The world needs a constant supply of electricity to reach net-zero targets. Renewable energy sources provide part of the solution. Nuclear reactors run regardless of weather conditions, with lower carbon emissions than hydrocarbons, but traditional nuclear plants have become notorious for delays and cost overruns. Small modular reactors (SMRs) promise to de-risk the cost overruns and delays through factory production methods. Given the growth in AI infrastructure, large technology companies are already interested in SMRs.
Google has partnered with Kairos Power, Amazon has invested in X-energy and Microsoft has secured output from a restarted reactor. These companies need vast amounts of reliable electricity for data centres. Governments see SMRs as essential for energy security while meeting climate commitments. The scale of interest is substantial: the global SMR pipeline has grown 65% since 2021 to reach 22 gigawatts of planned capacity, requiring $176bn in total investment according to Wood McKenzie.
What advantages do SMRs offer over traditional nuclear plants?
SMRs use standardised components built in factories and assembled on site, in contrast with traditional nuclear power plants, which consist of massive, bespoke reactors that take many years to construct. This modular approach should reduce construction time and cost. The reactors themselves are smaller (defined by the International Atomic Energy Agency as up to 300MW compared to 1,000MW plus for traditional plants), making them suitable for locations that cannot accommodate massive facilities. Some advanced designs use innovative cooling systems beyond conventional water-based technology. No Western company has completed a first-of-a-kind SMR, although China and Russia have operational reactors.
Which reactor designs are leading the race to market?
The SMR market resembles a global race with diverse technological approaches. Among proven water-cooled designs, GE Hitachi’s BWRX-300 leads deployment timelines, with four units under construction in Ontario, Canada, targeting first power by late 2029 and build times of 24–36 months. Rolls-Royce (LSE:RR.) leverages six decades of UK submarine reactor experience, with its design undergoing final UK regulatory review and selected for Czech deployment. NuScale Power Corporation (NYSE: SMR) achieved first SMR technology US regulatory approval, though its Idaho Falls project was cancelled in 2023 due to cost overruns.
More experimental designs have attracted substantial backing: Kairos Power began constructing its Hermes demonstration reactor in 2024, becoming the first US Gen IV reactor to enter build phase, with Google’s investment supporting its molten salt technology for 2030 deployment. X-energy plans the sector’s most ambitious rollout – over 5GW by 2039 – with Amazon backing its high-temperature, gas-cooled design. TerraPower’s sodium-cooled fast reactor with integrated energy storage, supported by Bill Gates, began demonstration construction in 2024. Westinghouse Electric (NYSE:WEC) is developing both the eVinci microreactor and the AP300 SMR, drawing on decades of nuclear expertise.
BWX Technologies (NYSE: BWXT) positions itself as a critical supplier of nuclear components and fuel across multiple designs. Terra Innovatum Global (NASDAQ: NKLR) focuses on micro reactors, using widely available low-enriched uranium fuel and off-the-shelf components, with supply chains ready to construct its first SOLO reactor by 2027, pending US regulatory approval. This technological diversity reflects different approaches on the optimal balance between proven reliability and advanced performance.
Are SMRs economically competitive with renewables and gas?
SMRs must achieve levelised costs of electricity between €52 and €119 per megawatt-hour to compete with other baseload energy sources under current market conditions, according to Arthur D. Little analysis. These targets face stark competition: the International Energy Agency estimates standalone solar at $30.43/MWh and onshore wind at $36.92/MWh, though offshore wind reaches $120.51/MWh. Advanced nuclear currently sits at $63.10/MWh. Rolls-Royce targets below £70/MWh for its design. The economics depend critically on achieving standardisation benefits through volume production –requiring 30 to 50 units of standardised designs to unlock economies of scale. First-of-a-kind projects consistently face cost overruns, making next-of-a-kind deployments essential for proving commercial viability. Without synchronised supply chains and early manufacturing investment, projected time and cost advantages remain theoretical. The challenge intensifies as wind and solar scale rapidly, though their intermittent nature and lack of affordable large-scale storage create opportunities for reliable baseload alternatives. Investment decisions hinge on whether the industry can transform from custom-built projects to mass-produced standardised components, escaping nuclear’s historical pattern of delays and budget overruns.
What are the biggest obstacles to widespread SMR deployment?
Regulatory frameworks for SMRs remain fragmented, with each country requiring separate certification processes, reducing the benefits of standardisation. There are supply chains constraints, particularly for specialised fuel and components. In addition, a global skills shortage in nuclear engineering limits how quickly projects can proceed. Most fundamentally, no Western company has yet proven the SMR concept works commercially at scale. Until a first-of-a-kind reactor operates successfully in the West, demonstrating both technical performance and cost competitiveness, the technology remains unproven. This creates a dilemma: progress requires investment, yet investment requires proof. Government support and large corporate partnerships have become essential precisely because private capital alone will not bridge the financing gap.
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