For nuclear energy to effectively contribute to achieving net-zero emissions globally, it must be cost-competitive with other forms of power generation, says a report by Wood Mackenzie, a global energy research firm.
Nuclear capacity is set to increase by 280 gigawatts (GW) by 2050, as countries search for decarbonised electricity sources. Despite policy support and market growth, the biggest economic hurdle to the uptake of the latest nuclear and small modular reactors (SMRs), is cost.
Nuclear is just one of several technologies, including hydrogen-fired power, gas or coal with carbon capture and storage, geothermal, and long-duration energy storage, vying to deliver a reliable decarbonised electricity supply.
According to Wood Mackenzie, all are expensive and need technological innovation to build a strong position in the market. The nuclear industry will have to address the cost challenge with urgency if it is to participate in the huge growth opportunity that low-carbon power presents. At current levels, the cost gap is just too great for nuclear to grow rapidly,' said David Brown, director, of energy transition services at Wood Mackenzie, and lead author of the report.
The energy research firm added that scaling up the SMR market will depend on how fast costs fall to a competitive level against other forms of low-carbon power generation.
'Conventional nuclear power currently has a levelised cost of electricity (LCOE) of at least four times that of wind and solar. To get around cost concerns, SMRs are designed to be modular, factory assembled, and scalable,' it said.
'They are expected to be quicker to market, with a target construction time of three to five years compared with the 'nameplate' 10 years needed to build a large-Pressurised Water Reactor (PWR).'
Wood Mackenzie added that if costs fall to $120 per megawatt-hour (MWh) by 2030, SMRs will be competitive with nuclear PWRs, gas, and coal-both abated and unabated-in some regions.
'Further price declines are expected between 2040 and 2050 as SMRs realise economies of scale and improve market economics,' the energy firm said.
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Scaling up small modular reactors
Wood Mackenzie states that SMRs will play a small part in the power market through to 2030, largely because high costs are holding back deployment, the decade is already passing by, and construction timelines mean, at best, only a few plants will be built.
'First-of-a-kind (FOAK) SMR costs could be as high as $8,000 per kilowatt (kW) and as low as $6,000 per kW,' it said. FOAK SMR refers to a new generation of nuclear reactors that are smaller in size and designed to be modular.
Wood Mackenzie analysts expect that FOAK costs will be at the high end of this range, and could be even higher, as developers build out early-stage projects.
'The amount of FOAK SMR investment remains uncertain and will be influenced by multiple factors, such as financing terms, commodity costs, uranium availability, and the political will to see projects succeed,' it said.
'At least 10 to 15 projects, with a capacity between 3,000 and 4,500 MW required for a standard 300 MW SMR, need to be under development between 2030 and 2040 to support lower SMR costs.'
According to the energy research firm, this activity level would help the nuclear industry regain momentum during the last nuclear growth phase from 1970 to 1990.
Wood Mackenzie also said that there are four key aspects of expanding nuclear that need greater focus:
According to the report, there are four key aspects of expanding nuclear that need greater focus:
Governments must lay the groundwork. Policymakers need to set out clear rules for planning, permitting, regulation, and safety. A middle ground around permitting timelines - one that allows public, industry, and government dialogue - is needed to produce predictable timescales.
Expanding the uranium supply chain. Russia's invasion of Ukraine should be a wake-up call for the nuclear industry. Wood Mackenzie projects uranium demand to double under its base-case scenario and triple under its Paris-compliant Global Pledges Scenario. Russia is currently a key supplier to both low and highly-enriched uranium markets, especially to Eastern Europe and France.
Developers need to establish and refine their skillset. SMRs will need to overcome nuclear's challenging track record. No commercial, new-generation SMR plant is operating today. The expertise to build nuclear plants needs to be consistently re-applied; developers should prioritise a few technologies rather than a wide array of options. This will result in greater cost savings and faster deployment over time.
Offtake agreements will need to be more creative than ever. Buyers will need to place a value on nuclear's ability to deliver stable zero-carbon power, zero-carbon process heat, nuclear-based renewable energy credits, and a power supply for low-carbon hydrogen. The cost of lowering carbon emissions via nuclear should be compared with other abatement options.
'Overall, governments, developers, and investors must work collaboratively to establish a new ecosystem for nuclear to flourish,' concluded Brown.
A recent report by the International Energy Association also speaks to the critical role of the energy source. It said nuclear power could play a role as a source of low-emission electricity that is available on demand to complement the leading role of renewables such as wind and solar in the transition to electricity systems with net zero emissions.
Stefano Buono, founder, and CEO, Newcleo, said we try to understand what scares people and why nuclear has not been successful so far - and the reason was essentially the cost and, of course, the fear of accidents and the waste. So we are trying to solve these three problems in our new design.
According to the CEO, we are using the nuclear waste, essentially plutonium and uranium, that the nuclear industry has used to produce more energy than was initially extracted.
'Another thing is the cost. Big installations are very costly. Historically, nuclear has become very big to keep the cost down, but the opposite has happened. So now nuclear is returning to the idea of making very small and modular machines that can be produced in series. Of course, safety is very important for the nuclear industry. In the next generation of nuclear, you can enhance passive safety, making your reactor switch off in any condition,' he said.
'Nuclear technology essentially stopped progressing for 35 years. But there has been a lot of research. So we are using the experience and the research. We are still trying to find something new. You don't need new technology, but we need to put this technology together in a new industrial design.'