The Institute for Energy Economics and Financial Analysis (IEEFA), a reputable source, recently published (website) an analysis titled “SMRs: Still too slow, too expensive and too risky.” It is an easy read, and the authors spare no effort or color graphs to hammer home the point: SMRs are bad, and renewables are the only solution. Fortunately, we are able to reexamine their conclusions.
A small example: in the first section, the authors neglect to account for CPI when comparing dollar cost of different years. This makes the cost escalation of the Chinese HTR-PM only 200% and not 300% in Figure 1. While this is still a very large cost escalation, the authors conveniently neglected to mention that even after this escalation, the SMR capital cost is about 6000 $/kW (according to their reference). This is cheaper than any recent Nuclear build in the West, and is about only 15-20% more expensive than a comparable PWR reactor in China.
What is more impressive is that this is a first-of-kind (FOAK) demonstration plant. As any engineer who has built anything new will tell you, the first build is the most expensive. The Nuclear industry showed this effect back in the beginning in the late 1960’s with light water reactors. Will the next HTR-PM plants be cheaper? Time will tell, but probably yes. At any rate, the HTR-PM is a dazzling success FOAK (and probably economic too!).
The authors seem to ignore the key difference between a first-of-a-kind and a commercial rollout. FOAK will always take longer and be much more expensive than estimated initially. This is not something that happens only in the nuclear industry but rather is a general rule.
Historical view: The dawn of nuclear energy (data from Lovering 2016)
As another telling example, we were surprised to see the cost escalation of the X-energy Xe-100 reactor shown in Figure 2. In the reference, the authors cite the X-energy SPAC papers, where X-energy is asking for ~5B$ in order to:
Complete licensing of first of kind
Build a fuel factory(!)
Build the first NPP of 320MW
The authors divide 5B$ by 320MW to arrive at a very misleading updated cost estimation. This is worse than sloppy.
We could go on with more examples of time to build, volume cost reduction, and more. But the theme is similar—very biased and sometimes misleading data. While it is true that, on average, the nuclear industry has been particularly bad at delivering on time and on budget, and that it is not clear if SMRs will be viable, the discussion is much more nuanced than the authors present.
Finally, the bias of this paper is mesmerizing when the authors conclude only renewables will provide the (short-term) solution. This is a surprising conclusion for several reasons:
Authors do not consider large “traditional” nuclear build out:
The French nuclear build (Circa 1975-1990): ~15 years to effectively decarbonize the French grid, meeting time, cost, and risk.
UAE South Korean Nuclear led build up of 5.6 GW at a total capital cost of about 4300$/kW
reproduced from original by Zion Lights
The authors also fail to account for “real-world experience” with renewables: They say nothing of the grid-level costs of renewables, making them "the cheapest technology for making expensive electricity" (as Germany and California have shown). See the latest Lazard report (page 15) vs. Figure 5 in the IEEFA report. Renewables are much more expensive than LCOE would have you believe.
The inconvenient fact is that countries looking to increase grid capacity (especially in developing countries) are building polluting and expensive coal power plants and sometimes looking into nuclear. They are not expanding capacity with renewables. One needs to ask why. Authors do not attempt any such thing.
Despite best intentions, Coal and Gas electricity generation has not decreased. source: Our World in Data
While the jury is still out on the economics of SMRs, and at the end of the day, it might be the case that large South Korean PWR mega projects are a better economic solution compared to SMRs, this report only muddies the water with bias and questionable numbers.
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