Outside of the ideological and ethical debates surrounding nuclear power, the rather brutal economics that dictate its construction represent one of the biggest obstacles to the technology’s wider deployment.
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By GlobalDataThe construction of traditional, large-scale reactor facilities requires an upfront investment that is prohibitively high in many cases, and involves a level of technical complexity that UK-based nuclear expert Tony Roulstone recently described as the equivalent of “building a cathedral within a cathedral”. The endless delays and blown budgets of high-profile nuclear new-builds such as the European Pressurised Reactor (EPR) projects at Flamanville and Olkiluoto have done little to assuage observers’ reservations.
SMRs: an emerging market
The development of small modular reactors (SMRs) is the nuclear sector’s attempt to provide an antidote to the inflexibility of the traditional nuclear construction model. These small reactor concepts – defined by the International Atomic Energy Agency as 300MWe or less – come in a host of forms. These include those based on tried-and-tested pressurised water reactor (PWR) designs like Westinghouse’s AP1000-derived 225MWe SMR concept and more radical concepts such as the molten salt reactor and the liquid metal fast reactor.
The key to SMRs’ appeal lies in their compact size and the fact that they could, as the name suggests, be manufactured in bulk from centralised factories, then shipped to generation sites for relatively simple installation. This would, theoretically at least, reduce the cost of deployment and provide the flexibility to make nuclear generation possible in regions and markets where geographical, financial or grid-based constraints would make large plants unfeasible. Greater capacity to ramp output up or down based on demand could also make them potentially a more suitable partner to intermittent renewables than their larger counterparts.
“I would say [SMRs] don’t replace, but have the opportunity to complement large reactors,” says Westinghouse’s key account director for EMEA Simon Marshall, who leads the company’s SMR efforts in the UK. “It depends on the marketplace.”
The potential for SMRs to provide a new option for low-carbon baseload generation is clear, but with very few operational units deployed, there is still a requirement for national partners to host the development and deployment of the technology, thereby providing a springboard for market growth. From Marshall’s perspective, the global export opportunity is significant for those willing to make the pioneering investment.
“The market is sitting and waiting for industry to develop the products,” he says. “If there was one of these products available to sell today, I think you’d be able to sell it to the emerging markets. But the reality is there isn’t. So the question is who gets to the market first? Because these things are pretty expensive to develop, the first to the marketplace is likely to get the lion’s share.”
Help wanted: SMR overtures to the UK
For many companies in the SMR game, the UK has emerged as a prime candidate to provide the requisite support. Westinghouse made an unsolicited proposal to the British Government in October to collaborate on the development and deployment of its SMR technology. The company proposed the establishment of a UK-based enterprise jointly owned by Westinghouse, the UK Government and British industry, which it believes would “put the UK at the forefront of SMR development”.
Westinghouse is not alone in cosying up to the UK as a powerful partner and a potentially lucrative market for SMRs – its US rival NuScale recently signalled its own strong intention to pursue the UK as a market to deploy its own SMR technology, which is designed to connect multiple small modules into a large plant of up to 12 modules with a combined thermal capacity of 600MW, by the mid-2020s. So why has the UK become the centre of attention in the SMR space?
While formerly nuclear-friendly nations such as Germany continue to signal a strong desire to ramp down their nuclear capacity and focus on other technologies, the UK has remained firmly in the pro-nuclear camp. The development of nuclear energy enjoys cross-party support in parliament as an important means of achieving its decarbonisation targets. The current Conservative government wasn’t dissuaded by the EPR horror stories when it committed £25bn to build the massive 3.2GWe Hinkley Point C in partnership with French and Chinese companies.
“The UK has a long nuclear history, it is cross-party pro-nuclear, and is recognised to have a strong regulator,” says Marshall, who also believes the UK’s geographical limitations makes it a good fit for SMRs as decent sites for large plants dwindle.
“If we want to completely decarbonise, which is apparently the government’s stated aim, then we need a lot more baseload generation,” he adds. “Being quite a small island where we don’t have large inland rivers, the capacity to build lots of large 1GW reactors is fairly limited. Then, when you look at the impact of renewable energy and the instability in the grid that causes, the ability of small modular reactors potentially to be on the smaller inland sites – for example, where there were previous coal or oil or gas stations – offers some opportunities that the large plants in the UK can’t.”
Capitalising on the opportunity
After years of promising signs, UK Chancellor George Osborne in late November gave what Marshall describes as “a huge signal” that the government is planning to double down on nuclear in general, and SMRs in particular. The Autumn Spending Review made provisions for investing £250m on nuclear research and development, while announcing a competition to identify the “best value” SMR design for the UK. Detailed plans for the competition, which is intended to pave the way for the deployment of a pioneering SMR before 2030.
Westinghouse might not have gotten the ideal response to its unsolicited proposal in October, but Marshall is happy to see positive movement in the field. “If [the offer] was sufficient for [the UK Government] to think, ‘Well actually, there is a real opportunity here but because of competition law, we’re going to compete this,’ then hey, that’s fine,” he says. “So I take it as a real positive that in this period of austerity, the Chancellor has put his name behind the development of a UK-based SMR.”
Westinghouse sees the UK domestic market as a large enough potential source of future SMR orders to be a strong market in its own right, but the opportunity for global export to developing countries offers virtually unlimited scope for growth. Marshall describes SMR demand as highly market-specific; while rapidly developing powerhouses like China, India and South Africa are likely to stick with 1GW plants as the primary nuclear generation option, there are many other markets that could prove receptive.
“The issue with the big plants is you need a pretty well-established grid system,” says Marshall. “If you look at the emerging markets, particularly in Africa for example, they don’t have large grid systems. So you couldn’t just dump a 1GW plant there. That’s coupled to the fact that [SMRs] are generally passively safe; for a developing nation they’re probably an easier option, firstly from the absolute quantum of finance that you require, secondly the impact on the grid, and thirdly from a regulatory and safety perspective. There are countries in Africa – Morocco, Tunisia – that might not want a large plant. Their grid capacities and their requirement to start up with a brand-new regulator from scratch may dictate that a large plant is simply not feasible.”
At this early stage, there is still a long list of questions on the practicalities of SMRs that need to be answered, including the all-important need to have a sensible electricity price at the end of the process. But if these questions can be answered to the satisfaction of a wide range of power-hungry markets, SMRs could open up a new frontier in civil nuclear technology and put the UK back on the map as a leader in the field, a role that has diminished in recent decades.
“The reality is you now have French technology at Hinkley and Sizewell, Chinese technology at Bradwell, Japanese technology at Wylfa and Oldbury and American technology at Moorside,” Marshall says. “What a crying shame that we don’t have UK technology. We’ve missed the boat on the 1GW plants; the only opportunity the UK has to get back to being a premier league technology player is in small modular reactors.”
