Many countries are expanding portfolios of small modular nuclear reactors to ensure energy supply and to meet decarbonisation goals. China will hold a lion’s share of the global pipeline for new builds small nuclear reactors by 2050, according to a new report released by Wood Mackenzie.
Up to 125GW of new nuclear capacity has been proposed globally today as utilities and governments seek to decarbonise power generation using the technology. China accounts for nearly a third of the proposed pipeline, according to the study.
Wood Mackenzie Asia Pacific Head of Markets and Transitions, Prakash Sharma said: “By 2050, the country (China) will account for nearly half of global operational nuclear capacity which is expected to rise 88% from 2020 to hit 685GW under a 2-degree Celsius scenario.”
Despite arguments regarding the cleanliness of nuclear energy over the past years, an increasing number of stakeholders and institutions have reiterated nuclear as a safe, friendly and green energy resource for the environment. Wood Mackenzie states that “small modular nuclear reactors could play a crucial role in meeting Paris Agreement targets.”
With up to $2 trillion required to build new power generation capacity to meet growing demand and net-zero goals, small nuclear reactors could provide a cost-effective and faster energy resource to speed up the energy transition, according to the study.
Moreover, the increase in the electrification of the global economy means rapid increases in energy demand which are also requiring rapid action to meet the demand. Small modular nuclear reactors have the ability to provide utilities with flexible and dispatchable capacity in a timely manner.
Wood Mackenzie recommends a combination of small modular nuclear reactors, hydrogen capacity and carbon capture, utilisation and storage to meet growing energy demand whilst ensuring sustainability.
In addition, the ability of small modular nuclear reactors (SMR) to be sited at different operations enables the intensification of decentralised energy and distributed energy resources business models. This will help utilities avoid the high costs associated with the construction of energy transmission lines.
Sharma, added: “As more fossil fuel-fired power plants are retired around the world, brownfield sites and transmission connections could be repurposed to be used by SMRs. But capex costs must fall 50% to compete with other flexible technologies.”
Barriers to SMR adoption
Government support is required to reduce the levelised cost of electricity (LCOE) for new small modular nuclear reactors which is above $120/MWh. Wood Mackenzie states that with more government support, the LCOE could decline to below $80/MWh in the 2030s. The research firm recommends the Chinese government adopt measures to ensure innovation, success, and cost-reductions of other energy technologies.
Besides the policy environment hindering adoption, SMRs are not popular although the technology has been on the market for some time, according to the report. Sharma, added: “…there are only a handful of them in operation or under construction. Around 70 different SMR concepts in different phases of development are happening around the world currently.
“The challenge is to scale down the number of concepts to realise cost reductions in a highly regulated industry.” Reducing the number of designs that are currently on the market, to come up with a globally recognised design, would help reduce the cost, would scale-up production and ensure the acceptance of the technology by industry stakeholders.
Sharma, reiterated: “SMRs may still be at its infancy, but its potential is endless. They can play a role in producing low-carbon hydrogen, which is a cornerstone of almost all deep decarbonisation scenarios.
“Using our proprietary levelised cost of hydrogen model, we estimate that if power from an SMR could be delivered at US$65/MWh, and paired electrolysers can be run at very high load factors, nuclear-produced hydrogen could compete with green hydrogen.”