Small modular nuclear reactors (SMRs) will be too expensive, slow, and risky to build in time to help decarbonize the grid over the next 10 to 15 years, but promoting them could “take resources away from carbon-free and lower-cost renewable technologies that are available today,” a new analysis warns.
The pricing in the report by David Schlissel and Dennis Wamsted of the Institute for Energy Economics and Financial Analysis (IEEFA) includes best available cost figures for the SMRs that Ontario, Saskatchewan, and New Brunswick are intent on building, Schlissel told The Energy Mix. The 23-page report shows the price tag per kilowatt for the 300-megawatt GE Hitachi BWRX-300 boiling water reactor ballooning from an estimate of US$2,883 in 2020 to a range of $7,408 to $12,347, calculated in 2023.
That’s before construction even begins on a reactor that has never been built, put forward by a pair of companies from the United States and Japan that aren’t even trying for design approval in the U.S., Schlissel said.
Schlissel unearthed the cost figures in a September, 2022 statement by Saskatchewan cabinet minister Don Morgan, who placed the unit cost of a 300-MW SMR at C$5 billion. Previous estimates put the total at $3 or $4 billion per reactor, Pipeline Online reported at the time. The online publication was still citing the same figures a year later, while complaining that Energy and Natural Resources Minister Jonathan Wilkinson had only earmarked $74 million to support the effort.
Far Costlier Than Renewables
This week’s report by Schlissel, IEEFA’s director of resource planning analysis, and Wamsted, IEEFA energy analyst, declares that experience to date shows SMRs “will continue to cost far more and take much longer to build than promised by proponents.” It urges regulators, utilities, investors, and governments to “embrace the reality that renewables, not SMRs are the near-term solution to the energy transition.”
IEEFA concludes that:
• The cost, slow pace, and business risk in SMR development “should serve as a cautionary flag for all energy industry participants.” If regulators are asked to approve projects, they should “craft restrictions to prevent delays and cost increases from being pushed onto ratepayers.”
• Utilities should pay attention to the “uncertain costs and completion dates” for SMRs and compare them to the “known costs and construction timetables of renewable alternatives. Utilities that still opt for the SMR option should be required to put shareholder funds at risk if costs and construction times exceed utility estimates.” (That recommendation doesn’t apply to public utilities in Canada, for whom taxpayers are the ultimate “shareholders”.)
• Bankers and investors should do their due diligence against the risk that “things will go wrong, imperilling the chances for full recovery of any invested funds.”
• Governments should insist on full transparency on construction costs and schedules so that all parties can assess the risk.
Opportunity Costs
IEEFA also emphasizes the opportunity cost in directing funds to SMR development.
“The dollars invested in SMRs will not be available for use in building out a wind, solar, and battery storage resource base,” the report states. “These carbon-free and lower-cost technologies are available today and can push the transition from fossil fuels forward significantly in the coming 10 years—years when SMRs will still be looking for licencing approval and construction funding.”
The report shows four SMRs in Russia, China, and Argentina that were each meant to be built in three to four years but ultimately took 12 or 13 years to complete.
And “while SMR developers struggle to get just one reactor into commercial operation, the buildout of U.S. renewable resources is rapidly picking up speed,” Schlissel and Wamsted write, with the U.S. Energy Information Administration (EIA) projecting installed solar capacity hitting 158,000 MW by the end of next year, a 75% increase since 2023. They cite NextEra Energy CEO John Ketchum, who recently opined that the U.S. renewables and storage market could be “three times bigger over the next seven years compared to the last seven, growing from roughly 140 gigawatts of additions to approximately 375 to 450 gigawatts.”
Over those seven years, the IEEFA authors add, “it is highly unlikely that even one SMR will be commercially operational in the U.S.” The report puts the cost of U.S. SMRs in 2040 at $119 per megawatt without subsidies under the Biden administration’s Inflation Reduction Act or $89 with subsidies, compared to $21 for solar PVs, $22 for onshore wind, $50 for solar PV+storage, and $57 for offshore wind.
“I’m very skeptical with regard to SMRs,” said Ketchum, in a statement cited by IEEFA. “Right now, I look at SMRs as an opportunity to lose money in smaller batches.”
‘Using Ratepayers as Guinea Pigs’
But investments in SMRs could inhibit renewable energy development, IEEFA warns: Once a utility sinks billions of dollars into one of the plants, it’ll want to maximize its use, crowding more affordable, faster-to-deploy renewables out of the system.
While SMR proponents maintain their technology can complement renewables, U.S. SMR developer NuScale bases its costing on the reactors running 95% of the time. “If NuScale did consistently post a 95% capacity factor it would be impossible by definition for it also to be a flexible, load-following resource. Both things cannot be true,” IEEFA writes. “The reality is that developers bringing multi-billion-dollar SMRs onto the electric grid would have every incentive to run them as much as possible to recover their costs through electricity sales. Instead of working with renewables, they would effectively be blocking renewables from the grid.”
In January, 2023, GE Hitachi announced its first North American contract to build an SMR, a partnership with Ontario Power Generation (OPG), Aecon Group, and the since-rebranded SNC Lavalin for a BWRX-300 unit at the Darlington nuclear station in Clarington, Ontario. Schlissel, who has previously warned that Canadian nuclear projects lack the transparency on costs of private developments in the U.S., said GE Hitachi isn’t even trying to get regulatory approval for the BWRX in that operating environment.
“I suspect that if they didn’t have OPG using its ratepayers as guinea pigs, they probably wouldn’t invest (in Ontario),” he said. “They’re not betting some investor’s money. They’re betting their customers’ money.”
That problem is amplified if an SMR developer attempts to scale up.
“The risk to anybody who tries to build 10 of them, or 20 of them, is that they’re wrong and I’m right, and they’re screwed,” Schlissel told The Mix. “So it’s a matter of risk. Is it possible that over time they’re going to work? Well, yeah.” But he said it’s “nonsense” to expect the cost of SMRs or any other nuclear plants to fall as more of them are built.
“I haven’t seen any evidence to show that.”
or, significantly reduce cost if you combine SMR’s with coal whereby pollution-free fuel is created….?
How do you see *that* happening??