Institute for Energy Economics and Financial Analysis:
A key tenet for SMR proponents is that the new reactors will be economically competitive. But the on-the-ground experience with the initial SMRs that have been built or that are currently under construction shows that this simply is not true.
There currently are three operating SMRs worldwide—two in Russia and one in China, plus a fourth under construction in Argentina. Costs for all four have been significantly higher than originally forecast.
The takeaway is that the projected costs significantly understated actual construction expenditures.
Projected costs for the Russian SMRs climbed more than 300% from initial estimates, according to the last available information.1 Since the estimate is from 2015, it is likely the final costs were even higher since the two units did not enter commercial service until 2019. Likewise, it has been reported
that the cost for China’s Shidao Bay 1 SMR, a 150MW high-temperature gas-cooled reactor (HTGR), was triple initial cost projections.
The example from Argentina is even more extreme. Projected costs for the CAREM 25 (Central Argentina de Elementos Modulares), a 25MW research reactor designed to serve as the prototype for 100MW models, have climbed 600% since initial work began on the project in 2013.
According to the World Nuclear Association, the plant will not begin operation until 2027,4 which makes additional cost increases a real possibility.
Similar significant cost increases have occurred at proposed projects in the U.S. IEEFA has previously documented the problems at NuScale.5 Costs for that company’s SMR more than doubled from 2015-2023, rising from $9,964 per kilowatt (kW) to $21,561 per kW, prompting the cancellation of the company’s signature project, a planned six-reactor, 462MW facility to be built in Idaho in cooperation with the Utah Associated Municipal Power Systems (UAMPS).
NuScale’s problems are not unique. U.S. SMR developers have consistently sought to shield their construction cost estimates, but information about two other prominent projects shows that the estimated costs for these projects also have skyrocketed. The cost increases for the X-Energy and GE-Hitachi SMR projects (see graphic below) occurred well before either had secured licensing approval from NRC, let alone begun construction. IEEFA believes this should be a red flag for utilities, regulators and investors. The costs, already high, are likely to climb even higher.
I’m willing to concede that the first generation of SMRs may just be suffering from initialization costs, but I don’t see the requisite demand that will be needed to achieve high-volume discounts, and certainly not in time to defer the immediate threat of growing emissions.