Plans for building small modular reactors (SMRs) in the UK are advancing. That said, potential projects are still years away from completion and there are mixed views on the role they could come to play in the country’s energy mix.

The technology remains unproven. To date, only two are in operation, in Russia and China, according to consultancy RBN Energy.

Meanwhile, concerns over the safety of nuclear power generation continue to weigh on plans to build new nuclear capacity globally, including in the UK. And the costs, complexity and timelines involved mean there is considerable scepticism over the UK’s ability to bring new nuclear capacity online. Where this can be said about conventional large reactors it is also true about innovative SMRs.

Nonetheless, the UK’s plans involve nuclear playing a significant role in the decarbonisation of its power generation mix.

Revival of dithering

In 2023, the previous Conservative government launched Great British Nuclear (GBN). This has the aim of driving a “massive revival” of nuclear power. This was to focus on SMRs and on ensuring the construction of the large-scale Hinkley Point C and Sizewell C projects.

It targeted up to a quarter of the UK’s electricity, 24 GW, from domestic nuclear energy by 2050.

The new Labour government has stated its commitment to accelerating nuclear development in the UK. This includes the roll-out of SMRs. Indeed, the party’s election manifesto pledged to end a “decade of dithering” over nuclear by the previous government.

The new government was quick to launch GB Energy, a publicly owned clean energy generation company and investment body. One of GB Energy’s five key functions will be exploring how to collaborate with GBN on nuclear power.

“Labour made a real play on their ambition on energy and the energy transition in the lead-up to the election and have been very keen to be seen to hit the ground running,” an Osborne Clarke partner and head of sustainable infrastructure, Hugo Lidbetter, told E-FWD. “From a nuclear perspective, it will be interesting to see how the relationship between GB Energy and GBN is articulated.”

The policy environment appears favourable for those companies attempting to realise their SMR ambitions in the UK. However, there are numerous other hurdles to overcome. While recent news show that proposals are being advanced, success is far from certain.

*Welding on the dome at Hinkley Point C. Source: EDF.*

Nuclear challenges

Attempts to develop new large-scale nuclear reactors around the world have been beset by cost overruns and construction delays. These challenges have also had an impact on how new nuclear capacity is financed, as illustrated by the UK’s struggles.

“Large nuclear has been branded with the hugely damaging perception of being very expensive and very difficult to build,” said Lidbetter. “The industry has done its best to articulate a narrative around that, but successive governments have been slow to engage with the underlying reasons for that cost and complexity. As a result, large nuclear has been treated at arm’s length, meaning private developers have been expected to develop hugely expensive projects on their own balance sheets.”

Lidbetter went on to note that while recent UK governments have recognised the importance of nuclear, they have struggled to deliver a funding model that is sufficient for private investors.

This has resulted in what he described as something of a “no cake/won’t eat it” scenario. Here, the government will not build nuclear capacity itself but is also struggling to persuade private investors to do so.

“This is why Toshiba and Hitachi both walked away from the UK,” he said.

SMR pros and cons

SMRs are being touted as a way to build nuclear capacity while circumventing some of the challenges relating to delays and cost overruns. A typical SMR design can be between one-tenth and one-quarter the size of a traditional nuclear reactor with a maximum output of about 300 MW, according to RBN.

SMRs therefore require considerably less space and water for cooling. As a result, this provides more flexibility to site them in a wider variety of locations. The modular nature of SMRs allows for a larger proportion components to be assembled in a factory setting. They can then be transported to the facility’s site.

“SMRs offer additional advantages that make them a neat choice in the wider energy transition: they are reasonably location agnostic, can be scaled to the size required by a captive customer/offtaker (e.g. data centre, green hydrogen producer) and can flex their output between power-to-grid and other options depending on the prevailing level of wind and solar power on the grid,” said Lidbetter.

One major advantage SMRs have is in terms of funding. They may not need a Regulated Asset Base (RAB) model or a contract for differences (CfD), he said.

“You could get them off the ground (in principle) with a fully non-state private wire [power purchase agreement] PPA,” he said.

Offset savings

However, the purported advantages of SMRs have been called into question. A University of Greenwich emeritus professor of energy policy, Steve Thomas, is sceptical. He said the economic case for SMRs assumes that the scale economies lost by building smaller reactors are offset – or more than offset – by the savings from mass production of components and modular construction.

“The only way to test this is to actually build a lot of SMRs because building a couple will prove nothing,” Thomas told E-FWD. “It is a big gamble.”

Thomas also noted the high costs of bringing an SMR design to orderable status and setting up the facilities required for the manufacture of components. Under these circumstances, developers would likely seek guarantees of a certain number of SMR units going ahead before committing to their delivery.

Additionally, the academic questioned the assumption that modularity would necessarily help circumvent construction delays. He cited Westinghouse Electric’s large-scale modular 1,100 MW AP1000 reactor. All eight AP1000 units ordered so far have run into delays and cost overruns, Thomas noted.

“It is also claimed SMRs’ build would be quicker and more predictable, but why would this be?” Thomas continued. “Are large reactors always late because they are large or because they are complex? I suspect the latter, but why would a small reactor be less complex than a large one unless it did not have the same level of safety features?”

Further, when designing an energy system, the role of SMRs must be considered. It is not enough for SMRs to have better economics than large reactors, he said. “The competition is renewables and energy efficiency.”

Decarbonisation role

Nonetheless, SMRs are seen as having a role to play in the energy transition – and not just in the UK.

RBN’s manager of analytics and products, Marc Passy, told E-FWD that SMRs are the only dispatchable zero-emissions source. Therefore, they would be useful to a country such as the UK, which has such ambitious grid decarbonisation goals.

Osborne Clarke’s Lidbetter went further, describing SMRs as not just useful, but crucial to the UK’s decarbonisation goals.

“It’s probably fair to say there can be no successful energy transition – at least in the net zero by 2050/decarbonised grid by 2030-35 sense – without SMRs,” Lidbetter said.

“That comment is true of nuclear more generally, but UK policy on nuclear has very much been a blend of large GW plants and much smaller SMRs. The 24 GW capacity target alone means SMRs will be essential, as there are not sufficient GW-scale plants in the pipeline to deliver the capacity required,” he said. That includes Hinkley Point C, Sizewell C and “a plant at Anglesea, or possibly Moorside”.

Slow starter

However, he noted the risk of the UK making some of the same mistakes with SMRs that it has with large-scale nuclear.

“A couple of years ago there was a huge interest in the UK SMR market, with a wide selection of global technology vendors. But the UK has dragged its feet with the creation of GBN and the inception of an SMR competition that initially seemed to lack an obvious purpose,” Lidbetter said.

The sites are there, he continued. EDF as a fully qualified operator might have provided a shortcut to deployment of the first few SMR projects. But generally, “things are moving too slowly”.

However, in July, EDF pulled out of the government selection process underway to determine which SMR technology to use. This was another setback to the roll-out of SMRs. This followed EDF’s decision to revise its SMR design to focus on proven technologies, rather than pursuing innovations.

Regulatory review

The remaining companies in the selection process are Rolls-Royce SMR, Holtec International, GE Hitachi Nuclear Energy, NuScale Power and Westinghouse. These are pressing ahead with the next stage, having submitted tenders to GBN by the delayed deadline of July 8.

Two of the companies have also made recent progress with the Generic Design Assessment (GDA) regulatory review process.

In late July, regulators announced that Rolls-Royce’s 470-MWe SMR design had completed Step 2 of the GDA process. Two days later, they said Holtec’s SMR-300 design had completed Step 1 of its GDA.

Both designs have progressed to their next GDA stage. In Holtec’s case the GDA consists of two steps and is due to be completed in October 2025. Rolls-Royce faces three stages and expects to wrap this up in December 2026.

The GDA focuses on ensuring regulatory standards including for safety. It is one of the steps that need to be completed before site-specific proposals are brought forward. The Rolls-Royce and Holtec assessments come after regulators made the GDA process more flexible in 2019. This was intended to help review SMRs and less mature designs.

“The regulators’ requirements and expectations for new reactor designs have not changed with the implementation of the more flexible GDA process,” an ONR spokesperson told E-FWD.

“The updated approach allows for reactor vendors and their stakeholders (potential investors and customers) to complete only two steps of GDA to provide a regulatory opinion on the fundamentals of the design. This may appeal to vendors wanting to secure an early regulatory opinion on some new or novel aspects of the design, alongside the other design fundamentals.”

*Grafenrheinfeld NPP in Germany, which ceased generating in 2015. Source: PreussenElektra*

Digging in

Beyond the regulatory sphere, the five companies involved are taking other steps to help bring their SMRs to construction. These include short-listing possible site locations for the reactors themselves and for the factories that would manufacture components.

Rolls-Royce announced in May it would set up a facility at the University of Sheffield’s Advanced Manufacturing Research Centre (AMRC). This would produce working prototypes of the modules it intends to use for its SMRs. However, the future of the AMRC is currently under review amid a shake-up that could lead to the centre’s closure.

Westinghouse, meanwhile, signed an agreement last year with Community Nuclear Power. This covers the construction of four privately financed AP300 SMRs in Teesside, Northeast England.

Time concerns

Even if regulatory reviews move at their expected speed and other aspects of the projects fall into place, it will be years before the SMRs reach the final investment decision (FID) stage, let alone starting up.

Thomas pointed to Rolls-Royce, which should complete the GDA process in 2026. It could then reach FID in 2029. First, if must resolve outstanding questions about reactor ownership, financing and siting – among others.

“From FID to actual start of construction would usually take about three years to mobilise the workforce, set up the site and order the equipment, so you would be looking at 2037 for first power,” Thomas said. The government aims to decarbonise electricity generation by 2030. SMRs would not contribute to this if first power is generated in the late 2030s – at the earliest.

It appears the new government is undeterred. But Lidbetter cautioned that funding concerns could slow progress – not just on nuclear power but on energy more broadly.

“At the moment it is probably too early to tell, but the concern will be that the considerable noise coming from the Treasury about unfunded commitments and unsighted financial blackholes” become an excuse to backtrack on Labour’s energy-related ambition, Lidbetter said.

There is political support for SMRs and they could play a role in stimulating the economy. This is particularly true if they can win over private funding. What they will not do, though, is solve the government’s 2030 net zero problem.

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