Are small modular reactors (SMRs) the answer to the world’s energy trilemma? By Andrew de Lotbinière McDougall KC and Kirsten Odynski

SMRs – Small Modular Reactors – are likely to play an integral part in the energy transition. This was recently acknowledged by the UK Energy Security Secretary, Grant Shapps, who in July launched Great British Nuclear and a tender for procurement contracts for a fleet of SMRs. In comparison to mega projects such as Sizewell C, he recognized the ability for SMRs to transform how power stations are built by making construction faster and less expensive.

It may be that events in Ukraine accelerated this action from the UK government. The conflict brought the issue of energy security to the forefront, galvanizing the debate around alternative sources of energy, including nuclear. SMRs typically produce less than 300 MWe compared to up to 1,600 MWe for traditional reactors. Their smaller size enables them to fulfil the need for flexible, affordable power and heat generation for a wider range of users and applications.

US President Joe Biden has also indicated his support for the technology, allocating $21 billion of the fiscal 2023 budget to nuclear and hydrogen programs. Canada has released its own SMR Action Plan, while emerging nations such as Estonia and Poland are looking closely at the technology.

Corporates are involved, too. Reactor designs are being developed by well-known players such as Rolls-Royce, to newer names including NuScale Power and TerraPower. The latter has drawn investment from Bill Gates and is developing several innovative SMR technologies for potential use in providing electricity to the developing world. Meanwhile EDF – the world’s biggest operator of atomic plants – is championing the future role of the SMR.

Opportunities across industry sectors
The use of small reactors for reliable power is not a new concept. SMRs have been used in the military since the 1950s, especially in vessels such as icebreakers and aircraft carriers that need to be at sea for long periods without refueling, or for powerful submarine propulsion.

The potential use of SMRs across major industries presents a significant commercial opportunity, not least in the extractive industry. Driven by the rapid industrialization of developing economies such as China and India, global energy consumption is on the rise and the demand for resources remains great. Yet the discovery of high-grade mineral deposits is simultaneously declining, forcing companies to turn to more remote inland locations.

These off-grid sites are often powered by diesel generators, fulfilling the need for consistent power supply but proving problematic in terms of logistics and environmental impact. Given the intermittency of solar and wind, batteries and hydrogen have been touted as potential replacements, but cost constraints are significant. SMRs limit emissions and maintain climate change commitments, while acting as replacements for diesel generators and a heat source for industrial processes and residential use. They can be deployed alongside renewables, providing a reliable baseload power to these otherwise intermittent forms of energy. In Canada, such progress is already underway: Westinghouse and Bruce Power have collaborated to develop the eVinci microreactor, which can be used in mines and remote areas.

Another opportunity is sustainable supply of potable water. About 20 per cent of the world’s population still has no access to safe drinking water, and this will increase as the population grows and freshwater sources continue to decline. The worst-affected areas are the arid and semiarid regions of Asia, the Middle East, and North Africa. SMR technology is thus piquing interest in such regions, particularly the Middle East where fossil fuels are currently used as a source of heat and electricity for desalination, as well as irrigation water for crops and landscapes. Thanks to the flexibility of SMRs, utilities can correctly size power plants for current clean energy and water requirements, with the option to increase capacity according to evolving demands.

Traditional nuclear plants vs SMRs
Traditional nuclear plants are often viewed with skepticism due to the lengthy construction process and significant costs, with notable examples of cost overruns. By contrast, the intention of SMRs is to standardize many aspects of the build process and shrink each unit size, meaning that units could be operational in two to three years, at a reduced cost.

Regulation – a consistent challenge in traditional nuclear plant development – also has the potential to be simplified given the lower safety risk associated with SMRs. There is joint effort from regulators to harmonize codes, standards, and domestic safety regulations in this space.

According to the International Atomic Energy Agency, there are currently almost 70 different SMR technologies under development, a significant jump from just a few years ago. The pipeline of potential capacity is substantial.

Unlocking SMRs’ full potential
The SMR has widespread political support. The technology’s offering is compelling: carbon-free power is reliable, safe, more affordable, and can be built and deployed without the significant costs and complexity of traditional nuclear power. In a world where almost every investment decision will be measured against its climate impact and whether it is compatible with the Paris climate goals, the SMR could offer a solution without the drawbacks hobbling its larger predecessors. Yet, there are challenges to overcome. The champions of the SMR will have to work with all stakeholders, from governments and investors to the wider public, to ensure its potential can be fully unlocked.

Any views expressed in this publication are strictly those of the authors and should not be attributed in any way to White & Case LLP.

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Andrew de Lotbinière McDougall KC and Kirsten Odynski are partners at White & Case, a leading global law firm with lawyers in 44 offices in 30 countries. Among the first US-based law firms to establish a truly global presence, it provides counsel and representation in virtually every area of law that affects cross-border business. Its clients value both the breadth of its global footprint and the depth of its US, English, and local law capabilities.