Experts Warn: US, Investors Gamble on Unproven Nuclear Technology
The U.S. government and private investors have committed a significant amount of funding—approximately $9 billion—toward the development of small modular reactors (SMRs). These investments aim to address the increasing energy demands related to the artificial intelligence (AI) boom while also striving to reduce emissions.
Financial Commitment to SMR Technology
Since 2019, various federal agencies, including the Departments of Energy and Defense, have allocated over $6 billion to SMR developers. This funding has taken the form of loans, grants, and cost-sharing agreements. Additionally, private investors have contributed more than $3 billion during the same period, indicating robust interest in this emerging technology.
Promises and Challenges of SMRs
SMRs are touted as a reliable source of clean energy, capable of meeting the substantial electricity needs of data centers, which are essential for training and operating AI models. The technology’s potential has led to increased stock valuations and investor enthusiasm, despite many companies still lacking substantial revenues or operational projects.
Industry Perspectives
Experts have raised concerns regarding the economic viability of SMRs. Chris Gadomski, head of nuclear research at BloombergNEF, likened current trends in SMRs to the internet bubble of the early 2000s, emphasizing that considerable capital is required to bring these projects to fruition. SMRs typically generate up to 300 megawatts of power each, which is much lower than the 1,000 megawatts produced by traditional utility reactors.
Cost Competitiveness
Questions over the cost-efficiency of SMR technology persist. Previous SMR efforts in the U.S. faced delays and budget overruns. For instance, in 2023, NuScale had to cancel a project due to costs soaring by over 120%. Current operational SMRs in Russia and China have reported cost overruns ranging from 300% to 400% above initial estimates.
Comparative Energy Costs
Analyses reveal significant discrepancies in the projected “levelised cost of energy” for SMRs. According to Wood Mackenzie, by 2030, SMRs could generate electricity at around $182 per megawatt-hour. In contrast, conventional nuclear power is estimated at $133, while natural gas sits at $126. Renewable sources, such as onshore wind and solar, may produce energy at even lower costs.
- Oklo estimates its SMR technology will generate power for $90 per megawatt-hour.
- NuScale claims a cost of $64 per megawatt-hour.
Supply Chain and Safety Concerns
Several experts believe larger reactors are more cost-effective due to economies of scale that smaller units may not leverage. Supply chain dependencies further complicate SMR viability, particularly concerning fuel resources such as high-assay low-enriched uranium. The limited production capacity in the U.S. adds pressure to operating costs, with estimates suggesting fuel costs could increase by $20 per megawatt-hour.
Future Projections and Industry Outlook
Despite the current challenges, proponents of SMR technology argue that costs will decrease over time. Some companies are forging agreements with utilities for power supply, with over 32 gigawatts of commitments since 2023. For instance, a binding agreement between Google and Kairos aims to provide 500 megawatts by 2035.
Industry leaders like David Brown from Wood Mackenzie view these partnerships as significant progress, indicating a potential pathway to commercial viability for SMRs. The growing interest reflects both confidence in the technology and a recognition of its necessity in a rapidly evolving energy landscape.
