COP disappointment could open the door for small nuclear

State-supported demand boosters could potentially revolutionise the energy markets of Poland, Romania, Czechia, Slovakia, and Bulgaria, turning them into a global launch pad for SMR deployment.

COP 28’s failure to agree a timetable for phasing out fossil fuels this year is extremely disappointing. But although the fossil fuel lobby may think they have scored a victory their triumph is likely to be short lived. The most likely result of this failure will be to intensify alternative international efforts to speed up the clean energy transition. The currently heavily carbon-intensive economies of Central and Eastern Europe as well as Central Asia are set to be at the forefront of this shift.

The danger of allowing a rise of more than 2°C in global average surface temperature is now better understood than ever before. In those parts of the world where fossil fuel production is not the main source of income the priority attached to tackling the threat of climate change by continued expansion of renewables and improved energy efficiency will increase.

This background is good news for the nuclear energy industry whose prospects are now the best they have been in this century. In particular, the timing is perfect for the backers of small modular reactors (SMRs). Over 70 SMR designs are reported to be currently under development in twelve countries and some enthusiasts claim that by 2050 the global SMR fleet could account for as much as 40 per cent of the world’s total installed nuclear capacity, which itself is expected to double.

Scaling Success is a new report from the New Nuclear Watch Institute. It provides a timely and comprehensive analysis of the outlook for SMRs, highlighting twenty five projects it believes have the best chance of success. It concludes that by mid-century first mover advantage means just a small handful of designs will dominate the market.

The NNWI study is a reminder that widespread deployment of SMRs will take place in a very competitive environment. Not only are there a large number of different designs coming forward but alternative low carbon energy sources, such as carbon capture, utilisation, and storage (CCUS), cheaper utility scale energy storage and advanced geothermal energy in some parts of the world are also progressing towards full-fledged commercialisation.

Still, as of now, SMRs appear to be the most technologically mature and economic option for such urgent energy transition actions as replacing aging and preventing commissioning of new unabated coal-firing baseload generation in the grid, supplying low carbon district heating (all other low carbon alternatives, including renewables-powered electric heating are at least five-six times more expensive) and powering off-grid applications which are currently run on highly polluting diesel.

According to NNWI, the likely size of the global fleet in 2050 is around 160 gigawatts-electric in the base-case and 300 gigawatts-electric in high-case scenarios. The more cautious, base-case figure is regarded by independent observers as more realistic. It still leaves plenty of scope for winners in the race to roll out the first reactors to exploit the economies of scale.

NNWI’s research suggests that cost reduction, which is widely claimed as one of the big advantages of SMRs, will depend as much and possibly more on capital availability, subsidised demand, the length of supply chains and speed of licensing, than on technological innovation.

Since scaling up is a key factor in lowering SMR costs it’s very possible that an early mover with less advanced technology could be more successful commercially than a more advanced design which comes to market later.

This has important implications for the governments which are throwing taxpayer’s money at the development of SMRs. So far subsidies have been aimed mainly at fostering innovation and funding research and development but it may now be more effective to concentrate on areas where the government can directly influence outcomes. These include the cost of capital and the length of time required to license new designs and approve sites.


In this context the strategy followed successfully by Russia’s Rosatom in achieving its dominant position as the leading vendor in the export market for large nuclear reactors is worth noting. An attractive finance package tailored to the customer’s needs is obviously very important. But at least as significant is the availability of a one stop shop, “reactor-as-a-service” approach. This can include plant operation and maintenance, supply of fuel and the removal and treatment of waste.

Taking care of all these factors may be particularly appealing to customers in the SMR market where reactors may be deployed in remote locations unsuitable for large plants. The US vendors, such as NuScale and OpenAI CEO Sam Altman’s start-up OKLO, are rightly moving in that direction.

As pressure to close the most polluting coal fired plants intensifies around the world the TerraPraxis’s Coal-to-Nuclear Repower initiative and US-backed Project Phoenix aimed at helping to replace coal-fired power plants, are gaining traction. This proposes to replace retiring coal fired power plants with advanced nuclear reactors.

Currently these initiatives are mainly focused on decision-making support, feasibility assessment and design support for such repowering projects, but they could and should be turbocharged with state-supported demand boosters such as equivalents of feed in tariffs for electricity and heat generated by SMRs replacing coal.

This could potentially revolutionise the energy markets of Poland, Romania, Czechia, Slovakia, and Bulgaria, turning them into a global launch pad for SMR deployment. Some developers like NuScale and GE-Hitachi are already having a good foothold in the region with some siting and preliminary contracts, others, which are at earlier stages, such as British Rolls-Royce and French NUWARD still have a room in the market to catch up.

Regulatory uncertainty

If successful this approach will have the benefit of utilising suitably adapted existing generation and transmission infrastructure assets and simultaneously providing employment for workers willing to retrain who might otherwise be made redundant. The key barrier to overcome is regulatory uncertainty, an obstacle whose removal depends entirely on national governments.

Many European countries must replace coal plants in the next decade or so to meet their net zero targets. SMRs can fill part of the capacity gap which these closures cause. Government intervention to minimise regulatory obstacles, prevent financial support to help meet the cost of decontaminating polluted sites and subsidise power purchase agreements could do more to accelerate rollout of SMRs than tweaking advanced plant designs.

Compared with the subsidies which even now still flow into the coffers of fossil fuel companies, the cost of supporting SMRs in this way would be trivial.

Russia has the first SMR-based facility to reach commercial operation, a floating plant launched in 2019 and has first reached the series deployment stage with a handful of its flagship RITM-200 reactors to become operational by 2030 in the Arctic and Yakutia. Rosatom has an export marketing strategy which has served it well in the past. Geopolitical considerations may inhibit demand from potential customers in Europe but, according to NNWI’s estimates, if the current trends prevail, Rosatom’s RITM-200 is expected to have the world’s largest market share by installed capacity, followed by China’s Linglong One reactor.

Firstly winning a decent slice of the global SMR market will be much easier if you are a first mover because that way you can gain volume quickly. Secondly make sure that any subsidies you offer are targeted where they will make a real difference. Doing these simple things will make money and speed up emission reductions.

Photo: NuScale.

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About the author

Tim Yeo

Tim Yeo

Tim Yeo is Chairman of the New Nuclear Watch Institute, a London-based internationally focused think tank, and a former Minister of State for the Environment and Chairman of the UK Parliament Energy and Climate Change Select Committee.

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