WORKWEEK

This week, the DOE published a series of reports (“Pathways to Commercial Liftoff”) detailing more specific plans on how the U.S. government aims to scale up key clean energy and climate tech industries. The first reports focus on hydrogen, long-duration energy storage, and nuclear power. As part of the reports, the DOE also made projections for what the result of concerted decades of scale-up might yield, including tripling U.S. nuclear capacity from ~100 GW to ~300 GW over the next thirty years.

Against this backdrop, it was a big week for companies developing small modular reactors, often hailed as the next generation of nuclear energy deployment. Here are the quick hits from the news this week:

• Newcleo, an SMR developer based out of London, opened a new investment round. It will target a total fundraise of more than $1B. I reckon they’ll be able to fill it, even in a more challenging capital fundraising environment. 
• TVA, Ontario Power Generation, & Synthos Green Energy (Poland) are investing $400M to source critical components and to kickstart regulatory approval processes for their first SMRs from GE Hitachi Nuclear Energy. 
• Last Energy, a Washington, D.C., based developer of truly ‘small’ SMRs (20MW), inked 34 deals worth ~$19B to build 34 reactors across Europe.

All of this points to significant interest in and demand for SMRs. And that demand is global, spanning Canada, the U.S., the U.K., and several European countries in the above announcements alone.

A decade in, a decade out 

As we’ve covered, and owing to many factors, building more ‘traditional,’ GW-sized reactors in the U.S. has become increasingly difficult. New reactors are coming online in Georgia this year, which is good news. But they’re decades late and billions of dollars over budget. 

The idea with small modular reactors is that they’ll be, well… smaller and more modular. And ‘small’ and ‘modular’ are often synonymous with easier and cheaper to build, site, and deploy. 

That’s the promise, at least. Folks have been talking about and investing in the development of SMRs for a decade plus, and few have been rolled out so far. 

So far, there are only three operational SMR projects worldwide (in Russia, China, and India). Most SMR projects, as detailed below, are in the conceptual or basic design phase:

It’ll take another decade before we (ideally) see many more SMRs move into the construction and operation phase in the chart above. 

Demand, investment, and intentions are one thing. Whether SMRs can deliver on their economic promise across dimensions of hard capital costs, softer costs of the time to build, and time spent navigating regulatory approval is still a big TBD. The most basic question of whether simply making reactors smaller makes them cheaper is an open one. 

There are no-so-rosy signs on this front; NuScale Power, a prominent U.S.-based SMR developer, has already hiked cost estimates and announced delays for its first projects. Sounds familiar!

There are endless arguments about which clean energy sources will prove most cost-effective. However, all those arguments, like most SMR projects, are in the conceptual or basic design phase. Solar power (especially when paired with storage) is the cheapest, most scalable, and most easily deployed clean energy technology in this moment, in most scenarios. 
Still, as a potential form of clean and firm (i.e., not intermittent) power, it makes sense why folks are holding on to hope for SMRs. Long-duration energy storage, the complement to wind and solar that would let them play the same role that nuclear or hydropower can on the grid, is similarly still at a stage where more technical development and innovation is needed to bridge gaps in terms of what’s currently possible, scalable, and cost-effective.

The net-net

The most important thing about all the SMR news this week is that we’ll actually get the chance to find out whether the tech’s promises will bear fruit. 

The amount of orders out for SMRS has reached a level of escape velocity. In a decade, we’ll have much more intel on whether orders for SMRs were delivered relatively on time and on budget. In and of itself, that information will be valuable. While studies and projections (e.g., from Wood Mackenzie) suggest SMRs will hit cost-parity with fossil fuels, those are, well, a bit speculative. 

Finally, levelizing and comparing the costs of power across energy sources is an incredibly complex exercise. SMR’s unique characteristics (small size, relatively small material footprint, and high capacity factor) should lend themselves well to many applications, whether grid-connected or in service of industry. Demand exhibited for Last Energy’s SMRs in Europe is a testament to this.