reliable energy source to ensure grid stability.
Moreover, it's very low-carbon lifecycle footprint (from mining to decommissioning), and its low environmental impact (the smallest land-use footprint per megawatt-hour of electricity among available energy sources) represent significant advantages « OurWorldinData ».
The development of Small Modular Reactors (SMR) is reshuffling the cards by offering a differentiating value proposition; smaller sized units that are factory-built and road-transported for site-assembly. Developers aim to reduce costs and construction times, while strengthening the safety of operations thanks to the integration of the latest technological advances. The diagram below highlights the positioning of SMRs as a viable and effective solution to the energy trilemma:
Sources: GE Hitachi ; Monitor Deloitte Research & Analysis
Key success factors for the development of Small Modular Reactors
This booming technology offers a more flexible alternative to traditional nuclear reactors to meet the needs for electrification and carbon-free heat production for industry and urban heating networks.
During our research, we identified more than 150 Small Modular Reactor designs under development around the world. Among these different designs, the industry estimates that less than fifteen of them will reach the stage of technological and commercial maturity by 2045+.
To support the development and massive deployment of this innovative technology, several essential conditions must be met:
- Facilitate access to financing, regardless of its source: public subsidies, bank loans, be listed on the stock market exchange, private equity, etc.
- Harmonize safety standards between the different nuclear safety authorities
- Ensure public acceptance of the expansion of nuclear production capacities; a historically sensitive topic
- Structuring end-to-end value chains, from fuel supply to radioactive waste management, to optimize their costs and strengthen their resilience in a context of growing geopolitical tensions
Sources: Monitor Deloitte Research & Analysis
In this first article, we highlight the opportunities and challenges of the emerging Small Modular Reactor industry. We also explore the main success criteria to consider for a Small Modular Reactor to stand out and be one of the fifteen models on the market in 2045+.
