Nick Van Hee graduated with great distinction in June 2023, earning a Master’s degree in Business Engineering from the University of Antwerp. He further specialized in sustainability by completing a second Master’s degree in Environmental Science in June 2024, also from the University of Antwerp. Throughout his academic journey, Nick gained practical experience through internships, as a Climate Risk Intern at Gimv, a private equity firm, and as a Sustainability Consultant Intern at Deloitte. In addition to his hands-on experience, Nick has contributed to academic research. He wrote an article on the economic potential of Small Modular Reactors, which was published in the Renewable and Sustainable Energy Reviews journal. In September 2024, Nick joined Econopolis Strategy as a Climate Analyst, where he focuses on strategic advisory projects related to climate and the energy transition.
The Role of Small Modular Reactors in Europe's Energy Transition
As Europe navigates the complexities of transitioning to a low-carbon future, nuclear energy is re-emerging as a pivotal player. Projections indicate that global nuclear energy use is set to double between 2020 and 2050, driven by its unique benefits such as low carbon emissions and reliable baseload power generation. While traditional large-scale reactors have dominated the nuclear landscape, the advent of Small Modular Reactors (SMRs) offers a promising complement to renewable energy sources like wind and solar.
Figure 1: Nuclear power plant. Photo by Markus Distelrath.
SMRs: A Game-Changer in Nuclear Technology?
Small Modular Reactors are characterized by their smaller size (<300MW) and modular construction, allowing for greater flexibility and potentially lower costs compared to their larger counterparts. For comparison, the Belgian nuclear reactor Doel 4 has a capacity of around 1000MW. Although the absolute costs of SMRs are lower due to their smaller scale, my academic paper[1] indicates that they have higher capital costs per kW output of 41% (on average) compared to traditional reactors. This discrepancy arises from the economies of scale that benefit larger reactors, which are less applicable to SMRs.
The figure below shows this data as the range of capital costs for SMRs, expressed as a percentage relative to the 100% baseline of large reactor capital costs across various SMR capacity scenarios. For example, a value of 140% indicates that SMRs in this study have a 40% higher capital cost compared to large reactors. As shown, nearly all SMR cost estimates exceed the large reactor baseline, though deploying more SMR units on the same site can reduce costs due to co-siting benefits. These estimates are also influenced by the inclusion of specific SMR advantages, such as learning effects and co-siting economics, where incorporating more of these benefits results in lower cost estimates per kW.
Figure 2: Relative SMR capital costs (in %) compared to baseline of 100% for large reactor capital costs
Despite the higher relative costs, SMRs bring several advantages that may justify their investment: passive safety system, smaller size (making them more flexible and cheaper on an absolute scale), reduced construction time, lower co-siting costs, design simplification and standardization, faster learning and its modular character. Furthermore, SMRs provide a stable, non-intermittent power source that could complement intermittent renewable energy, ensuring grid stability.
The Broader Economic Context of SMRs
The economic feasibility of SMRs relies not only on their direct costs but also on external factors such as carbon and gas prices. According to an American publication[2], while SMRs currently have higher life-cycle costs compared to gas plants, a carbon price between €98 and €121 per ton of CO₂ would render their costs competitive. This is particularly relevant in the context of the European Emission Trading System (ETS), where carbon prices have fluctuated between €50 and €100 per ton CO2 in 2023-2024.
Additionally, regulatory landscapes vary significantly across Europe. For instance, Germany's Energiewende policy has excluded nuclear energy, while France continues to invest heavily in it. Compared to non-European countries like the US, Russia or China, the SMR deployments in Europe are lacking behind (partly due the divided opinions between Member States of the EU). This urgently calls for an increase in SMR projects in Europe, as Europe could otherwise fall behind in this strategic energy technology. Some positive steps are already being taken like the establishment of the European SMR Industrial Alliance.
In conclusion, while SMRs are currently more expensive on a per-kW basis compared to traditional large reactors, their absolute costs are lower, and they offer unique benefits that make them a compelling option for Europe's energy transition. As carbon pricing and regulatory frameworks evolve, the economic case for SMRs is likely to strengthen, making them a key component of a balanced and sustainable energy mix. To discuss this topic further or explore other energy or climate solutions, we invite you to contact us!
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[1] Van Hee, N., Peremans, H., & Nimmegeers, P. (2024). Economic potential and barriers of small modular reactors in Europe. Renewable and Sustainable Energy Reviews, 203, 114743.
[2] Asuega, A., Limb, B. J., & Quinn, J. C. (2023). Techno-economic analysis of advanced small modular nuclear reactors. Applied Energy, 334, 120669.