A nuclear revival

Bottom Line

Within the nuclear business, Small Modular Reactors, based on a new technology that is reaching its application phase, promise to sweep the market: they can satisfy the demand for new carbon-free processes locally and provide de-carbonization solutions. The challenges lie in the capability to achieve volume production quickly and in the strategic questions about nuclear proliferation, as plants would be scattered around the globe. Nevertheless, an industrial fight for a juicy market is already underway.

Our Sustainable Future portfolios are not currently invested in the nuclear sector, but we are closely monitoring its evolution to seize any opportunities that may arise.

The Path Toward A Big SMR Market

Three nuclear technologies

Nuclear reactors, the most known tech, are now at generation 3, but they will never reach a critical level in the energy mix despite their growth. Fusion technology, the “ideal” clean solution, will not be available before the century’s second half. On the contrary, the latest tech, Small Modular Reactors (SMR), shows impressive development momentum and moves to the industrial stage.

  • Nuclear energy accounts for ~5% of the world’s energy.

SMR has multiple advantages

SMR, due to its flexibility and wide availability, offers appealing use cases like supplying remote places and operations or enabling the low carbon industry by providing energy locally.

  • SMR will dramatically reduce Capex and plants’ installation time.

The next industrial battlefield

About 72 models of SMRs are currently under development or construction. China and Russia lead the race, with the U.S. developing a solid ecosystem of startup companies. Most of the products will be on the market within 5–8 years.

  • The market is expected to show a 15% CAGR until 2030 and accelerate as the products become readily available.
  • A first U.S. SMR company is already planning to go public.
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Overview Of The Nuclear Landscape

Conventional nuclear plants offer limited growth

Nuclear energy is the world’s second most important low-carbon source of electricity. In 2020, 440 nuclear power reactors in 32 countries produced 10% of the world’s electricity representing 5% of the world’s energy. These amounts will not grow significantly enough to replace oil or coal.

  • 55 new reactors are being constructed. 19 of those are in China, 2 in the U.S., and 3 in Russia.
  • The expected CAGR for the decade 2020–2030 is ~3.5%.

Fusion will not be ready in the short to medium term

Even though fusion technology will not be available for decades, significant technological advances have been achieved recently.

  • In December 2020, China started a reactor able to heat plasma at over 150mn °C.
  • In August 2021, ignition (when fusion creates more energy than it requires) has been almost reached in the U.S. during 0.1 nanoseconds.
  • In December 2021, 59 megajoules of energy have been generated for five seconds in the U.K.

Small modular reactors are the short-term solution

SMRs produce between 1 and 350MW per module and may be an answer to fulfill the need for flexible energy generation within a reasonably short period.

  • 72 different models of SMR are under development or construction in 18 countries.
  • A first barge powered by SMR recently started operating in Russia.
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SMR Help Harness Nuclear Power

A stable and (almost) safe energy source

Compared to intermittent renewables like wind and solar photovoltaics, nuclear plants are stable and consistent energy producers. To a certain extent, they can adjust their output, facilitating energy management at the grid level. Most SMR designs are simpler and rely on intrinsic design security, practically eliminating the risk of severe damage and significant releases of radioactivity.

  • SMRs based on Molten Salt technology may be able to adjust their electricity production by 50% in just a few seconds.

An upgraded business model

SMR (assuming mass production) offers key advantages vs. classical bigger nuclear plants: the modular and standardized design coupled with off-site production brings lower cost, less manufacturing risk, and a shorter manufacturing process. Dismantling and reprocessing are facilitated, and maintenance is easier. Finally, the lower Capex and faster ROI will lead to new business models.

  • The learning rate (i.e., cost reduction for doubling cumulative production) for traditional nuclear plants is ~3.5%. It is expected to be >10% for SMR.

Broadening the use cases

The flexibility and improved safety of SMR allows them to be installed locally and respond to intense electricity or heat demands. They can also supply specific remote locations or serve the high energy needs of a given industry (see below).

  • China and Russia plan to use SMR for some isolated urban thermal networks and supply mines.
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SMR Generate Heat Needed For Many Industries

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A Geostrategic Issue

Worldwide development race

Eighteen countries are currently developing SMRs. Many other countries will benefit as reactors will be easy to install and affordable. SMRs may be easily deployed anywhere around the globe, providing another element to the energy-related geopolitical power struggle.

  • China and Russia are leading the race and already have operational products.

Potentially reshuffling the geostrategic status-quo

SMRs provide autonomy and flexibility. Producing countries will be able to fulfill their needs and react quickly to eventual new conditions. Other countries will have to negotiate with a supplier. Energy autonomy will come at the expense of financial or political dependency.

  • In 2020, at least seven sub-Saharan African states have signed agreements to deploy nuclear power with backing from Russia.

Mitigating the nuclear risk

The Ukrainian-Russian conflict highlights the risk of nuclear installations being damaged or poorly operated. In such a situation, the proliferation of SMRs around the globe may be hampered by their use as a threatening capability in any conflict. As a result, only the safest SMR technologies (using the fewest radioactive elements and capable of quickly stopping the nuclear reaction) will be adopted.

  • Russia taking control over Ukraine’s nuclear plants in Tchernobyl or Zaporizhzhia brought renewed awareness about potential nuclear incidents.

SMR For Nuclear Safety

SMR design safety: intrinsic and passive security

While most existing reactors require a power source and active and passive safety features (shutdown rods, etc.), many new SMR designs offer improved, even almost “absolute”, security by using intrinsic and passive security systems.

  • Molten salt reactors rely on liquid fuel. As the temperature rises, the liquid expands, and the reaction slows down.
  • Accelerator Driven Systems use a proton beam producing neutrons to enable and sustain fission. Stopping the beam immediately stops the reaction.

Recycling nuclear wastes (“nuclear waste eaters”)

Fast Reactors or Molten Salt Reactors produce a low quantity of low-grade waste. They recycle plutonium and high-level nuclear fuel waste that otherwise would produce radiotoxicity up to 20,000 years. Decay heat and the radiotoxicity of the waste are thus minimized.

  • Molten Salt Reactors using thorium fuel generate 83% of safe wastes after only 10 years and 17% that are safe after 300 years.

A nascent industry with limited investment opportunities

Most of the new design models are still under development. Today, investment opportunities in listed companies remain quite limited. But companies will go public in the next few years.

  • newcleo (a private company in which AtonRa Holding is an early investor) combines a Lead Fast Reactor to reduce waste, and an Accelerator Driven System to ensure total security.

The SMR Market

An upcoming boom

Considering the number of actors and designs (72) under development, products will be available within 5–8 years. Assuming the industry succeeds in the standardization and mass production phase, it will disrupt the current nuclear business, addressing a new market and possibly replacing part of the existing one.

  • 39 projects are under conceptual design, 28 under basic and detailed design, 2 under finalization, and 3 already in operation.
  • Nuclear joined the “green” taxonomy in the European Green Deal.

A worldwide industrial competition

Chinese and Russian governmental companies are well advanced in their R&D and have already delivered their first products. The west is behind but pushing strong to catch up: the U.S. government is financing many start-ups targeting this technology, followed by many other western countries.

  • The U.S. Department of Energy has already provided $1.2bn for research projects in this field between 2011 and 2019.

Leading players are emerging in the west

Behind the state-owned Chinese and Russian behemoths, western companies and start-ups are vying to position themselves as market leaders.

  • TerraPower, founded by Bill Gates, is developing the Natrium, a 345MW reactor.
  • NuScale, backed by Fluor Corporation, is developing a very modular 60MW reactor and plans to go public soon.
  • Terrestrial Energy (Canada) is developing a 190MW reactor.

Geographical Dispersion Of Ongoing SMR Projects

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  • Support from governments. Chinese and Russian governments are directly driving the activity by providing ample funding. The U.S. is strongly pushing for start-ups development. Europe included nuclear in the “green” taxonomy.
  • An alliance between western actors. Many critical design and production tools should be shared to accelerate development, e.g., blacksmith.
  • Need for energy independence. It is now clearly understood that energy independence is critical for all countries. SMR is a medium-term answer.


  • Proliferation. Distributing SMR everywhere around the globe may be risky due to possible mismanagement of the nuclear wastes, increased misuse probability, and possible strategic stakes or risks during conflicts.
  • Lack of focus from western players. For the manufacturing process to be viable, volume is needed. Only a few designs should be pursued, with collaborations between actors. Many projects currently underway won’t survive.
  • A global imbalance is leading to geopolitical tensions. China and Russia are years ahead and are already marketing their solutions. Western reaction in driving the international regulations may bring geopolitical tensions.

ieaData and statistics, Allied Market Research, SMR cost reduction studies – UK government – 2016, Advances in Small Modular Reactor Technology DevelopmentsPower Engineering, World Economic Forum, Power, International Conference Nuclear Energy for New Europe 2021

Companies mentioned in this article:
Fluor Corporation (FLR US), NuScale (not listed), TerraPower (not listed), Terrestrial Energy (not listed), newcleo (not listed)



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