An Evaluation of SMR Economic Attractiveness

TLDR

The global nuclear renaissance focuses on large GW reactors, but Small Modular Reactors (SMRs) are emerging as commercially viable GenIII+ plants that use proven pressurized water technology and passive safety, yet their smaller size may reduce economies of scale and raise electricity generation costs. This study evaluates the economic pros and cons of deploying multiple SMRs versus equivalent‑capacity large plants of the same technology. The authors assess investment profitability and risk from the plant owner's perspective, using metrics suited to liberalized capital and electricity markets. Results indicate that a cluster of SMRs on a single site can match the investment returns of larger plants while offering features that lower investment risk.

Abstract

The nuclear “renaissance” that is taking place worldwide concerns the new build of GW size reactor plants, but smaller GenIII+ NPP (Small Modular Reactors, SMR) are on the verge to be commercially available and are raising increasing public interest. These reactor concepts rely on the pressurized water technology, capitalizing on thousands of reactor-years operations and enhancing the passive safety features, thanks to the smaller plant and equipment size. On the other hand, smaller plant size pays a loss of economy of scale, which might have a relevant impact on the generation costs of electricity, given the capital-intensive nature of nuclear power technology. The paper explores the economic advantages/disadvantages of multiple SMR compared to alternative large plants of the same technology and equivalent total power installed. The metrics used in the evaluation is twofold, as appropriate for liberalized markets of capital and electricity: investment profitability and investment risk are assessed, from the point of view of the plant owner. Results show that multiple SMR deployed on the same site may prove competitive with investment returns of larger plants, while offering, in addition, unique features that mitigate the investment risk.