Government warned to ‘gauge demand’ for SMRs

The government will need to gauge demand for small modular reactors (SMRs) before backing their development, the Welsh Affairs Committee (WAC) has warned.

Unless there is a sufficient customer base for SMRs be manufactured in large numbers, they will not be economically viable, it said in a report.

“The evidence we received made it clear that while SMRs are not certain to be a source of low-cost power, they are an option worth exploring. It is possible that SMRs will be price competitive with both large nuclear reactors and renewable sources, but that case is not proven,” the report said.

“Claims for their viability relied on overturning the received wisdom of the nuclear industry, that building large nuclear reactors allows for economies of scale.”

In order to for that to happen two conditions will would to be met, the committee was told by Gordon MacKerron and Philip Johnstone from School of Business, Management and Economics at the University of Sussex.

Firstly, factory production of the reactors would need to “minimise the kinds of ‘on-site’ cost escalations that have been problematic for conventional nuclear reactors”. Secondly there would need to “orders for a large number of SMR units” so that “economies of scale in manufacturing multiple units would kick in”. They said it could take hundreds of units before they became cheaper per megawatt than large reactors.

The report also noted a 2014 feasibility study by National Nuclear Laboratory, which gave a much more optimistic estimate. It suggested a first-of-its-kind reactor could generate electricity at a price of £84/MWh and that the cost could be brought down to £67/MWh by manufacturing 15 of them. Nevertheless, the committee concluded that for SMRs to be viable “there would need to be a relatively large customer base for them.”

In the autumn budget statement last year, the government announced £250 million of funding for an “ambitious nuclear research and development programme”, including for a competition to identify “the best value SMR design for the UK”. Phase one of the competition was launched in March to “gauge market interest among technology developers, utilities, potential investors and funders”.

The report said the competition “must carefully consider the potential cost of any SMR project and determine whether there could be sufficient demand for SMRs. The UK government must be sure that any decision to support an SMR developer offers value for money and a relatively high chance of successful delivery.”

It also said Trawsfynydd in North Wales – where an old reactor is undergoing decommissioning – would be “an ideal site for a first-of-its-kind SMR”. This is despite the fact the surrounding area does not have a sufficient population to support the use of an SMR for district heating – “one of the potential advantages”. It said building an SMR at the site “would provide a good test case of whether SMRs can deliver value for money electricity without needing to sell large amounts of excess heat”.

The idea behind SMRs is that, by virtue of being small and modular, large numbers of them can be pre-fabricated in factories to a single design before being transported on site and combined together to form larger plants. The hope is that constructing reactors in this way will bring down costs.  

Earlier this month SMR developer NuScale Power announced plans to forge a demo reactor vessel in Britain by the end of 2017.