Small Modular Reactors in the Energy Transition: Economic, Regulatory, and Technological Perspectives

There is an unprecedented need to expand the toolbox of solutions to boost the scalability of clean power and energy systems. Amid the urgent need to scale clean energy systems, nuclear power is gaining renewed attention as a vital tool in the global energy transition. This paper reviews the current state and potential of small modular reactors (SMRs)—a new class of nuclear technology offering lower power capacities (around 300 MW), modular construction, and enhanced flexibility. Both conventional light-water and next-generation advanced reactor designs are assessed in terms of their system integration value, ability to provide grid services, and economic potential. Unlike traditional large-scale reactors, SMRs aim to achieve cost competitiveness through modularity and mass production rather than economies of scale. However, challenges remain regarding their uncertain techno-economic performance. This paper addresses these challenges by offering a foundational cost analysis, including the use of learning curves to estimate future deployment costs. SMRs can operate as baseload or dispatchable resources and may be integrated with thermal energy storage and renewables to enhance grid flexibility. The study discusses their role in delivering firm, low-carbon energy, which is essential for achieving climate targets such as those set in the Paris Agreement. Historical examples, such as France and Sweden, demonstrate nuclear energy's success in decarbonization. The paper ultimately positions SMRs as a potentially disruptive innovation for clean energy systems. The advent of small modular reactors (SMRs) represents a transformative leap in nuclear technology. With their smaller size, modular construction, and safety features, SMRs address challenges faced by traditional reactors. However, these technological advancements pose significant regulatory challenges that must be addressed to ensure their safe and effective integration into the energy grid. This paper presents robust regulatory strategies essential for the deployment of SMRs. We also perform economic and sensitivity analysis on a notional SMR project to assess its feasibility, profitability, and long-term viability, pinpointing areas for cost optimization and determining the project's resilience to market trends and technological changes. Key findings highlight market demand as the most influential factor, with public acceptance, regulatory clarity, economic viability, and government support playing critical roles. The sensitivity analysis shows that SMRs could account for 3% to 9% of the energy market by 2050, with a base case of 4.5%, emphasizing the need for coordinated efforts among policymakers, industry stakeholders, and regulatory bodies. Technological maturity suggests current designs are viable, with future R&D focusing on market appeal and safety. By synthesizing these insights, the paper aims to guide regulatory authorities in facilitating informed decision-making, policy formulation, and the adoption of SMRs