Small Modular Reactors and Their Role in Decarbonization

A smaller plant changes the investment

For a utility planning its next power plant, a smaller reactor offers an appealing possibility. Capacity could arrive in stages, with less money committed to each unit. Small modular reactors, or SMRs, use nuclear fission to produce heat for electricity or other energy needs. The term generally covers units with an electrical capacity of up to 300 megawatts per module.

The proposal is to manufacture more components in factories and add reactors as demand grows. This could suit a utility whose grid or budget cannot accommodate a large nuclear plant. The practical question is whether a project can turn that flexibility into a competitive energy supply.

A smaller initial investment and cheaper electricity are different benefits. Staff, security, and licensing costs must still be covered, but a smaller unit spreads them across less output. Several modules may share facilities, subject to the design and operating rules.

Financing also affects the result. Interest builds during construction, before electricity earns revenue. Earlier completion could reduce that burden, while delays could increase it. A comparison needs the complete project cost, financing terms, and expected electricity production.

The same distinction applies to manufacturing. A factory can be designed to produce reactors efficiently, but its savings depend on what it actually builds, how often, and for whom.

Factory production needs a repeatable business

Repeated tasks can improve quality and productivity. In an SMR program, the expectation is that building a series of similar units will become easier and less expensive. Such savings depend on a stable design, capable suppliers, and enough committed orders.

The first project also pays for work that later projects may reuse, including engineering, licensing, and supply-chain development. Buyers must distinguish savings projected for future production from the costs documented in completed projects. Buyers need evidence of both delivery capability and a market for the output.

The US Carbon Free Power Project illustrates the commercial challenge. On 8 November 2023, NuScale and UAMPS ended the project after concluding that it was unlikely to secure enough customer subscriptions. These were commitments to buy its electricity. Higher projected costs were part of the context, but the cancellation cannot be reduced to a single cause.

The Los Alamos utilities record traces an earlier target of $58 per megawatt-hour in 2020 dollars and a January 2023 target of $89 in 2022 dollars. The later target already included federal benefits, and financing assumptions had changed. These were project projections, not operating prices or forecasts for all SMRs. The different dollar years also prevent a straightforward like-for-like price comparison.

Technical progress and regulatory approval alone do not establish a viable market. Customers must also be willing to buy the energy on terms that support the project.

Capacity can grow in steps

A region may need more electricity without needing a large reactor's full output immediately. Smaller units could bring investment closer to demand growth, although the opportunity depends on how the plant and its shared facilities are arranged.

For illustration, one 1,200-megawatt reactor and four 300-megawatt modules provide the same total installed capacity. The modular option could add capacity in stages of 300, 600, 900, and eventually 1,200 megawatts. Depending on the design and operating arrangements, it might also allow maintenance on one module while others operate. Equal capacity does not imply equal cost, annual electricity output, or safety.

Roads, cooling systems, grid connections, and other shared facilities may still require investment before the first module starts. A suitable site, qualified workers, and regulatory approval remain necessary. Staging changes when capacity arrives; it does not remove the work needed to deliver it.

Safety and waste for the proposed design

Some SMR designs use gravity or natural circulation for particular cooling functions, reducing dependence on powered equipment. These passive safety features may offer advantages, but the safety assessment must demonstrate their performance under the design's relevant operating and accident conditions.

A site with several modules also needs assessment of shared risks. A flood or a failure in common infrastructure could affect more than one unit. An independent review should consider both the site as a whole and each reactor.

Smaller reactors still produce radioactive waste. Comparing waste per reactor can mislead when electricity output differs. A fairer assessment considers waste per unit of energy, the waste's characteristics, and its storage and disposal needs. Fuel choice, efficiency, and operating strategy affect the result. Project plans need to cover waste management and eventual decommissioning from the start.

Where SMRs could help decarbonization

Nuclear generation can provide low-carbon electricity without relying on sunshine or wind. An SMR could contribute where its unit size and operating characteristics suit the electricity system. Like other plants, it still needs maintenance and can experience outages.

The assessment should compare it with renewable generation, storage, transmission, energy efficiency, and other available options. The relevant comparison is the cost and reliability of meeting demand across the whole system. Individual generation prices tell only part of that story.

Industrial heat is another potential use. Some designs may supply heat as well as electricity, but the fit depends on the required temperature, distance to the customer, and the reliability the process needs. Higher-temperature applications require suitable reactor designs; the SMR label alone does not establish that capability.

Existing industrial or retired power-plant sites may offer useful infrastructure. Each location still needs assessment for cooling, grid access, safety, and community acceptance. The assessment starts with the required energy service, then tests whether an SMR can provide it competitively.

The evidence comes from delivery

Canada's Darlington project has reached a different stage. Ontario Power Generation received a construction license for one BWRX-300 reactor on 4 April 2025. The regulator then cleared work on the reactor building foundation on 30 March 2026. These are construction milestones, not permission to operate. Final costs and sustained operating performance remain to be established. Credible budgets, schedules, and customer commitments remain essential. Later units can show whether standardization reduces costs and delays.

Other questions belong in the same assessment. Is the required fuel available? Who carries the financial risk if construction slips? Are waste management and eventual plant closure funded? Has the surrounding community been meaningfully involved?

An SMR's value depends on the project and the energy system it serves. Smaller units can offer useful flexibility, but that advantage must be weighed against the full cost and delivery requirements. Their contribution to decarbonization will depend on plants that supply useful energy safely and reliably, at a cost their customers can sustain.