Demand for small modular reactors surges 65% as clean energy ambitions grow

A growing desire to include nuclear energy in many nations’ clean energy mix has seen a strong push for the development of small modular reactors (SMRs) because of their potential cost savings and adaptability.

According to a new report, this has led to a 65% leap in demand for SMR projects since 2021.

The Wood Mackenzie study found that the SMR project pipeline reached 22 gigawatts (GW) in the first quarter of 2024, requiring an investment of close to $266 billion.

“The nuclear power market has been gaining momentum as a key strategy to achieving net zero,” said Wood Mackenzie’s director of energy transition service David Brown.

“While the sector has faced a range of challenges over the last 12 months, especially the cancellation of NuScale’s Clean Power Project, multiple markets across the world are expanding their focus on nuclear SMRs,” he added.

According to the report, five countries – the US, Poland, Canada, the United Kingdom and South Korea – are responsible for 58% of the risked SMR project pipeline.

COP28 powered new nuclear interest

“COP28 also provided a new tailwind for nuclear with a new goal to triple nuclear capacity by 2050,” Mr Brown said.

“In Wood Mackenzie’s net zero scenario, SMRs would account for 30% of the nuclear fleet.”

“The global focus on net zero means the market for SMRs has widened from utilities to industrial and technology companies.”

“For these sectors, SMRs provide a range of solutions, including around-the-clock carbon-free power, carbon-free industrial heat and the ability to meet power demand growth long term.”

“The latter is a particular area of focus in the US with increasing demand for high-capacity data centres.”

Government backing required

However, Wood Mackenzie also warned that without government backing the nuclear momentum could quickly stall.

The international research firm said policy support is crucial to accelerating projects to final investment decisions.

“Some regions have put new policies in place that have spurred the recent activity. Most notably, the US, the United Kingdom and Japan,” the report found.

In the US, the Inflation Reduction Act provides a 30% investment tax credit (ITC) for a zero-emission advanced nuclear power plant to be implemented after 2025.

Additional incentives include 10% ITCs for domestic content and building an SMR on the site of a retired coal plant.

In Japan pro-nuclear sentiment has strengthened following the election of Prime Minister Kishida and amid record-high commodity prices in 2022.

In the UK, government targets and reactor funding has been set as part of the nation’s path to net zero.

The UK has awarded almost $120 million to GE-Hitachi and Holtec International for SMR feasibility analysis.

“Across the world, governments are stepping up in various ways,” according to Mr Brown.

“The recent momentum in SMR announcements is a result of strong public and private partnerships involving both established and new companies in the nuclear sector.”

Uranium supply an issue

In what may be positive news for Australia as the holder of the world’s largest uranium reserves, Wood Mackenzie says concerns around supply availability and rapidly escalating prices present challenges to the nuclear sector as a whole.

In 2023, uranium was the strongest performing commodity, with prices soaring.

“The uranium market is turning bullish, driven by production shutdowns, potential sanctions on Russian uranium supply, the addition of 8GW of large-scale new nuclear capacity in 2023 and lifetime extensions of the current nuclear fleet,” Mr Brown said.

“In turn, this has ignited concerns about uranium supply security across the OECD nations.”

“As a response, there are plans from both governments and the private sector to fund expansions of the uranium supply chain.”