Sizing Up Small Modular Reactors

Written by Juno Chowla-Song

Edited by Shreya Devani

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Interest in nuclear energy is rebounding after a long decline, and small modular reactors (SMRs) have stolen the spotlight.^[1] There are more than 120 SMR designs at different stages of development, with most being targeted for the early 2030s.^[2] These modern nuclear generators are intended to be compact, factory-built and scalable, allowing them to decarbonise energy systems and build energy resilience while meeting rapidly growing demand. In the UK, the most advanced SMR project is being developed by Rolls-Royce, but there are questions over whether its costs are justifiable and whether the UK has the specific type of use case that made SMRs worthwhile elsewhere.

SMRs can vary in output from 20 megawatts electric (MWe) to 300 MWe, compared to conventional nuclear plants with outputs of over 700 MWe. They need less space and cooling water than large nuclear plants, allowing greater flexibility for site selection. They also incorporate passive safety features inherent to their designs.

However, at least a dozen SMR projects have been cancelled, abandoned, or pushed into bankruptcy in the past 15 years. These failures have persisted across the US, Canada, France, the UK, Argentina, and South Africa.^[3] Only two SMRs are operational today: the HTR-PM of China and the Akademik Lomonosov of Russia.

Both China and Russia had specific reasons for deploying SMRs that made the costs and delays easier to justify. This article analyses both and asks whether the UK's Rolls-Royce programme has a similar backing.

HTR-PM (Shidao Bay, China)

The HTR-PM is the commercialisation of decades of work on pebble-bed high-temperature gas-cooled reactors. The technology originated in Germany, but was abandoned post-Chernobyl.^[4] When construction on the Chinese version began in 2012, the reactor was expected to begin operating around 2017. Commercial operation actually started in December 2023, six years late. Estimated levelised cost of electricity (LCOE), or the average cost per unit of electricity that the plant produces over its entire lifetime, is around $95.56/MWh.^[5] In comparison, the LCOE for coal and solar photovoltaic in China are estimated at $47/MWh and $33/MWh, respectively.^{[6] [7]}

However, HTR-PM’s value extended beyond its cost. The SMR was developed to replace coal-fired plants across China, in line with the country’s plan to reach carbon neutrality by 2060. The reactor produces high-temperature steam that can drive the same kinds of turbines used in coal plants.^[8] Its successor, the HTR-PM600, is specifically designed to integrate with the infrastructure of China’s remaining 1,195 coal plants.^{[9] [10]} Feasibility studies for this HTR-PM600 are already underway for five sites, despite the cost of the original HTR-PM.^[11]

Akademik Lomon0sov (Pevek, Russia)

The Akademik Lomonosov is a floating nuclear power plant (FNPP) in the Arctic Chukotka region with two KLT-40 reactors generating 35 MWe each. It was built primarily to power the construction of the Baimskaya mine, which holds estimated reserves of 23 million tons of copper and significant quantities of gold.^[12] The Lomonosov plant also generates enough electricity to replace the Bilibino nuclear plant and ageing Chaunskaya coal plant, both of which needed decommissioning.^[13] The barge design was chosen to eliminate the need to build a concrete foundation on melting permafrost.^[14] Instead, the plant was built from start to finish in shipyards.

Economically, it was a difficult project. While the original 2006 cost estimate was $170 million, actual costs ballooned to $574 million, 238% higher than expected^[15]. Meanwhile, the project ran ten years behind schedule, with the plant only being fully commissioned in May 2020. No official LCOE has been published. However, a 2024 paper estimated $550/MWh as the median LCOE for a large Arctic FNPP.^[16] Given that the Akademik Lomonosov was not manufactured through a modular factory process, it is unlikely to cost significantly less. Still, its developer considers the plant enough of a strategic success in displacing coal in a fragile environment that they plan to scale up.^[17] The company is in the process of constructing four floating power units and is targeting the export market.

Rolls-Royce SMR

The UK government is targeting 24GW of nuclear energy by 2050, tripling current nuclear capacity.^[18] In June 2025, the Great British Energy - Nuclear governmental body invested £2.5 billion ($3.4 billion) in Rolls-Royce to develop and build a fleet of SMRs.^[19] The first three SMRs will be built in Wylfa, with grid connection expected in the mid-2030s.

Rolls-Royce has suggested that the nth-of-a-kind reactor (after ten have been built) would generate power at £40–75/MWh ($ 51–96/MWh).^[20] This cost is comparable to wind power in the UK. However, this estimate is reliant on Rolls-Royce being able to mass-produce SMRs in a factory setting. Domestic UK orders alone are unlikely to be sufficient to justify factory-scale production; Rolls-Royce itself and a House of Lords committee report admit that the business case depends on securing significant export orders.^[21] 

Whether large-scale export is actually feasible is unclear. Rolls-Royce SMR's April 2026 Early Works Contract with Czech utility ČEZ funds only preparatory design and licensing work for a single 470 MWe unit at Temelín, subject to a future final investment decision.^[22] Meanwhile, a Polish industrial group has announced their intention to purchase Rolls-Royce SMRs, but no contract has been signed yet.^[23] As of 2025, no SMR has yet been exported and operating commercially anywhere outside its country of origin. South Korea attempted. It invested several hundred million dollars over decades developing the 100-MW SMART (System-integrated Modular Advanced Reactor) for export, but was unsuccessful in finding international buyers. Argentina’s CAREM project, also intended for export, was abandoned in 2024 after 10 years of construction.

Even successful exports may not deliver the costs Rolls-Royce has advertised. A Technical University of Berlin study modelling production cost uncertainties found the mean LCOE of a factory-produced Rolls-Royce SMR would be approximately £163/MWh ($222/MWh).^[24] In comparison, current UK LCOE for wind and solar lie within the £30-50/MWh ($41-68/MWh) range.^[25] 

Future Outlook for SMRs

None of this is to dismiss SMRs entirely.  One of the strongest arguments for SMRs is that they would increase energy security by providing consistent domestic output to complement variable wind and solar. This is crucial, since energy demand is highest during the winter when the days are short and cloudy and renewable generation drops. SMRs could fill this gap efficiently.

A single UK SMR could heat or cool a city the size of Sheffield, or pair with a desalination plant to produce 500 million cubic metres of potable water a year.^[26] Because SMRs are smaller than full-size nuclear plants, they should be cheaper to build and easier to finance.^[27]

Data centre demand could also make SMRs increasingly valuable in the years ahead. In the UK, 5.9% of electricity is already used by data centres, and data centre developers currently report waits of several years for national grid connections.^[28] To bypass these long delays and secure reliable, climate-friendly power, tech companies are turning to SMRs located at or near data centre sites. For example, Google’s Kairos Power agreement will build up to seven SMRs providing 500 MW of power for their data centres.^[29]

If data centres continue to quadruple their energy use by 2030 as forecasted, they could fuel further competition in the SMR industry, lowering LCOE over time.^[30] Already, there has been some progress on SMR competition. In February 2026, the UK’s Department for Energy Security and Net Zero (DESNZ) published the Advanced Nuclear Framework with a series of key policy, regulatory and institutional features designed to encourage private nuclear projects beyond just Rolls-Royce.^[31]

However, SMRs’ future is still uncertain in the UK. As the World Nuclear Industry Status Report acknowledged in 2025, the technology is "currently only a hypothesis with very uncertain timescales and costs."^[32] Rolls-Royce is unlikely to deliver electricity before the mid-2030s. By that point, the UK will need to have already made enormous progress on decarbonisation using cheap and proven technology. China and Russia accepted high SMR costs because each had a specific problem justifying the cost: inland coal replacement or Arctic mining. The UK has no comparable use case right now. While data centre demand is emerging as a possible candidate, it is too early to know if it will persist at the scale needed to justify the SMR price tag. With a mature renewables sector and cheaper options, SMRs would need to outcompete the alternatives. On the evidence so far, they have not.

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Bibliography:

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