About the Energy Transition Technology Profile series: These profiles draw on, and update, the Institute’s analysis of specific safe-bet and wild-card technologies that are driving Canada’s clean energy transition.
Strengths and cautions
A potential source of reliable, emissions-free electricity.
Canada, with its nuclear industry and uranium reserves, could play a leading role.
Still several years away from deployment in Canada.
Still needs to overcome substantial technical, financial, and regulatory barriers.
What are small modular reactors?
Small modular nuclear reactors (SMRs) are an emerging nuclear power technology. They rely on a nuclear fission process similar to conventional nuclear plants to generate energy, but, as the name suggests, they are significantly smaller in scale—300 megawatts or less per reactor, compared to 1,000 megawatts or more for conventional reactors.
Interest in harnessing small nuclear reactors as a source of reliable, clean electricity has been building in recent years, primarily due to their scale and flexibility compared to conventional nuclear plants. Their small size—many reactors currently in the works are less than 100 megawatts—makes it easier to find and seek approval for appropriate sites, while their modular design and shorter construction times promise to reduce costs. (Nearly all conventional nuclear plants are custom-designed, whereas SMRs could be produced in serial fashion at a manufacturing facility and then sited wherever needed.)
They could also operate more safely, as they rely on passive safety systems instead of operator intervention and are less susceptible to meltdowns or radioactive spills. And they use less fuel (and generate less waste) than conventional nuclear technologies.
Why do they matter now?
Small modular reactors are viewed in many jurisdictions as a promising source of reliable, emissions-free electricity that could come to serve some crucial roles in the energy transition. As electricity systems get bigger, cleaner, and smarter, SMRs could replace fossil-fuel baseload power plants on grids and diesel-powered generators in remote and northern communities. And as a source of baseload power capable of operating at a wide range of scales, small nuclear reactors could pair well with variable renewable energy as power grids decarbonize. The International Energy Agency estimates that nuclear power capacity (of all kinds) will double globally by 2050.
Canada could play a leading role in this growth of SMRs, as it is one of few countries with an established nuclear industry, a strong track record in nuclear research and development, and ample supplies of nuclear fuel. Building on these advantages, the federal government and several provincial governments have already made significant investments in advancing the technology.
Federally, this includes an investment of $70 million in the 2022 budget to expand capacity for producing fuel and handling waste, as well as $51 million to develop better regulatory capacity.
Provincially, the Ontario, New Brunswick, Saskatchewan, and Alberta governments have formulated a joint strategic plan to accelerate SMR development, and Ontario Power Generation is now undergoing licensing and technical review to construct a single reactor of up to 300 megawatts at the Darlington nuclear site in Ontario, for completion around the end of the decade.
Saskatchewan intends to have its first SMR up and running in 2034. New Brunswick is developing SMR technology that would be capable of providing both electricity and steam heat, while a start-up company called Global First Power is working at the federal government’s research facility at Chalk River, Ontario, to develop a micro-reactor, less than five megawatts in size, for potential use in remote, off-grid locations.
Are they a safe bet or wild card?
Small modular reactors—along with other next-generation nuclear technologies—are still considered wild cards. Although there have been significant investments in small nuclear reactor technology and there are demonstration plants in development at many sites around the world, the technology is not yet commercially viable. It also remains to be seen how the technology will be able to compete on a cost basis with other current and new sources of reliable, non-emitting power.
There are currently more than 60 proposed plants worldwide at some point in their development phases. The United States, Canada, and the United Kingdom, for example, all have several projects in development, and demonstration projects are operating in China and Russia. But the technologies still need to overcome substantial barriers before they could be established as a safe bet.
What challenges must they overcome?
Even as investment in SMRs expands, the technology faces formidable challenges to widespread adoption.
A key potential advantage of small reactors is lower costs—both in construction and in operation—relative to conventional nuclear power. But technology costs remain stubbornly high so far, and early efforts at commercialization have not been successful.
The first SMR project approved in the United States, for example, would have seen the developer NuScale build 12 SMRs in Utah, each with a 60-megawatt generating capacity. The initial estimated total price tag was $4.2 billion, but as costs rose, NuScale cut back its plans to six 77-megawatts reactors at a cost of $6.1 billion, which then rose to $9.3 billion. This would have produced power at triple the cost of similar amounts of wind or solar, and the utilities involved in the NuScale project chose to back out.
A similar project in Idaho was also cancelled last year, due in part to rising costs. The future for SMRs may bring economies of scale and cost declines, but at this early stage of commercialization, cost remains a challenge.
Overall, a survey of recent projects by the Institute for Energy Economics and Financial Analysis found that SMRs continue to struggle with mounting costs and lengthening project timelines—issues that have long hampered the growth of the nuclear industry as a whole.
SMRs face other barriers common to all nuclear power plants. In many jurisdictions, there is strong social opposition to nuclear technology in general, and often significant resistance from environmental and local community groups, over the dangers of nuclear waste and the spectre of major disasters. The Canadian nuclear industry may face less of this pushback than other jurisdictions, owing to the long track record of safe, large-scale nuclear power generation in Ontario, including at the Darlington site where Ontario’s first SMR is to be built. But barriers persist for finding sites for new nuclear plants of any scale.
Beyond these barriers to social license, SMRs also face regulatory hurdles everywhere they are proposed, including extensive, time-consuming licensing processes that have not been standardized or adapted for SMR technology.
Many SMRs, including the version that Canadian provinces are proposing to build, also require a more heavily enriched form of nuclear fuel from conventional reactors—a type of fuel richer in uranium-235—and supply chains for this fuel are not yet in place. The best case for such a supply chain would be sending Canadian uranium to the United States, France, or the United Kingdom for enrichment and then re-importing it for use.
What are the next steps for policy makers?
Canadian governments have already introduced many of the policies required to accelerate the development of SMRs in Canada. The federal government’s new Enabling Small Modular Reactors Program, the commitments in the 2022 budget, and a range of federal investment tax credits together provide needed support to the new industry. Interested provincial governments have also brought in financial supports to help SMR projects move forward.
The regulatory environment for SMR development needs improvement if the technology is to take off, however. A crucial next step is to create a clearer and more efficient regulatory regime specifically for SMRs that ensures their safe construction and operation and alleviates public concerns about the technology. This is already in process as part of the joint strategic plan released by Alberta, Saskatchewan, Ontario, and New Brunswick in 2022. The energy roadmaps being developed by a number of provinces (and recommended for all of them) can also provide guidance and clarity regarding how SMRs fit into each province’s broader electricity systems.
Profile text by Chris Turner.
