No-one wants to pay for SMRs: US and UK case studies

Nuclear Monitor Issue: 
Jim Green ‒ Nuclear Monitor editor

No company, utility, consortium or national government is seriously considering building the massive supply chain that is at the very essence of the concept of SMRs ‒ mass, modular construction. Yet without that supply chain, SMRs will be expensive curiosities.

All or almost all SMR projects are either dependent on government handouts or they are run by state-owned agencies. The private sector won't bet shareholders' money on SMRs to any significant degree but governments have "a once in a lifetime opportunity" to bet taxpayers' money on private-sector SMR frolics and to offer SMR developers "full and ongoing Government support".1 But government funding has generally been modest (in the US and UK, for example) and well below that required to kick-start or sustain an SMR industry. The Chinese and Argentinian governments hope to develop a large export market for their high-temperature gas-cooled reactors and small PWRs, respectively, but so far all they can point to are partially-built demonstration reactors that have been subject to significant cost overruns.

Government funding for SMRs in the UK is currently of the order of tens of millions of pounds ‒ three orders of magnitude less than the largesse showered on the Hinkley Point C large-reactor project (lifetime subsidies of several tens of billions of pounds). In the US, government SMR funding of several hundred million dollars is an order of magnitude lower than subsidies for large reactors (several billion dollars for the AP1000 projects).

Of course, it could be argued that government funding for SMR programs is excessive given the strong likelihood of failure. A case in point is the mPower project in the US, which was abandoned despite receiving government funding of US$111 million.2

And of course, just because government funding is currently a small fraction of that required to kick-start an SMR industry, it is still possible that government funding will be dramatically increased.

United States

A 2018 article in the Proceedings of the National Academy of Science discusses the funding provided by the US Department of Energy's (DOE) Office of Nuclear Energy (NE) for advanced reactor designs:3

"[W]e recently analyzed the DOE's efforts to commercialize advanced reactor designs. NE has spent $2 billion on this effort since the late 1990s, with very little to show for it. This is unsurprising: Even by its own assessment, this amount is less than half what is necessary to demonstrate even one non-light water technology. Moreover, NE's spending portfolio conflicts with much of the wisdom regarding the execution of innovative research and development programs: Annual funding varies fourfold, priorities are erratic, and spending on existing infrastructure (some of which is obsolete or ill-suited to support testing of new designs) consumes more than half of the budget.

"Moreover, the funds dedicated to advanced reactors have been spread across a number of different designs and fuel types, not because a conscious choice has been made to further these technologies based on their technical, economic, and institutional benefits but because they are the favored projects of different national laboratories. In interviews with leaders across the enterprise, those associated with the DOE and the national laboratories expressed either alarm or despair at the trajectory of advanced fission innovation in the United States."

SMR Smart, a US consortium of companies and utilities, said in a 2017 "policy statement":4

"The total cost to obtain regulatory approvals and perform first-of-a-kind final design engineering for two or more SMR designs and the initial SMR facilities is expected to be $2 billion to $2.5 billion. To date, four designers have invested a total of more than $1 billion dollars to develop their SMR designs.

"Potential owners of SMR facilities have also invested tens of millions of dollars in preparing their sites for possible deployment of SMRs. The U.S. Department of Energy's (DOE's) SMR Licensing Technical Support (LTS) program, envisioned to provide initial funding of $452 million on a cost share basis, is much appreciated but not sufficient in the current business environment to achieve large-scale SMR commercialization.

"The SMR LTS program is scheduled to end in fiscal year 2017, just as the first design and facility applications are being submitted for review by the NRC. DOE's LTS program should be expanded to cover design finalization in addition to licensing under the multiple available regulatory processes …, with a commensurate increase in funding and extension through FY2025."

SMR Start's "policy statement" is nothing more than a wish-list for additional government subsidies including commercial deployment partnerships (production tax credits, power purchase agreements, loan guarantee program), technology development partnerships (grid security and reliability programs, national laboratory support), and manufacturing and supply chain partnerships.4

NuScale has submitted an application to the US Nuclear Regulatory Commission for its small PWR design. The company has spent more than US$800 million on its design ‒ including US$288 million from the Department of Energy.5 NuScale estimates that by the time it gets through the NRC licensing process, it will have spent US$1 billion overall (including government contributions).6 That's US$1 billion (possibly more) before the first concrete pour. NuScale will then face the problem that there is a long way from NRC certification to the completion of its first SMR, and further still from the first reactor to mass production for a mass market. One of many reality checks will be the eventual, inevitable acknowledgement that NuScale's estimate of "around $3 billion" for its first 684 MWe plant is ridiculous.7

The 2018 article in the Proceedings of the National Academy of Science states:3

"Often, proponents of nuclear power note that private enterprise is faring better than the government at advancing non-light water reactor concepts. Indeed, more than $1.3 billion has been secured by close to four dozen such companies. However, a dozen of these are working not on advanced fission reactors but on fusion reactors or nuclear fuels. Another dozen reactors either belong to bankrupt companies (e.g., Westinghouse) or are proceeding at a very low level of activity (e.g., the DOE's Next Generation Nuclear Plant and various university ventures that are very much in the conceptual design phase). Moreover, while $1.3 billion sounds impressive, that sum is dominated by one firm, TerraPower, which has found it remarkably challenging to build or secure access to the range of equipment, materials, and technology required to successfully commercialize its innovative design. As a result, it is teaming with China in its development efforts."

Since that article was published, Terrapower's plan to build a demonstration fast reactor in China has been abandoned and the company is now focused on fundraising in the US. Dan Yurman takes up the story: "When Bill Gates came to DC offering to match his billions to an equal stake from the government, the most polite way to describe the response is "don't let the screen door hit you on the way back home." Gates, who was investing his own money in TerraPower's collaboration with Chinese state owned enterprises, got the door slammed in his face by Trump's ill-advised trade war with China."8

The 2018 Proceedings article concluded that the development of an SMR industry in the US would require "several hundred billion dollars of direct and indirect subsidies" over the next several decades "since present competitive energy markets will not induce their development and adoption."3

SMR developers are keen to get their hands on taxpayers' money and electricity ratepayers' money ‒ but not so keen to invest their own money. Dan Yurman surveyed the SMR scene in the US in 2015, noting that "three potential customers ran into financial and regulatory headwinds which are no different than for plans to build the 1000MW units."9

  • Babcock & Wilcox had scaled down its spending on mPower (and abandoned the project in 2017 despite receiving US$111 million of government funding). B&W CEO Jim Ferland said that he sees the future of SMRS as "still being up in the air." B&W had no customer, hence its unwillingness to invest more money, the unwillingness of the finance sector to invest, and the unwillingness of the US government to throw good money after bad.
  • First Energy was "nominally" still interested in SMRs, Yurman states. But First Energy subsidiaries, including FirstEnergy Nuclear Operating Company, filed for bankruptcy protection in March 2018.10
  • Westinghouse attempted to develop a 225 MW SMR in partnership with Ameren in Missouri. Westinghouse abandoned its efforts after it missed out on funding from the US Department of Energy.
  • Ameren twice failed twice to win legislative approval for CWIP financing for either a large French EPR reactor or an SMR. CWIP ‒ Construction Work in Progress ‒ is legislation in a handful of US states that allows a utility to charge ratepayers higher rates to cover future costs of a yet-to-be-constructed reactor, even if that reactor is never built. CWIP has always been controversial, all the more so after the collapse of the AP1000 project in South Carolina and the doubling of cost estimates for the two AP1000 reactors still under construction in Georgia.
  • Warren Buffet's MidAmerican Energy tried but failed to secure CWIP funding for an SMR in Iowa … and then gave up on the project.

NuScale was "the sole survivor of the US SMR shakeout", Yurman noted in his 2015 article.9

A November 2018 US Department of Energy (DOE) report states that to make a "meaningful" impact, about US$10 billion of government subsidies would be needed to deploy 6 GW of SMR capacity by 2035.11 (For comparison, about 12.5 GW of new renewable energy capacity was installed in 2017 alone in the US, in addition to 3.5 GW of small-scale solar capacity.12)

The DOE report, prepared for the Department by Kutak Rock and Scully Capital, cites claims by SMR Start that costs of SMR-generated power could be reduced by 22% by milking any and every subsidy that might be made available at local, state and federal levels: Production Tax Credits, credit incentives (loan guarantees), and state and local tax incentives such as sales and use tax exemptions and property tax abatements.

The DOE report promotes the case for SMR subsidies yet it suggests some strong reasons not to bet on SMRs. It notes that the development and construction of SMRs "represents a highly uncertain endeavor" and it further states: "SMRs face significant challenges in commercial deployment, including the need to develop a manufacturing ecosystem for a new technology, significant work remaining to license and develop a working generation facility, and costs which may be high relative to other energy sources in the competitive and quickly evolving power markets."11

Canadian Nuclear Laboratories has set the goal of siting a new demonstration SMR at its Chalk River site by 2026. But serious discussions about paying for a demonstration SMR ‒ let alone a fleet of SMRs ‒ have not yet begun. The Canadian SMR Roadmap website simply states: "Appropriate risk sharing among governments, power utilities and industry will be necessary for SMR demonstration and deployment in Canada."13 The CEO of Terrestrial Energy said in early 2019 that the Canadian government "must … provide financial products which minimize commercial risks", with options including loan guarantees, production tax credits, grants and offtake agreements.14

United Kingdom

Government funding made available in the UK to kick-start an SMR industry is trivial compared to the amount required. In 2018, the UK government agreed to provide £56 million towards the development and licensing of advanced (non-LWR) modular reactor designs and £32 million towards advanced manufacturing research.15,16

Industry sources told the Guardian in 2017 that government funding is relatively small and they are unsure whether it will be enough to make a difference. "It's a pretty half-hearted, incredibly British, not-quite-good-enough approach," one said.17 An energy industry source questioned how credible most of the SMR developers were: "Almost none of them have got more than a back of a fag packet design drawn with a felt tip."17

Andy Dawson, author of a 2018 Global Warming Policy Foundation briefing paper on SMRs18, argues that "three years have been wasted, and the window for a meaningful UK participation in SMR delivery has narrowed almost to the point of closure."19 Dawson suggests several possible reasons: a loss of commitment at ministerial level, loss of Treasury support, civil service inertia and technical incompetence.19

Rolls-Royce missed out on government funding for its SMR design but continues to lobby. Nuclear Energy Insider reported in January 2019 that the Rolls-Royce SMR consortium has asked for over £200 million pounds of UK government funding to develop and license its light-water SMR design.20 In mid-2018, Rolls-Royce scaled back its SMR investment significantly, from several millions to simply paying for "a handful of salaries".21 David Orr, executive vice-president of Rolls-Royce's SMR program, said that without government funding the project "will not fly. We are coming to crunch time."21 

The Guardian reported in October 2018:22

"Backers of mini nuclear power stations have asked for billions of pounds of taxpayers' money to build their first UK projects, according to an official document. … But the nuclear industry's claims that the mini plants would be a cheap option for producing low-carbon power appear to be undermined by the significant sums it has been asking of ministers.

"Some firms have been calling for as much as £3.6bn to fund construction costs, according to a government-commissioned report, released under freedom of information rules. Companies also wanted up to £480m of public money to help steer their reactor designs through the regulatory approval process, which is a cost usually paid by nuclear companies. ...

"David Lowry, a nuclear policy consultant who obtained the document, said: "SMRs are either old, discredited designs repackaged when companies see governments prepared to throw taxpayers' subsidies to support them, or are exotic new technologies, with decades of research needed before they reach commercial maturity.""

The so-called Expert Finance Working Group on Small Nuclear Reactors in the UK laments "the financing sectors potential misunderstanding of nuclear specific risks and how such risks can be mitigated, and that nuclear specific risks aside, nuclear energy projects are no different to any other energy project."23 The finance sector might be in need of education on nuclear-specific risks, but its disinterest in SMRs suggests a clear understanding of the likelihood that they would be uneconomic.


1. Rolls-Royce, 12 Sept 2017, 'British small nuclear plants can deliver low cost, low carbon electricity – report issued today',

2. Nuclear Monitor #840, 21 March 2017, 'U.S. small reactor project just got smaller',

3. M. Granger Morgan, Ahmed Abdulla, Michael J. Ford, and Michael Rath, July 2018 'US nuclear power: The vanishing low-carbon wedge', Proceedings of the National Academy of Science,

4. SMR Start, 14 Feb 2017, 'Policy Statement on U.S. Public-Private Partnerships for Small Modular Reactors',

5. Adrian Cho, 21 Feb 2019, 'Smaller, safer, cheaper: One company aims to reinvent the nuclear reactor and save a warming planet',

6. Dan Yurman, 4 May 2016, 'NuScale announces roadmap for SMR operation at Idaho site by 2024',

7. NuScale, accessed 26 February 2019, 'A cost competitive nuclear option for multiple applications',

8. Dan Yurman, 10 Feb 2019, 'Why are so many firms investing in new uranium fuel projects?',

See also: Steven Mufson, 28 Jan 2019, 'The Energy 202: Bill Gates is selling Washington on the promise of nuclear power',

9. Dan Yurman, 1 March 2015, 'Be careful about rose colored glasses when viewing the future of SMRs',

10. First Energy, 31 March 2018, 'FirstEnergy's Transformation to Fully Regulated Utility Company with Stronger Financials and Customer-Focused Growth Moves Ahead',

11. Kutak Rock and Scully Capital for DOE's Office of Nuclear Energy, Oct 2018, 'Examination of Federal Financial Assistance in the Renewable Energy Market: Implications and Opportunities for Commercial Deployment of Small Modular Reactors', or

12. US Energy Information Administration, 10 Jan 2018, 'Nearly half of utility-scale capacity installed in 2017 came from renewables',


14. Nuclear Energy Insider, 16 Jan 2019, 'Canadian utilities build SMR alliances as developers tackle licensing',

15. Neil Ford, 18 July 2018, 'UK funding spurs advanced reactor R&D but application outlook needed',

16. NucNet, 21 Feb 2019, 'UK Announces Feasibility Studies For Small Modular Reactor Development',

17. Adam Vaughan, 4 Dec 2017, 'UK government to release funding for mini nuclear power stations',

18. Andy Dawson, 2018, 'Small Modular Nuclear: Crushed at birth', Global Warming Policy Foundation,

19. Andy Dawson, 17 Sept 2018, 'Who Killed the Small Modular Reactor Programme?',

20. Nuclear Energy Insider, 30 Jan 2019, 'Rolls-Royce seeks UK SMR funding as market gaps open; NRC delays Seabrook license verdict',

21. NucNet, 23 July 2018, 'Rolls-Royce 'Planning To Shut Down SMR Project Without Government Support',

22. Adam Vaughan, 1 Oct 2018, 'Energy firms demand billions from UK taxpayer for mini reactors',

23. Expert Finance Working Group on Small Nuclear Reactors, March 2018, 'Market framework for financing small nuclear',