Small modular reactors are still too expensive, too slow and too risky

Key takeaways:

Small modular reactors still seem too expensive, too slow to build and too risky to play a significant role in the transition away from fossil fuels in the coming 10 to 15 years.

Investments in SMRs will divert resources away from the zero-emission and cheaper renewable technologies currently available and could significantly accelerate the transition away from fossil fuels over the next 10 years.

Experience from operations and proposed SMR reactors shows that the reactors will continue to cost much more and take much longer to build than proponents promised.

Regulators, utilities, investors and government officials should recognize that the short-term solution to the energy transition is renewables, not SMRs.

Despite claims by advocates and the industry, small modular reactors (SMRs) are still too expensive, too slow to build and too risky to play a significant role in the transition away from fossil fuels, according to a new report from the Institute for Energy Economics and Financial Analysis (IEEFA). ) report.

SMR supporters have argued for years that the price and construction time of these plants will be faster and cheaper than previous nuclear projects. A new IEEFA report shows that the industry continues to struggle with cost overruns and schedule delays.

“The key argument of SMR supporters is that the new reactors will be economically competitive,” said David Schlissel, IEEFA director of resource planning analysis and co-author of the report. “But field experience with the initial SMR vehicles that have been built or are currently under construction show that this is simply not true.”

The report’s findings should serve as a warning signal to all energy industry participants. The report recommends in particular:

• Regulators that are asked to approve SMR proposals backed by utilities or developers should develop restrictions to prevent delays and cost increases being imposed on ratepayers.
• Utilities considering SMRs should be required to weigh the uncertain costs and timelines for completing the technology against the known costs and timelines for building renewable alternatives. Utilities that continue to choose the SMR option should be required to put shareholder funds at risk if construction costs and times exceed utility estimates.
• Investors and bankers considering any SMR proposal should conduct thorough due diligence. Something will go wrong, which will jeopardize your chances of fully recovering your invested funds.
• State and federal governments should require that SMR construction cost estimates and schedules be publicly available so that utility ratepayers, taxpayers, and investors are better able to assess the amount of SMR-related financial risk they may have to bear.
• Finally, it is important to take into account the opportunity costs of promoting SMR in this debate. Dollars invested in SMRs will not be available for use in building the wind, solar and battery resource base. These zero-emission, lower-cost technologies are already available and could significantly accelerate the transition away from fossil fuels over the next 10 years – years while SMR companies continue to seek license approval and construction financing.

“The comparison between building new SMRs and building renewable energy couldn’t be clearer,” said Dennis Wamsted, IEEFA energy analyst and co-author of the report. “Regulators, utilities, investors and government officials should acknowledge this and embrace the available reality: renewables are a short-term solution.”

IEEFA has previously written about delays and cost overruns in the SMR industry. Today’s report confirms these findings with even more evidence of the costly and risky nature of SMRs.