Report assesses state of play for SMRs

A recent report by a pro-nuclear UK think tank has shone a light on the challenges that need to be overcome to accelerate the development and rollout of small modular reactors (SMRs) globally.

While the New Nuclear Watch Institute[i] report – Scaling Success - sees SMRs playing an important role in helping countries decarbonise and impressive growth out to 2050, it is a little less optimistic than some projections and assesses the uncertainties and key hurdles needed to be dealt with. The report has identified 25 of the most promising designs vying for commercialisation and rollout.

One of those designs is Rolls Royce’s 470 MW SMR, also known as the UK SMR, which has been cited as a design potentially suitable for Australia. Below we take a further look at the NNWI report and the current progress of the UK SMR design.

Complex Interplay

The NNWI report points to a complex interplay of technological, economic and geopolitical issues influencing and potentially constraining the technology’s rollout.The claimed advantages of SMRs are their small size, the ability to modularise them and their flexibility, but the report states  they are also vulnerable.

“Their smaller size and modular nature promise faster, cost-effective construction and adaptability to various grid types, especially in emerging markets and remote locations. However, these benefits are accompanied by higher relative electricity costs per unit of installed capacity, while uncertainties in demand, along with regulatory and political risks, create a ‘chicken-and-egg’ situation for the modular factory manufacturing and scaling that are prerequisites for cost reduction,” the report says.

There is an expectation the first SMR deployments will occur between 2030-2035 using light water generation III+ designs, but it notes there could be delays averaging 1-3 years, along with significant cost overruns compared to initial schedules and estimates.

NNWI expects advanced (generation IV) SMRs to encounter more substantial delays due to more complex licensing, supply chain and fuel supply issues and full-scale First-Of-A-Kind (FOAK) deployments and subsequent series factory manufacturing are more likely to be available by around 2040.

While the report does not specifically consider Australia’s energy situation, it considers the potential rollout of SMRs for different countries based on which one of five distinct groups they fall into. These are:

1. ‘Closed’ – the home markets of key SMR vendors.

2. ‘Open and relatively open’ - those with notable local vendors but who also import technology and allow foreign ownership.

3. Countries operating nuclear plants or expected to start in the next 1-2 years.

4. Countries with no operational plants but which feature nuclear in long-term plans and that are actively exploring nuclear new build options.

5. Countries with some strong potential demand for SMRs, no anti-nuclear public opinion but without nuclear infrastructure and specific plans.

For a country like Australia, which falls under the group five definition – a country that has some strong potential demand for SMRs, but without nuclear infrastructure and specific plans, it doesn’t forecast they would be introduced before 2040. Group 5 countries are also seen as those with no anti-nuclear public opinion, which is not the case for Australia. Locally, however, the major hurdle would of course be the need for bipartisan support and removal of legal impediments at both federal and state level.

Market Shares

The NNWI report assesses the overall market growth potential for SMRs between 2035 and 2050 to be 20-25 per cent given supply side constraints, competition from other generation technologies and market fragmentation. Optimistic forecasts have claimed SMR capacity around the world could be as high as 350 GW by 2050 whileNNWI’s base case forecasts 150-170 GW. The report sees SMRs being used for off grid supply, such as at remote mine sites, on-grid generation, in advanced co-generation and transport applications. It also notes average forecasts for 2035 have come down significantly in the past decade – from 65-75 GW to about 6-10 GW.

First movers are expected to come from a group that includes: VOYGR (NuScale, US), RITM200 (Rosatom, Russia), ACP100 Linglong One (CNNC, NPIC, China), and CAREM (CNEA, Argentina).

Designs, which are at earlier stages of development, referred to as “later evolutionary” with some deployment prospects between 2030-2035, “realistically closer to 2035 and beyond” includes PWR-type projects: UK SMR (Rolls Royce), NUWARD (EDF, France), SMART (KAERI, South Korea), BANDI-60 (KEPCO, South Korea), SMR-300 (Holtec, US) and AP300 (Westinghouse, US).

Lastly it categorises innovative or advanced designs that regardless of the stage they are currently at are unlikely to secure a noticeable market share before 2035-2040.

The 25 most viable technologies and viability are shown in the table below.

Source: NNWI

NNWI expects the first wave of SMRs (beginning in the 2030s) to be dominated by light water reactors and to be rolled out in group 1 and 2 countries and, partially, group 3 countries. 

A second wave from around 2035 would occur in groups 3 and 4 countries, while a third wave would occur after 2040 which will bring a rapid deployment of SMRs in group 1 and 2 countries, while light water SMRs could fill the markets of groups 3, 4 and 5.

Key Benefits

Key benefits of SMRs include the potential for factory fabrication to deal with construction risks, having them built in modules is expected to allow greater flexibility for load following by shutting down some units as required, and the anticipated investment is expected to be lower than for a traditional nuclear plant.

According to the NNWI report,the modularisation and ‘learning curve’ effects for SMRs were neither fast nor certain.

The NNWI report notes that historically almost all ex-ante cost and timeline targets in engineering innovation – both nuclear and non-nuclear – “have tended to underestimate, sometimes dramatically, the required resources, as many practical implementation constraints remain unknown until deployment is attempted”.

Factors that can impact construction times, like labour market constraints, supply chain issues and availability of construction materials can vary significantly, while plants also can run into approval delays.

According to NNWI: “When modelled, it appears that SMRs have construction risk profiles relatively similar to larger reactors, with the likelihood of delays for…  FOAK installations being around the median of 30-35% (compared to initial schedules), and as high as 60-120% in some cases.”

Modularisation

An important factor in achieving modularisation will be predictable demand for standardised units, yet regulatory requirements can vary from country to country or be site specific which could complicate standardisation.  The report also notes a challenge flagged by some analysts could include a regulators’ “credibility gap”.  This stems from minimal new nuclear builds in recent decades and ‘an erosion of regulatory expertise and capabilities.’

SMRs also face growing competition from alternative dispatchable sources and grid balancing approaches, such as advances in battery technologies. Developments suggest the average cost per MWh of stationary storage could fall below $150[ii]as early as the 2030s. The potential cost effectiveness, as well as the ability to quickly scale up renewables and storage technologies “could challenge the economic viability of many on-grid SMR projects”.

The report points to the kind of challenges facing Australia. It notes countries with the highest dependence on coal-fired plants and a supply shortage, and where the economic fundamentals for SMRs appear strong, often lack nuclear infrastructure such as relevant legislation, regulators and experienced operators.

Conclusion

There is no doubt nuclear generation will play a role in the decarbonisation of energy grids globally, particularly in countries with existing nuclear capabilities, many of which (such as UK, US, China and Russia) are seeking to expand their nuclear capacity.  Russia, China and the US are also leaders in state support for the technology. NNWI notes the importance of state support for the development and deployment of SMRs and estimates the total value of this support at around US$150billion. The institute argues for OECD countries to compete with Russia and China, there is a need for demand side incentives to complement supply side support through measures like subsidised tariffs or price support schemes.

The extent to which the potential of SMRs will be realised and the timing remains open to debate and conjecture.  In the Australian context, the hurdles are well known and significant, and in a climate where there is no bipartisan support for the lifting of the existing nuclear ban, investors are focused on approved, existing and readily available technologies to decarbonise.

[i] NNWI was established in 2014 and is an industry supported think tank, chaired by Tim Yeo, who has previously been Minister of State for the Environment in the Major Government. He subsequently chaired the House of Commons’ Energy and Climate Change Select Committee.

[ii] US dollars

[iii] Peter Dutton confirms Coalition nuclear plan for coal communities as Anthony Albanese claims renewable energy would drive new jobs in regional Australia. | The Australian