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The potential for small modular nuclear reactors

11/5/2022

6 min read

Artist's impression of SMR design from Rolls-Royce Photo: Rolls-Royce
SMR design from Rolls-Royce Photo: Rolls-Royce

Small modular reactors (SMRs) are gaining the attention of governments and power providers across the world because of their low carbon and potentially low capital cost attributes. Yet the champions of the SMR must work hard to ensure its full potential is reached, write Daniel Garton, Richard Hill, Andrew McDougall QC, Kirsten Odynski, Dipen Sabharwal QC and Vit Stehlik from law firm White & Case.

Governments around the world face increasing pressure to replace fossil fuel power generation. The provision of affordable and clean energy is one of 17 United Nations’ (UN) Sustainable Development Goals, and at least 80% of the world’s electricity must be low carbon by 2050 — by which point the world’s energy consumption is expected to have more than doubled — to have a realistic chance of keeping warming within 2°C of pre-industrial levels.

 

Nuclear plants clearly have a role to play here. They have a small environmental footprint and keep air clean, requiring only a small amount of fuel compared to gas or coal while taking up a fraction of the space needed for wind and solar farms. In fact, a report published last year by one of the UN’s own bodies – the Economic Commission for Europe – has argued for the crucial role nuclear power can play in the transition to a clean energy future. 

 

The burning of fossil fuels is still the dominant source for global power, with the sector accounting for approximately one third of global emissions. While the role of renewable energy generation has risen exponentially in recent years, the inability of solar and wind to deliver reliable baseload generation means that many countries still rely on fossil fuels to fulfil that role. 

 

COP26 brought the question of how to tackle climate change, in what the UN has described as a ‘make or break’ year in the fight against global warming, to the fore. 

 

According to reports, nuclear groups were denied participation in the Green Zone at COP26, restricting their promotion of greater dialogue and awareness of nuclear energy. This, in turn, prompted the Director General of the World Nuclear Association, Dr Sama Bilbao y León, to send an open letter to UK MP and COP26 President Alok Sharma, urging the conference to treat nuclear energy fairly and to ensure that it is well represented alongside other low carbon energy sources. 

 

It appears that the cost and scale of nuclear projects, along with major incidents at Three Mile Island, Chernobyl and Fukushima, continue to pose challenges for the industry. The arrival of the small modular reactor (SMR) has been billed by some as the potential solution to many of these issues, and one that can play a role in a cleaner future. It addresses issues with previous generations of nuclear power projects, potentially making them more cost effective and easier to build and bring online, as well as featuring safety systems that reduce the risk of certain types of accidents. 

 

Finally, as a result of rocketing wholesale prices during the road to recovery from COVID-19, the world is in an energy crisis and governments are searching for solutions. This puts SMRs in a valuable position as they offer a much-needed alternative source of energy. 

 

SMRs’ powerful backers

Whilst SMRs are a relatively nascent concept, they already have powerful support. US President Joe Biden has signalled that they have a role to play as part of his $2tn climate plan, which focuses on clean energy. 

 

A notable investment from the world’s largest economy, Biden has set goals of achieving 100% carbon-free electricity production by 2035 and reducing net CO2 emissions to zero by no later than 2050. His energy platform specifically cites advanced nuclear as part of ‘critical clean energy technologies’, and his administration also plans to create an Advanced Research Projects Agency for climate that will have a specific focus on modular reactors. 

 

Canada released its own SMR Action Plan last December, while emerging nations such as Estonia and Poland are looking closely at the technology as it becomes more apparent that renewables alone will not be able to deliver all of the clean energy the world will need by 2050.

 

Meanwhile, UK Prime Minister Boris Johnson has confirmed the UK will invest in the concept, promising funding and political support to develop the next generation of small and advanced reactors as part of his government's 10-point-plan for a green industrial revolution, following years of setbacks in developing the next generation of large nuclear power plants. 

 

Russia has adopted a pioneering approach to SMRs of late,with the launch of its floating nuclear power station in 2019 – a world first, producing energy from two 35 MW SMRs. With ambitious plans for similar plants, there is every possibility that they will create a full fleet in the future. 

 

This support is unsurprising, as SMRs offer a step change from the existing world of nuclear power. These small plants are able to provide reliable energy in the form of both electricity and heat to power a city of around 100,000 people. The heat can help lower the emissions from carbon-intensive industries such as steel and cement making, while the power offers baseload energy that can help underpin more intermittent supply from the renewables such as wind and power.

 

Russia has adopted a pioneering approach to SMRs of late, with the launch of its floating nuclear power station in 2019 – a world first, producing energy from two 35 MW SMRs.

 

Support from the private sector 

Some of the world’s biggest industrial companies and utilities are also getting behind the technology, such as EDF – the world’s biggest operator of atomic plants. EDF said earlier this year that it sees a huge global market developing for small reactors over the next decade to replace fossil-fuel generators. 

 

Rolls-Royce too is utilising the technology, as it develops reactor designs, along with NuScale Power and TerraPower, which has drawn investment from Bill Gates. According to the International Atomic Energy Agency, there are currently almost 70 different SMR technologies under development, a significant jump from just a couple of years ago. 

 

This is particularly pertinent in light of recent events in Ukraine. Many countries are taking a fresh look at energy independence, as opposed to relying on fossil fuels from neighbouring nations. Finland is leading the way in this space, having recently announced it plans to invest up to €850mn in its nuclear power supply. Meanwhile, President Macron in France made investment in nuclear power a key part of his recent re-election platform.

 

Nuclear power is one of the clearest avenues to secure energy independence and SMR technology will be one way in which to facilitate this for those looking to achieve autonomy.

 

Challenges at play

Regulation has long been a challenge in nuclear plant development, and this will likely be no different for SMRs. Licensing risk has been a difficult and controversial issue in nuclear power, and has driven significant attention from policy makers, the public and environmentalists. The proliferation of nuclear plants envisaged by the widespread rollout of SMRs will be unlikely to avoid this scrutiny. Given the required oversight at all levels of development, the prospect of delays, cost overruns and disputes remain, particularly in the initial rollout of new technologies.

 

In tandem, the industry must overcome many of the perceptions from previous generations of nuclear power, in particular that the projects are too costly and complex. This is especially true when compared to both traditional fossil fuel power generation and the breakneck rollout of renewables. 

 

There is also the issue of waste. NuScale says that because SMRs contain less radioactive material and can be located below ground, their risks are lower. However, this point of view has received criticism from some experts.

 

There is currently no guarantee that SMR producers will not face the same obstacles that have plagued developers of traditional nuclear power. There also exists the challenge of convincing industrial users – a customer that seems well suited for the SMR offering – that it can compete with low-cost natural gas or proven renewables such as wind and solar. And the nature of SMRs means they will have to be built close to the communities they serve, raising new challenges for public engagement, especially around the waste problem.

 

The introduction of a new generation of nuclear power will undoubtedly lead to legal and commercial disputes. The intense scrutiny from policymakers and the public will likely cause delays and conflicts. As will jockeying for position in a potentially more competitive nuclear industry marketplace. With first-of-a-kind designs, and potentially new and less experienced players entering the market, comes increased risk of regulatory issues, time lags, cost barriers and general conflicts. 

 

It is vital to understand the nuclear regulatory framework and the nature of risks that commonly arise concerning the nuclear projects, in order to navigate these issues and minimise their impact.

 

Unlocking the full potential

The SMR has widespread support, from politicians to global companies. The technology’s offering is compelling: carbon-free power that is reliable, safe, more affordable and can be built and deployed without the significant costs and complexity of traditional nuclear power. 

 

In a world where investment decisions are increasingly measured against climate impact and compatibility with the Paris Agreement climate goals, the SMR offers a solution without many of the drawbacks that have hindered its larger predecessors.

 

As with all new technologies, there are of course challenges to overcome; and with nuclear power specifically, these can be expensive and protracted. The champions of the SMR will have to work with all stakeholders, from governments and investors to the wider public, to ensure its potential can be fully unlocked.

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