Financial Markets


The global energy landscape is at a crossroads, and the path we choose will have colossal ramifications on our future planet. One prospect being considered is Small Modular Reactors (SMRs), nuclear reactors with a power output of less than 300 megawatts, touted as a potential solution to our evolving climate crisis. However, the promise of these emerging technologies, we must argue, does not match the reality.

In theory, SMRs were thought to be more affordable than their larger counterparts due to their smaller scale. However, we've found that the cost per unit of power capacity makes these reactors considerably more expensive than larger traditional atomic energy plants.

A noteworthy instance proving this is the proposal of six NuScale Power SMRs in Idaho, which astonishingly ended up costing 250% more than a larger nuclear project, the Vogtle power plant, in Georgia. Such evidence significantly suggests a 'diseconomy of scale,' a troubling trend in nuclear energy development.

Unsurprisingly, the high construction costs of SMRs result in higher electricity production costs. It's been discovered that the costs of generating electricity from SMRs are weightier than those from wind and solar photovoltaic plants. Investing in an energy source that keeps the energy prices elevated seems counterintuitive at a time when affordable, sustainable energy is needed more than ever.

In addition to raised costs, SMRs bear the same murky challenges faced by traditional nuclear reactors, including the risk of severe accidents, the danger of promoting nuclear weapons proliferation, and the abiding issue of handling radioactive waste.

The global focus on nuclear power has been diminishing, reflected by the drop in the share of nuclear power from 17.5% of global power supply in 1996 to a mere 9.2% in 2022. Recent projects have not only demonstrated a pattern of cost overruns, but also significant time overruns, creating uncertainties in a time when solutions are urgently sought.

Examples are the Vogtle power plant in Georgia and European Pressurised Reactor in Flamanville, France, which further underline the risks in financing and timelines that nuclear power carries.

This brings us to the core of our argument. Given the urgency of the climate crisis, resources, including time and money, need to be most effectively utilized. The high costs and complex challenges inherent in SMRs make nuclear power an unfavorable choice when faced with the urgency and scale of the climate crisis. Instead, investments in nuclear power could be redirected to the development of renewable sources such as wind and solar energy, thereby facilitating immediate and substantial reductions in carbon emissions while providing a more sustainable energy future.

Co-authored by M.V. Ramana, a professor at the University of British Columbia specializing in nuclear power, and Sophie Groll, a masters student studying public policy with a focus on environmental policy, this piece calls for a more critical analysis of the potential effects and outcomes of the ever-evolving nuclear power debate. Our future, and that of upcoming generations, is dependent on the energetic choices we make today. At this critical juncture, leaning towards renewable sources seems the most promising route towards an environmentally sound future.