Nuclear has long been part of the energy mix and is set to play a significant role in the energy transition and pathway to net zero. We have helped clients identify key markets, navigate intricate regulatory and political landscapes, and, with the advent of advanced nuclear technology, continue to support developers in bolstering their market presence. This encompasses innovative financing, regional insights, customer targeting, and application-specific strategies to enhance competitive standing.
The renewed prominence of nuclear in the energy transition reflects the growing emphasis on energy security and decarbonization among policy makers. Alongside the repowering of existing nuclear plants, advanced nuclear technologies are now also under the spotlight as they hold the promise of shorter construction timelines, lower overhead costs, and cross-industry applications.
Given some of the biggest challenges to infrastructure investing are inflation and regulation (e.g., permitting and licensing, taxation, safety standards, etc.), investors require certainty. Under certain circumstances, the economic viability of advanced nuclear technologies is notable, offering some advantages relative to other energy sources, including renewable and storage portfolios. This distinction is particularly noticeable at high levels of renewable penetration when contributions to capacity from renewables starts to decline.
Advanced nuclear can also offer a more appealing proposition for off-takers or utility buyers, as demonstrated by the evaluation of the value-adjusted levelized cost of electricity (VALCOE), which considers the relative contribution of the technology to the electricity system in terms of energy, capacity and flexibility services. In a recently published report for EPRI titled, “Program on Technology Innovation: A Comparison of Capital Costs Between Large Light Water Reactors and Small Modular Reactors: Considering the Impact of Financing Costs,” we show how across 1000 Monte Carlo simulations, a first of a kind (FOAK) small modular reactor (SMR) has an overall average capital cost that is 16% less than a conventional light water reactor (LWR), primarily driven by lower financing costs resulting from shorter construction durations. This could ultimately result in lower total project costs for smaller reactors compared to their larger counterparts when considering both overnight and financing expenses.[1]
Additionally, when integrated with thermal storage, advanced nuclear technologies can provide enhanced flexibility in the delivery of ancillary services, further underscoring their intrinsic advantages compared to conventional alternatives.
The merits of advanced nuclear technologies present a strong case for potential investment opportunities. While external influences, such as government and industry, play a major role in de-risking investment, the role of the investor itself is critical in bridging the investment gap needed to enable the transition towards second-of-a-kind reactors and achieve commercial returns.
The first step in securing these returns involves gaining an understanding of the technologies, opportunities, and challenges associated with advanced nuclear power – this is the intention of this paper.
