The International Energy Agency (IEA) and the International Atomic Energy Agency (IAEA) note that Small Modular Reactors (SMR) are being developed as a complementary nuclear option to address rising electricity demand, grid flexibility needs, and energy security concerns. Which energy system needs such like baseload power, grid stability, industrial heat, or remote supply are most likely to support early commercial deployment of SMRs?
It is already unfolding across all these segments, with SMRs currently under construction in the US and Canada, designed to serve the grid, such as GE’s SMR project at Darlington, being developed by Ontario Power Generation in Canada. In the US, X-energy’s advanced reactor is being deployed by Dow Chemical to provide process heat and help reduce the carbon footprint of its petrochemical facility along the Texas coast.
At the same time, commercialisation efforts are gaining traction in sectors such as data centres, which are rapidly growing and power-intensive demand. One of the unique characteristics of these smaller, simpler designs is that they can serve a range of end uses. They are not limited to electricity generation but can also provide process heat for industrial needs.
As per industry and regulatory assessments, financing arrangements for SMR projects vary widely depending on policy frameworks, ownership models, and market structures. Which financing approaches have so far provided the clearest pathways for progressing SMR projects through licensing and construction?
In the US, most of our industry is in the private sector. Some of it is in regulated markets, some of it is in deregulated markets. In the regulated markets, the private sector utilities go to a regulatory board, get permission to build the nuclear power plant. If the project is approved, the regulator allows the utility to recover construction costs by incorporating them into electricity rates over a defined period. This structured cost recovery makes revenues predictable.
In the deregulated markets, it is a little less clear, but there are more models that are emerging. It is a very active discussion. In the past, these things have been financed off the balance sheets, but you hear increasing discussion of project finance models that have been used in other sectors of the energy market coming to nuclear. My organisation just held a nuclear financing conference in New York City, and I think there were hundreds of people in attendance there. There is a lot more to come on the subject.
IAEA and the World Nuclear Association (WNA) highlight that SMRs are at different stages of design maturity, licensing, and construction, with only a limited number of units operating or under construction globally. What practical lessons from first-of-a-kind SMR projects are most important for reducing cost, timelines, and delivery risk in future deployments?
I believe some of the key considerations relate to design. Many of the successful SMRs are likely to be simpler in configuration. They have largely been designed to be more cost-effective by incorporating standardised, off-the-shelf components and streamlined passive safety systems that achieve the same safety outcomes without excessive redundancy.
At the same time, one of the important lessons from large-scale plants is the need to finalise the design and avoid continual modifications. First-of-a-kind is essential to bringing costs down to nth-of-a-kind levels as early as possible. A predictable and efficient regulatory process also plays a critical role. Ultimately, all of these elements must come together to enable successful deployment.
Some industry studies identify potential of non-power applications for SMRs, including hydrogen production, district heating, desalination, and industrial energy supply, though most remain at early stages of development. Which non-electric applications are most likely to reach commercial viability first, and what integration challenges must be addressed?
The X-energy plant is under construction by Dow Chemical, which is intended for industrial heat and cogeneration. That plant is currently being built and may well be among the first of its kind. In many regions, however, SMRs are being positioned to replace fossil fuel facilities that have traditionally generated both electricity and heat, particularly for district heating.
This is especially evident in parts of Eastern Europe. Such units will be highly valuable in this context, as renewable sources do not provide the same combined output. When a coal plant is retired, the system loses both electricity and heat simultaneously, which represents a significant impact on the overall energy network.
One of the advantages of SMRs is their ability to supply both needs together. A similar opportunity exists in the Middle East, where there is substantial demand for desalination. In such cases, plants may be specifically designed for that purpose and could operate on a continuous basis to meet that demand.
As governments and utilities consider SMRs within broader energy diversification strategies, long-term outcomes will depend on multiple factors, including cost, supply chains, regulatory stability, and public acceptance. Which strategic decisions taken during early planning and project development are most important for supporting scalable and sustainable SMR deployment?
I believe that aligning the regulatory system more closely with deployment objectives is essential. The process should be efficient while fully upholding its safety responsibilities, delivered in a more streamlined manner. Establishing a clear and stable framework that enables projects to be bankable is something governments need to prioritise in order to accelerate progress.
