The true power of small
modular reactors on theroad to a sustainableenergy future
Unveiling key opportunities
and challenges
March 2024

Contents
Foreword3
Introduction5
1 From promises to real value proposition

82P
 aths towards SMR competitiveness

20

3A
 major deployment is expected fromthe 2030s if certain conditions are met 28
Conclusion41
Contributors422Foreword
As we navigate to a sustainable energy future,small modular reactors (SMRs) emerge as
another potential flexible and reliable low-carbon
solution. There has been a strong momentum in
SMRs in recent years, with several designs andprojects developed globally. Some advancedstage examples are attracting the attention of
the broader industry and investor community
which are looking at demonstrators and first-of-akind to prove SMR technical feasibility, economic
viability and business potential.
With the support of favorable policies andrelevant infrastructure, the first demonstrators
are expected to be commissioned by 2030 at a
US$15k-US$20k/kWe overnight CAPEX.
The cost is expected to decline as the industry
moves from first of a kind (US$8k-US$13k/kWe) to nth of a kind (US$5k-US$7k/kWe).
Modularization, co-siting, learning andstandardization are expected to be the key
drivers to optimize SMR costs in a more efficientand tangible way than for large reactors thanks
to series effect.
We anticipate the first demonstrators to
be commissioned around 2030, with a real
acceleration in deployment starting in the 2040s
with the emergence of Gen. IV, which
can respond to wider applications. Under
realistic and accelerated scenarios, we predict

Issam Taleb
EY Advisory France
Partner, EY-Parthenon France
Strategy and Transactions
France Energy Leader

400-700 SMRs (150MWe unit) to be deployedby 2050 (c.60-100 GWe). In 2050, we predictthat c.50% of SMRs will be deployed for industry(with hydrogen, steel and aluminum as the main
segments), c.40% for the grid and c.10% for
district heating. We also anticipate that in 2050,
c.50% of SMRs will be located in Asia-Pacific,(driven by China), 17% in Europe and 16% inNorth America.
However, certain enabling factors are on
the critical path to ensure the successful
deployment of SMRs, such as government
sponsorship, regulatory capacity, supply chain
consolidation, and Ecosystem coordination.
While the private sector is driving the effort on
research and development, governments are
expected to play a key role in establishing the
ground for favorable policy making, licensing
framework, and providing long-term support
packages to ensure the economic viabilityof SMR investment.
Collaborative approach from industry players
is also required to augment nuclear adoption
by providing the required supply chain support.
Certain other enabling factors are standardizing
the reactor design, obtaining ESG approvals at
the beginning of projects, and streamlining thelicensing regulatory process to ensure the SMRs
development timeline stays on track.

Jeremie Haddad

EY Advisory France
Partner, EY Consulting France
Europe WestPower & Utilities Leader

The true power of small modular reactors on the road to a sustainable energy future | March 2024

Mile Milisavljevic
Principal EY-Parthenon
Strategy and Transactions
Ernst & Young LLP US

3

4

Introduction
The world is transitioning toward lowcarbon energy, phasing down fossil
fuels and shifting to more electric
applications.
While variable renewable energy
plays a pivotal role in thistransformation, the energy mix
transition cannot fully rely on
renewable sources and requires
additional means of balancing supply
and demand for power.
Adding nuclear power capacity tonational grids is critical to ensure
reliable electricity generationand complementary to increasing
penetration of variable renewable
power generation. Moreover,thanks to continuously rising safetybaselines over 60 years, nuclear
is now demonstrably safe andaffordable when delivered at scale(i.e., large reactor fleet deployment
in US, France, Korea and China
between 1970-2010s).
Recent years have seen a resurgenceof nuclear power. During COP28,
recently held in Dubai, nuclear wasa new key player on a flagship eventfor the energy industry, that has
traditionally showcased renewables.

On that occasion, more than 20
countries from four continents signed
a joint declaration to triple nuclear
energy capacity by 2050, recognizing
the critical role of nuclear energy inreaching net zero.
Moreover, in November 2023, theEuropean Commission formallyannounced the creation of an
Industrial Alliance dedicated to SMRs
to accelerate the deployment ofthese technologies and to ensure astrong EU supply chain.
However, for the past 20 years,
nuclear capacity and market share
have flattened, and more units in theOECD have been disconnected fromthe grid than connected.
SMRs represent the industry's
promise of becoming a mainstream
primary energy source.
This report seeks to address thisonce-in-a-generation opportunity forthe nuclear industry to find its groove
and shift back into growth mode.
In this context, can nuclear shakeits "too expensive and too slow"
reputation to make a difference inthe race to a net-zero planet?

The true power of small modular reactors on the road to a sustainable energy future | March 2024

5

What we mean by small
modular reactor (SMR)
and advanced modular
reactor (AMR) or readability, in this report the word SMR refers to both
F
Gen. III/III+ and IV reactors, including SMR and AMR.

What are SMRs?
Small modular reactors (SMRs) are advanced nuclear
reactors that have a power capacity of up to 300 MWe perunit, which is about one-third of the generating capacityof large-scale nuclear power reactors.
SMRs are:• Small – with a power from 2 to 300 MWe;• Modular – making it possible for systems andcomponents to be factory-assembled and transported
as a unit to a location for installation;• Reactors – harnessing nuclear fission to generate heatto produce energy.

Conventional Pressurized Water Reactor(PWR) and SMR designs relative sizes
PWR

17x56 m900 MWe

40m

NuScale²~4,6 x ~23m
60 MWeNUWARD SMR1
15x18 m170 MWe

20m

6For what uses?

What is the status of SMRs?

Small modular reactors are intended to supplement
the nuclear supply in order to participate in the
decarbonization of the economy. Where “large” nuclear
reactors are generally only electrogenerating, that is tosay dedicated to the production of very large quantities
of electricity for the national network, SMRs aim to meet
specific and local needs for heat and /or electricity.
Thanks to their low power, they can more easily be
integrated into small electrical or heat networks, close toindustries and isolated sites.

More than 80 commercial SMR designs are being
developed around the world and some SMRs areoperational in Russia, China and Argentina.

© NUWARD 2023

Globally, SMRs are expected to be deployed from 2030,
while AMRs are anticipated to arrive from 2040.

SMR versus AMR?
• Two types of water reactors exist:• Gen. III: traditional water reactors;• Gen. III+: traditional water reactors withenhanced safety features.
• Small modular reactors can be traditional
water reactors, with lower power ranges
compared to large NPPs;• Advanced Modular Reactors (Gen. IV) bring
together various technologies that aim to
improve the fuel cycle and the safety.

NUWARD digital model, Source: EDF, NUWARD NUWARD, is a French company and an EDF subsidiary, developing a x2
170MWe reactor. Represented: NUWARD metallic enclosure.

1² NuScale is an American company developing a 50-77 MWe SMR.
Represented: NuScale module.

The true power of small modular reactors on the road to a sustainable energy future | March 2024

7

From promises
to real value
proposition
With the increasing electricity needs of the energy transition,
SMRs provide simple, scalable and reliable low-carbon power.
SMRs complement renewables and address several benefits,
such as grid stabilization, cogeneration, reduced land use anddecentralization.
Moreover, SMR design intends to bypass some of the financial,timing, centralization, safety and waste management issues
that hinder the widespread adoption of conventional reactors.
For instance, several Gen. IV and Gen. III+ technologies will
include passive safety features and will use nuclear wastefrom large Nuclear Power Plants (NPP) to close the fuel cycle.

81

While SMRs include both Gen. III/III+ and Gen. IV in thisreport, we distinguish between Gen. III/III+ (also refered as
SMRs), which are miniaturized versions of existing power
plants and are already mature, and Gen. IV (AMRs), whichhold significant technological promises. Gen. IV reactor
types offer various value propositions, including higher heatapplications, enhanced safety, fuel cycle closing but they areat a lower level of technological maturity.
One of the key strengths of SMRs is their versatility,
encompassing both on-grid and off-grid applications. Thanks
to cogeneration, power flexibility and high temperatures,
SMRs can provide power to the grid, district heating,industries and remote areas.
Two main business models will likely emerge from theapplications and client needs. Firstly, a manufacturer model
mainly based on design and licensing (which can also include
component manufacturing and NPP construction), similar
to large NPP, and adapted to grid application. Second, an“energy-as-a-service” model, providing turnkey solutions to
final client and more adapted for off-grid applications.
Finally, SMRs are gaining momentum, with over 80 projects
underway worldwide. However, it is important to acknowledge
that despite the excitement surrounding SMRs, only a few
projects are at an advanced stage and the economic modeland feasibility of this market is still to be proven.

With the increasing electricity needs ofthe energy transition, SMRs provide simple,
scalable and reliable low-carbon powerBaseload capacity
Supporting growing
electricity demand
will require nuclear,
and at the UN’s
COP28 climate change
summit, GE Hitachi
and other leaders
signed the Net Zero
Nuclear Industry
Pledge which commits
to a goal of at least
tripling nuclear
capacity by 2050.
Brad Hartnett
Strategic Marketing Leader,
GE Hitachi Nuclear Energy

SMRs offer a high amount of reliable, carbon-free baseload
power as a substitution of phasing out fossil sources in acontext of electrifying uses.

Grid stabilization
Variable renewable sources need to be backed by enhanced
stability of electricity grids through flexible operation or load
following.

Cogeneration
SMRs allow for cogeneration of heat and electricity andaddress growing electricity demand for off-grid applications.

Land use
Nuclear has the lowest median land-use intensity at 7.1 ha/
TWh/year. In comparison, solar PV has a 2,000 ha/TWh/year
land-use intensity.

Decentralization
SMRs are an affordable option to 2-300 MWe or even lessusers and are available for more diverse applications thanhistorical NPPs, including remote locations.

The true power of small modular reactors on the road to a sustainable energy future | March 2024

9

SMR design is intended to bypass some of the financial, timing,
centralization, safety and waste management issues that hinder
the widespread adoption of conventional reactors
Large NPP1
challenges

Benefits from SMR featurescompared to conventional reactors

Simple design andstandardization• Standardized designs and mass production
reduce costs through efficient learning rates anddelivery of nearly identical components in the
project value chain.

Modularization• SMRs are designed in large modules to be built
and tested in a plant and integrated on-site
shortening schedule and reducing the risk of
construction delays.

Co-siting• Constructing multiple SMRs in the same NPP
optimizes construction and facility utilization,
spreading investments and operating costs.

Network
integration• Smaller reactors can enable faster installation
and replacement thanks to lower workrequirements (construction schedule is reduced
to 3 to 4 years versus 10 years for a large NPP1).

Gen. IV

Size

Gen. III/III+

Cost andConstruction
time• Distributed generation reduces transmission
losses, provides flexible production, and meetsdiverse electricity and heat needs near endusers.

Integrated design• Integrated designs limit flows, junctions, andleaks with smaller size improving the surface/volume ratio for controlling fission energy.

Passive safety• Passive safety features for automatic shutdown
are included in molten salt and some fast neutron
reactors.

Fuel cycle closing• Use of nuclear waste from large NPPs andother SMRs allows to close the fuel cycle in fastneutrons reactors.

Nuclear safety

Nuclearwaste

1

Nuclear Power Plant.

Source: IAEA - Advances in SMR Technology Developments 2022, NEA - The NEA SMR Dashboard 2023, Expert interviews, Desk research, EY-Parthenon analysis.

10

Molten salt technology ensurespassive reactor safety throughgeometric construction, and fastneutrons allow part of existing
nuclear spent fuel to be reused as
fuel.

Gen. IV technologies, particularly
HTGRs, can produce - with intrinsic
safety properties - heat under or above
500°C to meet the needs of heavy
industries consuming steam and heat,
which are difficult to decarbonize.

Jean-Luc Alexandre

Antoine Guyot

CEO, NAAREA

CEO, Jimmy

Thorizon modular core
design leverages on fluid
characteristics to implement
passive safety.
Laure Claquin
COO and Director France, Thorizon

One key feature of SMRs is a lower
CAPEX per unit compared to large
nuclear, which reduces the balance
sheet risk for investors, especially inregions where large nuclear sufferedfrom massive cost and schedule
overruns.
Brad Hartnett
Strategic Marketing Leader, GE Hitachi Nuclear Energy

newcleo’s Lead Fast Reactor offering is
unique: our design and intrinsic safety
features mean our reactors could besited in a wider range of locations thanother technologies. Our use of recycled
spent fuel will not only reduce theclimate footprint of our own operations,
it will also effectively close the fuel cycle
and reduce the stock of long lived waste.
Finally, the simplicity of our technology
means our reactors will be highly costcompetitive.
Stefano Buono
CEO, newcleo

The true power of small modular reactors on the road to a sustainable energy future | March 202411

Gen. III/III+ SMRs are miniaturized existing nuclear power
plants, Gen. IV AMRs present technological promises

Main disadvantage

Main advantage
Illustrative examples

Gen. III/III+ SMR

Water-cooled• Historical design of nuclear power
plants, using uranium to produce
steam for the turbine in separate
steam generators.

High Temperature Gas-cooled
Reactor (HTGR)

Gen. IV – Advanced Reactors AMR• Uses helium or alternative gas likenitrogen. as coolant with fissile
material surrounded by threeceramic layers.

Molten-salt1• A self-regulating critical geometry
uses an enriched molten salt
mixture as coolant and fuel togenerate heat.

Liquid metal(Fast neutron spectrum1,2)• Uses fast neutrons capableof carrying more energy thanconventional thermal neutrons,
without neutron moderator.
Sources: World Nuclear Association, Idaho National Laboratory

1

Molten salt and fast neutron technologies can be combined in the same reactor.

² Some fast neutron spectrum technologies can also provide increased safety, like LFR (Lead-cooled Fast Reactor).

12

Differentiating factors

Maturity

Thermalrange

IncreasedsafetyUse ofwaste fuel• Most mature technology that can initiate a decentralized
production system with electricity and heat uses close toindustries.
• Heat applications: Low temperature heat (<300°C) for
district heating, desalination, low temperature electrolysis,etc.

• Technology for generating high-temperature heat to meethigh industrial requirements.
• Heat applications: Very high temperature (<1,000°C) for
petrochemical, coal gasification, steam electrolysis, steam
methane reforming, thermochemical processes, steel, etc.

• Technology for implementing passive safety, used at
atmospheric pressure and with lower water needed.
• Some molten salt reactors can fall in the fast neutron
category, allowing to use nuclear waste from large NPP andother SMR to close the fuel cycle.
• Heat applications: High temperature (<800°C) for somepetrochemical products, hydrogen production, refining, etc.

• Technology allowing the use of nuclear waste from large NPP
and other SMR to close the fuel cycle.
• Lead and sodium-cooled reactors can be operated atpressure levels close to atmospheric.
• Heat applications: Medium temperature (<600°C)‡for methanol, petroleum refining, etc.

Sources: IAEA - Advances in SMR Technology Developments 2022, NEA - The NEA SMR Dashboard 2023, Expert interviews, Desk research, EY-Parthenon analysis.

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SMRs provide several on-grid and off-grid usage areas
thanks to cogeneration (heat/electricity), different ranges ofpower (from 2 to 300 MWe) and high temperature
SMRs
Heat

TurbineandGenerator

Electricity

Grid(incl. remote areas)

HydrogenChemicals

Steel

Desalinationand other(cement, pulp and paper, glass and ceramics, mobility, etc.)

Districtheating

Description• Grid: SMRs have the potential to enhance grid reliability
and contribute to the resilience of integrated energy
systems. SMRs can also provide power to remote areas
with limited grid capacity. SMRs address a particularneed in smaller countries, where large reactors are lesssensible due to grid size and government budget;• District heating: SMRs can be one of the solutions
to decarbonize this segment and provide heat at
temperature between 160°C and 250°C;• Hydrogen: SMRs can power water electrolysis forgreen hydrogen production. It is estimated that 65%
of hydrogen in 2050 will be produced through waterelectrolysis. Hydrogen will be used to decarbonize
many sectors such as chemicals, steel and mobility;

1

Basic oxygen. Furnace.

² Direct Reduced Iron – Electrical Arc Furnace.

14• Steel: With the evolution of BOF1 production process
to DRI-EAF2, the demand of electricity will significantly
increase in this industry and SMRs can provide theelectrical and 0-500°C heat needs;• Desalination: SMRs can address the heat/electricalneeds of the two production processes for desalination(reverse osmose and distillation);• Cement, glass and ceramics: These segments require
high temperature (>1,000°C). SMRs can address theelectrical needs and the heat needs in the 0-500°C
range;• Pulp and paper: SMRs can provide the necessary heatand electricity to replace gas and other fossil fuels in
the production process.

Two main business models will likely emerge
from the applications and clients needs

Business model

Value chain positioning

1
Manufacturer

Designand R&D

Manufacturing

NPP construction

O&M

Fuel

Decom.

Energyselling• Same business model as for existing large nuclear reactors;• Selling SMR design, which may or may not include components manufacturing and NPP
construction, to an operator selling energy;• Revenue comes from the sale of the reactors (one-off sale followed by potential maintenance);• Prevalent model for grid application.
2
Energyas a service

Designand R&D

Manufacturing

NPP construction

O&M

Fuel

Decom.

Energyselling• Providers and vendors of turnkey solutions to final energy consumer – design the reactor,
operate and maintain it, with or without components manufacturing and plant construction,
to direct energy sale;• Selling energy as-a-service (electricity or heat);• Prevalent model for industrial applications.
CoveredPotentially covered

Traditional players versus new entrants
SMR industry requires a fundamental unpacking of the
traditional Owner-Operator/Vendor role and relationship.
Emerging SMR deployment models indicate a multitude of
key players from the development phase of any project:designer, regulator, site owner, manufacturer, builder,
operator and off-taker.

New players aim to address a wider range of applications,
including heat, by reusing as many already lab-proventechnologies as possible.

Established companies with existing nuclear footprint
benefit from their network and know-how along the value
chain, relying mainly on the large-scale NPP designs they
have already developed to reach the market more quickly.

The true power of small modular reactors on the road to a sustainable energy future | March 202415

NAAREA aims to decarbonize theindustry by offering a combined heatand electricity Energy-as-a-service
model, with an integrated vision of thevalue chain.
Jean-Luc Alexandre
CEO, NAAREA

There is a big difference in timeto-market between Gen. III SMRs
and Gen. IV SMRs (also calledAMRs) because of licensing, fuel andtechnological maturity.
Renaud Crassous
Executive President, NUWARD

We see technology and business model
as a whole as we aim at making molten
salt reactors competitive, which implies
specific decisions on design and power
output.
Kiki Lauwers
CEO, Thorizon

16

SMR projects are already widely spread across theglobe although the stages of the projects differ
Countries/regions with SMR’s projects

Russia (17)Canada (5)Sweden (1)Denmark (2)UK (4)
France (9)Switzerland (1)US (21)Finland (1)Netherlands (1)Czech Republic (2)Japan1 (6)Italy (1)
Saudi Arabia (1)South Korea (3)China (10)Indonesia (1)South Africa (4)Argentina (1)Global number of small modular reactor projects
by status of development, 2023
>300MWe
100MWe<C<300MWe
25MWe<C<100MWe<25MWeBasic and detailed
design

21

25

30

3

79

Under
construction 2 2 2 1 7In
operation 2 11 4

1 Although SMR projects exist in Japan, building new nuclear power plants in new sites may be challenging as political priority is lifetime extension of existing plants.
Regarding next generation plants, the Japanese government gives priority to fast reactors and high temperature gas reactors, prioritizing alliance and collaboration with
manufacturers from other countries.
Source: IAEA 2022; IHS Markit Global Clean Energy. Technology, November 2021, EY-Parthenon analysis.

The true power of small modular reactors on the road to a sustainable energy future | March 202417

We have identified 20+ projects in different
continents, responding to different use caseswith varying technologies and maturities
Technology

ThermalProjects

Companies

Country

powerGen. III/III+(MWth)

Water-cooled HTGR Molten salt Fast neut.1

ACP100

CNNC

China

c.400

VOYGR

NuScaleUnited States

c.200

CAREM

CNEA

Argentinac.100

Rolls-Royce SMR

Rolls-Royce and Part.

United Kingdom

c.1,300

BWRX-300

GE Hitachi

United Statesc.900

ACPR50S

CGNPC

China

c.200

NUWARD SMR

NUWARD (EDF Group)Francec.540

LDR-50 Heating Plant Steady Energy

Finland

c.50

AP300

Westinghouse

United Statesc.900

SMR-160

Holtec International

United Statesc.500

HTTR-307

JAEA

Japan

c.30

Jimmy

Jimmy Energy

Francec.20

Xe-100

X-Energy

United Statesc.200

HTR-PM

INET, Tsinghua Univ.

China

c.250

KP-FHR

Kairos Power

United Statesc.320

Natrium

TerraPower, GE Hitachi

United States

c.840

SSR-W

Moltex Energy

Canada

c.750

XAMR

NAAREA

Francec.80

Thorizon One

ThorizonFrance andHexanaHexanaFrancec.400

LFR-AS-200

newcleo8

Italy

c.500

ARC-100

ARC Nuclear Canada

Canadac.300

Current status or technical choice
Main target
Secondary target or use case partially covered

18

Netherlands

Gen. IV

c.250

Sources: IAEA, NEA - The NEA SMR Dashboard 2023,
Expert interviews, Desk research, EY-Parthenon
analysis.

We joined forces with NAAREA in some areas of shared interestto accelerate the development of our respective technologies, toavoid any duplication of work and to provide a more unified voice
for the sector.
Stefano Buono
CEO, newcleo
Use cases
Elec.
for the grid

Geography

Heat used for industries (including cogen.)depending on temperature level :<200°C2]200–500]°C

3

USAEuropeChina>500°C

4

Maturity
RoW5

Basic/
detailed
designUndermanufacturing
or construction6

In
operation

Fast Neutron Spectrum.
District heating, Seawater desalination, Hydrogen low temperature electrolysis.
3
Pulp and paper manufacturing, Methanol production, Heavy oil desulfurization, Petroleum refining.
4
Hydrogen (steam methane reforming, thermochemical), Coal gasification, Blast furnace steel making.
5
Rest of the world.
6
Manufacturing covers components or systems. Construction covers site choice, qualification and construction permit, in addition to actual, on-site, works.
8 newcleo and NAAREA announced the creation of a Strategic and Industrial Partnership in January 2024: Press release.
7
Test Reactor, not for commercial use.
1
2

The true power of small modular reactors on the road to a sustainable energy future | March 2024

19

20

2

Paths towards SMR
competitivenessOn average, SMRs construction should take 8-9 years for
the FOAK1 until the connection to the grid and 4 years
for a NOAK2 in theory, driven by a strong series effectcompared to large scale reactors. Regulatory and licensing
support, adequate supply chain and social acceptance are
key to drive faster development of SMRs.
To achieve mass adoption of new technologies, costcompetitiveness is key. The first SMRs built will bedemonstrators costing US$15k-US$20k/kWe overnight
CAPEX. Industrialized FOAK cost is expected to decline by
20%-40% and then the NOAK even more by 30%-50% toreach US$8k-US$7k/kWe.
Modularization, co-siting, learning and standardization
are key aspects to bring the costs down.
Modularization alone can reduce costs by 15%-30%
as modules are mass-produced in off-site factories
and assembled on-site to reduce costs and save time.
Multi-module siting at the same site can enable local
specificities to be mutualized, resulting in cost savingsof 10%-15%. Learning can increase efficiency across thevalue chain and standardisation allows to deliver (nearly)
identical integrated products.

“Nth”-of-a-kind SMR units are therefore expected to becompetitive with other clean technologies in the nearterm. SMRs have additional benefits of concentrated
siting and clustering (e.g., lower land use, reuse ofexisting transmission infrastructure), which create
economic value. They can also generate additional
revenue streams such as industrial steam, district
heating, DAC3, H2 production and desalination in addition
to electricity generation.
Additional levers such as investment into R&D andlicensing can potentially reduce cost and LCOE4.
Because of high costs and the risks associated to firstof-a-kind projects, access to capital is key. Once enough
SMRs will have been developed, they will be less risky andwill be able to benefit from advantageous financing. Gen.
IV projects will make it possible to reuse used fuel and canlead to lower fuel costs.
However, SMRs technology may negatively impact somecost inductors such as grid connections and operations.
Indeed, if SMRs are dispatched on various territories,
diffuse grid connection upgrades may be required.
Similarly, dispersing operations across the country lead toincreased staffing costs and need for coordination.

¹ First-of-a-kind.
² Nth-of-a-kind.
³ Direct Air Capture.
⁴ Levelized Cost of Energy.

The true power of small modular reactors on the road to a sustainable energy future | March 202421

On average, it should take 8-9 years to connect a FOAK
and 4 years for a NOAK
Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8Year 9Phase 1 – Digital twin
Preliminary safety analysis
Conceptual and prelim.
designDigital twin
construction
Digital simulations

Phase 2 – Demonstrator
Safety and licensing
Detailed design and engineering
Dry tests in laboratories
Prototype construction
Trial run and feedback

Phase 3 – FOAK
Safety and licensing
Industrial design and engineering
Vendors sourcing, configuration and supply chain
Pre-series 1.0 industrial
construction
Testing and commissioning

Phase 4 – NOAK
Plant industrial design series

22Historically the nuclear industry aimed
at increasing plants size to reduce costs.
Therefore, the key challenge for SMR
is to compensate smaller size with infactory manufacturing, lower risk andnew applications.
Paul Gauthé
CTO and cofounder, HEXANA

Gen. IV reactors - such as our modular
molten salt reactor intended to work as
a waste burner - are key in the energy
transition challenge. Therefore, theyshould become a reality as soon as
possible.
Kiki Lauwers
CEO, Thorizon

The key success factor for SMRs is tobuild trust with a FOAK that has theright specs delivered on schedule andon budget.

Our reactor is built on well-understood,
well-established, PWR technology already operating safely in hundredsof reactors around the world. Where
we’re innovating is in the delivery ofthat technology at scale to enable a
predictable, repeatable product.

Brad Hartnett

Sam Hounslow

Strategic Marketing Leader, GE Hitachi Nuclear Energy

Commercial Director, Rolls-Royce SMR Ltd

The true power of small modular reactors on the road to a sustainable energy future | March 2024

23

The first SMRs to be built will be demonstrators with a cost around
US$15k-US$20k/kWe, real industrialized FOAK2 will be able to reacha 20%-40% cost reduction, and NOAK3 a further 30%-50% drop in costthrough modularization, co-siting, learning and standardization
SMR potential cost reduction breakdown(US$/kWe, %)1

15-20kBased on manufacturers’ announcements, readjusted
from early SMR feedback, recent costs observed on large NPP FOAKs,
and recent research.

20-40%

8-13k

15-30%
10-15%

Demonstrator

1

5-10%

FOAK2

5-7k

NOAK3

First industrialization

Implementing industry best practices and using NPP
subcontractors skills will help reduce costs after the demonstrator.

Modularization

Modules are mass-produced at off-site factories and assembled
on-site to reduce costs and build time.

Co-sitingMulti-modules systems located at the same site enable local
specificities to be mutualized.

Learning

Manufaturer, contractor and owner learnings increase efficiency
within a strong value chain.

Standardization

Standard design and conception allow for the delivery of (nearly)
integrated products.

2

3

4

5

1

Based on selected projects including GEHitachi, NuScale, Rolls Royce, Holtec, Westinghouse, NUWARD etc.

2

First-of-a-kind.

3

Nth-of-a-kind.

Sources: Carried out by researchers from University of Cambridge, Technische Universität Berlin, German Institutefor Economic Research, CopenhaGen.Business School, University of Mannheim etc., IAEA, NEA - The NEA SMR
Dashboard 2023, Expert interviews, Desk research, EY-Parthenon analysis.

24

0-5%

Focus on FOAK to NOAK breakdown
Modularization• Modules are mass-produced in off-site factories and assembled on-site to
reduce costs and build time;• More compact factory/manufacturing facilitates the scaling effect;• Module size is to be tailored to the logistical / transport standards of eachcountry;• Automation and advanced manufacturing techniques1 can be implemented
in off-site factories.

Co-siting• Multi-modules systems located at the same site enable to:• Address site-specific characteristics once for all the modules(e.g., ground / seismic studies etc.);• Mutualize authorizations and public acceptance processes;• Share facilities, equipment and staff during both construction
and operation phases.

Learning• Manufacturer, contractor and owner learning increases efficiency within astrong value chain;• Global supplier development includes learning by doing and joint innovation
programs;• Logistical refinement and time coordination to anticipate delays;• Advanced EPC contractor development and management tools to reduce
construction time.

Standardization• Standard design and conception allow to deliver (nearly) identical integrated
products reducing construction risk and uncertainty;• Standard building blocks allow to share parts and makes qualification easier;• Reduced need to adapt to local site conditions and simplified design;• Manufacturer scale-up for expanded future orders;• Strengthened and operational supply chain.

1Including: electron beam welding, diode laser cladding, powder-metallurgy hot isostatic pressing and additive
manufacturing.

Source: NEA – Projected Costs of Generating Electricity (2020) and Lloyd (2019), Huntington Ingalls Industries(2017), OECD, Idaho National Laboratory, EY-Parthenon analysis.

The true power of small modular reactors on the road to a sustainable energy future | March 2024

25

Design decisions must be pragmaticand based on off-the-shelf materials
and components as much as possible tooptimize licensing time and reduce time
to market.
Laure Claquin
COO and Director France, Thorizon

Several factors help Steady Energy to
be competitive: Gen. III technology ismature, the reactor generates heat only
so no turbine is needed and the reactor
is built underground so no protective
dome is needed.
Tommy Nyman
CEO, Steady Energy

Cost reduction target from FOAK to
NOAK is -30%, which is made hard
to reach by heterogeneous licensing
requirements from one country toanother.
Renaud Crassous
Executive President, NUWARD

Jimmy’s approach is to use as many
existing, validated and with an existing
industrial chain components as
possible, to offer an operational andcompetitive system that can be brought
to market quickly.
Antoine Guyot
CEO, Jimmy

26

Additional levers can have an impact on SMR costover the long-term depending on how they will be
implemented
Additional cost evolution levers and rationale
Potential impact
on costs

Grid connection• As SMR will be dispatched to various territories, grid connection upgrades will be required.
• When SMRs replace thermal power plants, existing transmission infrastructure can be reused
without extra investment.

R&D and Licensing• As SMR technologies are less mature than Large-scale NPP, significant R&D and licensing costs are
required, especially for Gen. IV, but also for Gen. III/III+.
• The greater the number of units produced, the more these costs can be spread out.

Manufacturing• Dedicated factories will have to be built to manufacture these parts, which will also entail
construction costs.
• Thanks to the above-mentioned levers, a greater proportion of SMR components can be
manufactured in factories and will therefore require less time to produce.

Financing• Initial projects will be pioneering, involving substantial risk and subsequently facing higher debt andequity financing costs.
• Once a sufficient number of SMRs will have been developed, they will be less risky and will be able tobenefit from advantageous financing (debt and equity).

Operations• SMRs are expected to have higher operating costs than large reactors, as a significant portion of thestaffing costs is fixed, irrespective of the power output. Operations will be more dispersed across thecountry, requiring greater coordination.
• Number of FTEs required to operate SMRs varies widely and depends on project specifications,
ranging from 200 FTEs/SMR on-site for some Gen. III to 0 on-site for some Gen. IV projects.

Fuel• Reuse of spent fuel allowed by Gen. IV reactors may impact fuel cost. To date, this impact is unknown
as plutonium market does not exist. Increased toxicity and radioactivity of plutonium compared touranium may drive cost up whereas pricing the waste processing service offered by such reactors
may drive (net) cost down.
Decrease potential costs

The true power of small modular reactors on the road to a sustainable energy future | March 2024

Unknown

Increase potential costs

27

28

3

A major deployment is expectedfrom the 2030s if certain
conditions are met
Small modular reactors worldwide market
As energy transition gains momentum, the share of
nuclear energy is expected to double in the energy mix by
2050, if the IEA scenarios materialize.
EY-Parthenon anticipates the first demonstrators beingcommissioned around 2030, with a real accelerationin deployment from the 2040s with the emergence ofGen. IV, which can respond to wider applications. Under
realistic and accelerated scenarios, EY-Parthenon predicts
400-700 SMRs to be deployed by 2050 (c.60-100 GWe).
c.40% of SMRs capacity will be deployed for energy
supply to the grid, followed by hydrogen (17%), steel andaluminium (14%), and district heating (11%). Until 2040,
lower-temperature heat applications such as district
heating, desalination, pulp and paper industries will
be preferred. However, with the emergence of Gen. IV,
new uses will emerge, particularly in cement, glass andceramics.
Key regions for SMRs would be Asia-Pacific (c.50%) driven
by China, followed by Europe (17%) and North America(16%) respectively.
The overnight capital cost of a 150MWe SMR is expected
to decline from c.US$1.7b in 2030 to c.US$0.75b in
2050 without inflation.

However, successful deployment of SMRs relies on
several enabling factors, including regulatory mandates
and capacity, industry participation, and government
orchestration. The governments will play a key role
not only in establishing regulations and roadmaps toaugment nuclear adoption but also providing funding for
initial projects that have high costs and complexity. The
industry needs to move from a siloed structure to a morecollaborative approach to ensure adequate manufacturing
capacity and fuel supply. Implementing robust safetymechanisms, community engagement, skilled labor, andeffective waste disposal is also needed.
Few countries have implemented solutions to ensure
the deployment of SMRs, such as covering a percentage
of construction costs at and above the projected costs.
Governments can provide subsidy amounts per kW thatcan ramp down on each successive deployment similarly
to recent supporting policies to renewables.
To provide price stability, the government can sign anofftake contract for some or all of the generation from anorder book.
Other enabling factors could be standardizing the reactor
design, obtaining ESG approvals at the beginning of
projects, and streamlining the licensing regulatory process
to ensure the SMRs development timeline stays on track.

The true power of small modular reactors on the road to a sustainable energy future | March 2024

29

SMRs, real game changers, areof worldwide interest, as theircharacteristics meet needs other thanthose of high-power reactors.
Their versatility will enable the industry
to position itself for export in a wide
range of markets.
Marie-Delphine Louveau"Club France Réacteurs Innovants" leader, GIFEN,
French Nuclear Industry Association

Nuward is developing the first SMR
plant in France with EDF, discussing inparallel export projects with potential
customers.
Renaud Crassous
Executive President, NUWARD

30

A promising market potential
if IEA scenarios materialize
Global energy supply and mix, 2022-50
in EJ (exajoule)1

623

632
1%

4%
5%

609
1%

1%
2%

7%

5%
4%
3%
6%
12%

23%

630

610
1%

1%
8%

12%

6%

17%

3%

8%

8%

4%

10%

9%

4%

14%
21%

Other
Solar
Wind
Hydro
Nuclear
Bioenergy
Natural gas
Coal
Oil

1%

10%
16%

19%
27%

17%
17%

20%
14%

15%
12%

9%
30%

2022

28%

2030

25%

2035

22%

2040

18%

 Projections of the supply and energy mix refer to an
average of the Stated Policies Scenario, Announced
Pledges Scenario and Net Zero Emissions from the
IEA

1

2050

• IEA predicts a significant energy mix shift from fossil fuels (oil, coal, gas) to low-carbon
sources (renewables and nuclear) in only 25 years.
• All scenarios are expected nuclear to play a key role in the energy transition with a planned
doubling in the energy mix between today and 2050 (5% to 10% of global energy supply).
A tripling scenario from 5% to 14% is even planned in the Net Zero Emissions scenario.
• In this context, what share of new nuclear construction could SMRs potentially capture?
• In the next pages, EY-Parthenon presents its market size estimation until 2050. It is basedon research, IEA scenarios and expert feedbacks. EY-Parthenon has determined SMRs
penetration rate on new nuclear construction until 2050 and allocated it by application andgeography.

The true power of small modular reactors on the road to a sustainable energy future | March 2024

31

Estimated market size in number of SMRs
(150MWe unit) and in capacity (GWe)
Cumulated number of SMRs built, 2030-50(150 MWe units)c.700

Accelerated scenario
Realistic scenario

c.550

c.425
c.400

c.325

c.350

c.250
c.275

c.175

c.10
c.5

c.50

c.80

c.25
c.15 c.30 c.50

c.125

c.225
c.175

c.125
c.75

2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050

SMR installed base capacity, 2030-50(in GWe)

c.1

c.2

c.3

• The SMR installed base would
represent c.1 GWe in 2030, c.1525 GWe in 2040 and c.60-100
GWe in 2050.

c.100

c.60
c.50

c.10 c.20
c.5• EY-Parthenon forecasts a
cumulated base of c.125-175
SMRs in 2040 and c.400-700 in
2050;

c.80

Accelerated scenario
Realistic scenarioc.3• EY-Parthenon anticipates thefirst demonstrators beingcommissioned around 2030, witha real acceleration in deployment
from the 2040s onwards with the
emergence of Gen. IV, which can
respond to wider applications;

c.5

c.10

c.25
c.15

c.60

c.35

c.25

c.30

c.40

c.50

c.1
2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050

• This estimation comes with caveats. The outlook for nuclear is uncertain and subject to unpredictable
political decisions.
• For instance, the support of governments on the projects and the capacity to industrialize the production will
impact the SMR market significantly.
• EY-Parthenon has worked on two complementary scenarios: an accelerated scenario and a more realistic
scenario based on different penetration rates. These two scenarios are, however, based on the condition thatthe challenges to deployment have been overcome (financing, industrialization, etc.).

32

The most mature demand for SMRs
comes from energy companies forelectricity production, especially fromexisting nuclear operators.
Renaud Crassous
Executive President, NUWARD

The true power of small modular reactors on the road to a sustainable energy future | March 2024

33

SMRs will be a key part of tomorrow’s energy landscape,meeting electricity and heating needs

EY-Parthenon estimates that 50% of SMRs will be
dedicated to the grid and district heating and 50%
for the industry in 2050:• The energy supply to the grid segment is the mostimportant and will represent around 40% of SMRs
capacity installed worldwide in 2050.
• In the industry, the most promising segments arehydrogen (massive electricity needs with the growing
use of hydrogen in industry in particular) and steel andaluminum (mainly addressed for its electricity needs inarc furnaces and in the aluminum electrolysis process)The promise of SMRs to provide low-carbon heat is
confronted with the electrification of industry (e.g.,desalination, steel). At least 75% of the energy producedby SMRs is expected to be electricity.
Until 2040, lower-temperature heat applications will be
preferred for district heating, desalination (by distillation)and the pulp and paper segment. With the emergence ofGen. IV, which will be able to reach higher temperatures(>300°C), new uses will emerge, particularly in cement,
glass and ceramics.

Number of SMRs built allocatedby application in 2050
5%
4%
5%
6%
11%
14%
17%

39%

Other1
Pulp and Paper
Desalination
Cement, glass and ceramics
	District heating
Steel and Aluminium
Hydrogen
Grid2

39%
50%

Grid
	District heating
Industry11% Other includes other applications like food, textile, data center segments and other industrial usages.

1 Grid includes all grid application excluding the other segments (Hydrogen, Steel and Aluminum, Cement, glass and ceramics, Pulp and Paper,

2

Desalination, Other).

34

Large heavy industry players
want to buy energy, not reactors.
Paul Gauthé
CTO and cofounder, HEXANA

In 2050, c.50% of built SMRs are expected to be locatedin Asia-Pacific compared to 17% for Europe and 16% forNorth America;• Rest of the world (CIS, Latin America, Middle-East andAfrica) will account for c.20%;• Asia-Pacific will be driven by China as the country
stands at the forefront of nuclear energy with somealready operational SMRs. China faces a strong
challenge to decarbonize its industry and has identified
SMRs as one of the solutions;• In North America, the USA and Canada are investingheavily in SMRs and significantly increasing the numberof projects;• In Europe, France and the UK have solid SMRs projects,
while Eastern Europe is very interested in purchasing
this technology.

Number of SMRs built allocatedby geography in 2050

3%
5%
9%
16%
17%

48%

2%

AfricaLatin America
Middle-East
CIS	North America
EuropeAsia-Pacific

Jimmy's business model is to offer its
customers a turnkey heat supply
contract, from financing to generator
dismantling, with a competitive supplyof carbon-free heat at an unchanged
price for 20 years.
Antoine Guyot
CEO, Jimmy

The true power of small modular reactors on the road to a sustainable energy future | March 2024

35

SMR market is estimated at c.US$50-90b per year
in 2050 for capital expenditure in new build andc.US$20-30b for services including O&M and FuelAnnual SMRs market value 2030-50(US$b – inc.inflation at 2%)
Accelerated scenario

Realistic scenario
c.700

c.400

c.350
c.250

c.90
c.175

c.30
c.10

c.1

2030

c.60

c.2
2035

c.65

c.125

c.50
c.30
c.5
2040

c.1

c.15
2045

2050

c.5
2030

c.20 c.40
c.2
2035

c.30
c.5
2040

SMR power plant and equipment market - Build
SMR services market (O&M and Fuel) - Run
Number or SMRs (150MWe unit)

Assumptions:• An average SMR size of 150MWe is assumed;• Overnight capital costs of a 150 MWe
SMR are expected to be c.US$1.7b in 2030
(c.US$12k /kWe) and c.US$0.75b in 2050
(c.US$5k /kWe) without inflation;• Assuming 2% inflation, this leads toc.US$2.0b in 2030 (c.US$13k /kWe)and US$1.3b in 2050 (c.US$9k /kWe);

36

c.50

c.40

• Services costs are assumed to be close tocurrent large NPP projects at c.US$180/kWe
per year, only following 2% inflation.
This gives US$30m/year per 150MWe SMR
in 2030 and US$45m/year per 150MWe
SMR in 2050.

c.10
2045

c.20
2050

Like all SMR developers, success in the UK will
depend on government sponsorship and support, andthe prioritizing and enabling of nuclear development,
through a “whole of government” approach.
Stefano Buono
CEO, newcleo

In terms of both financing andharmonized licensing, there is a politicalchallenge at European level to facilitate
the emergence of SMRs.
Sophie Rouzaud
Head of Financial and Strategic Analysis, Nuclear Valley

The true power of small modular reactors on the road to a sustainable energy future | March 202437

To deploy from FOAK to NOAK,
SMRs have challenges to overcome
2023 Nuscale setback in Utah highlights that even if SMR can lower
construction cost and risk, it remains nuclear technology, with long anduncertain development cycles. It therefore requires strong and stablecommitment from all the key stakeholders over the long-term to be successful
and overcome its intrinsic challenges.

1 Government sponsorship 2 Regulatory capacity• Government sponsorship must be broad, holistic andresourced/funded on a multi-year/programmatic basis
in order to plug resource gaps as needed, from FOAK to
NOAK deployment with simultaneous support to Gen.
III and Gen. IV.
• It is important this support/public mandate transcends
electoral cycles in order to allow the industry tomature independently of political interference.
• Equally, exceptionally robust governance/oversight bygovernment is required in deliver to assure value formoney and public trust over the long term.

• National regulatory mandates and resources need
to be expanded with a bias to enabling new, non-LWR
and non-mature designs and accelerate licensing/permitting to facilitate the supply chain.
• Regulators need to be encouraged/incentivized tocooperate internationally, for example through theestablishment of international regulatory bodies that
could support development of national standards,
methodologies, etc.

3 Supply chain consolidation 4 Ecosystem coordination• Industrial participation must be demonstrated andencouraged in order to raise confidence levels acrosstechnology design, manufacturing, constructability
and operability.
• The labor gap across manufacturing, construction,and operations needs to be closed.
• Nuclear fuel cycle has to be secured.
• Compliance with regulation and safety standards
throughout the supply chain has to be ensured.

38• Technology designers and their partners mustbuild organizations capable of engaging in efficientregulatory and licensing activities, and demonstratecapacity to sustain licensing programs over the longterm. This includes running cross-country licensing
programs, similarly to NUWARD's Joint Early Review inEurope.
• Value proposition for the partners needs to be defined:
off-take guarantees, financing, governance and risk
management.

The industry, governments andregulators now need to coordinate theirefforts to allow long-term partnerships,
give visibility to the stakeholders andtherefore enable them to commit on
ambitious, yet realistic, targets.
Marie-Delphine Louveau

newcleo aims to play a key role inall parts of the SMR value chain andwe have adopted an M&A strategy tosupport our vertical integration and thecreation of a robust and resilient supply
chain for critical components and skills.

"Club France Réacteurs Innovants" leader, GIFEN,
French Nuclear Industry Association

Stefano Buono

Commitment is key. We welcome theincreasing ambition from governments
and the increased interest from private
sector but we need to work to turn that
into formal commitments.
Our supply chains need that to support
the investment needed.

The best way to achieve technologicalmaturity is to build up a strong
industrial ecosystem of partners,
experts and laboratories.

CEO, newcleo

Jean-Luc Alexandre
CEO, NAAREASam Hounslow
Commercial Director, Rolls Royce SMR Ltd
CEO, Jimmy

The true power of small modular reactors on the road to a sustainable energy future | March 2024

39

Conclusion
SMRs stand as one of the foundational pillars
for the development of nuclear energy at large
scale and enablers of net zero and 2050 capacity
targets. Potential opportunities for stakeholders(designers/engineers, states, the finance industry,etc.) could be significant. However, given thecurrent state of development, many challenges
must be overcome to enable a large-scale
deployment.
The success of SMRs may be assured for a
handful of first-movers in the early 2030s thatwill have levered government support more
successfully than the rest of the field.
However, as an industry, and to make an impact
on the Net Zero 2050 ambitions, including energy
security and affordability concerns, SMRs andAMRs can only be considered successful if nuclear
industry infrastructure is revamped.
The areas where changes are necessary range
from regulatory support and licensing, standards
and methodologies, industrial codes, humancapacity/training, off-taker incentives to develop
and invest in new designs, site availability, public
education, legislation and international treaties
on export/ transport of nuclear technology.
New financing models will need to be developedin line with the new nuclear ecosystem, in orderto deliver the many billions or trillions of USD thatare needed to assure global policy objectives.

The true power of small modular reactors on the road to a sustainable energy future | March 2024

41

Contributors

42

Thanks
SMR developers and stakeholders

EY Nuclear Center of Excellence• EDF NUWARD• Adrian Bocher, France• GE Hitachi Nuclear Energy• Anton E Poryadin, USA• GIFEN• Birute Bobrovaite-Jurkone, UAE• Hexana• Björn Alexander Krupa, Germany• Jimmy Energy• Bruno Bousquié, France• NAAREA• Chris C Lewis, UK• newcleo• Christian Grauers, Sweden• Nuclear Valley• Christoffer Clarin, Sweden• Rolls-Royce SMR Ltd• David Stearns, France• Steady Energy• David Roxby, UK• Thorizon• Giacomo Chiavari, Italy• Guillaume Bouvard, France

EY contributors• Hugo Jennequin, France• Issam Taleb, France• Antoine Chauvigné, France• Jamie Andrews, UK• Anton Poryadin, USA• Jeremie Haddad, France• Bhavya Agarwal, India• Julien Drevon, France• Birute Bobrovaite-Jurkone, UEA• Julien Saigault, France• Bruno Bousquié, France• Levente Kovacs, Hungary• Christoffer Clarin, Sweden• Makoto Kido, Japan• David Stearns, France• Mile Milisavljevic, USA• Gauthier Sorg, France• Naoto Utsumi, Japan• Jamie Andrews, UK• Paul Rees Jones, UK• Julien Saigault, France• Pierrick Vaudour, France• Megha Tomar, India• Rajeev Singh, UAE• Olivier Bertrand, France• Ralf Seidenspinner, Germany• Simona Horelicanova, UK• Tomas Skucek, Czech Republic• Takuya Okamoto, Japan• Victor Hammar, Sweden• Victor Hammar, Sweden• Vincent Gautier, France• Yuto Takahashi, Japan• Yunus Ozler, UK• Takuya Okamoto, Japan• Yuto Takahashi, JapanThe true power of small modular reactors on the road to a sustainable energy future | March 2024

43

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Issam Taleb

EY Advisory France
issam.taleb@parthenon.ey.com

Jeremie Haddad

EY Advisory France
jeremie.haddad@fr.ey.com

Mile Milisavljevic

Ernst & Young U.S. LLP
mile.milisavljevic@parthenon.ey.com

44This material has been prepared for general informational purposes only
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