Small Modular Reactor Market

Market Overview

The global small modular reactor market size was valued at USD 6.3 billion in 2023 and is projected to reach USD 13.8 billion by 2032, registering a CAGR of 9.1% during the forecast period (2024-2032). The positive effects of modularization and factory construction are increasing the small modular reactor market share.

Small Modular Reactors (SMRs) are improved nuclear reactors with smaller sizes and capacities than standard large-scale nuclear reactors. They are distinguished by their modular design, which enables factory fabrication and modular building, resulting in lower capital costs, faster construction timeframes, and improved safety measures. SMRs' adaptability extends beyond traditional power generation, with applications spanning from remote and off-grid sites to industrial operations and desalination. This versatility establishes SMRs as a cornerstone in the worldwide drive to transition to a low-carbon future, offering a dependable and resilient energy supply with a low environmental effect.

Furthermore, the small modular reactor market is gaining traction because of its ability to address energy security concerns. The modular design of these reactors ensures a dispersed and decentralized energy infrastructure, reducing the hazards associated with centralized power generation. This decentralization improves the resilience of energy systems, resulting in a more secure and stable energy supply. However, the small modular reactor business has its own set of problems. Significant considerations for sector executives include regulatory frameworks, public perception, and funding difficulties.

Highlights

• Light Water Reactor (LWR) accounts for the largest share of the market by reactor type.
• Grid Connected generates the highest revenue share by connectivity.
• A single-module power plant led to market growth through deployment.
• Up to 100 MW is the most common power rating in the market.
• Land dominates the market by location.
• Power Generation influenced the market growth by application.

Market Dynamics

Global Small Modular Reactor Market Drivers:

Growing Energy Demand and Decarbonization Goals

As the world population grows and economies improve, the power demand is predicted to skyrocket. Emerging economies like India and China are rapidly industrializing and urbanizing, creating a greater demand for dependable and cost-effective energy sources to power homes, companies, and industries. Furthermore, isolated communities and off-grid areas demand power for socioeconomic development and improved living conditions.

According to the International Energy Agency (IEA), worldwide energy demand is predicted to rise by 2.2% in 2023, slightly lower than the 2.3% increase in 2022. This is owing to a reduction in demand in sophisticated economies like Japan and the United States, where demand is predicted to shrink by 3% and 2%, respectively. However, demand in growing markets like China and India is projected to increase. The IEA predicts that demand will rise 3by .4% between 2024 and 2026. The increase in demand between 2023 and 2025 is estimated to reach 2,500 terawatt-hours (TWh), more than double Japan's present annual electricity consumption.

In addition, in 2023, the number of people without access to electricity is expected to fall to 745 million, which is still lower than pre-pandemic levels. However, the number of people without power access has decreased by more than 50% since 2000. The growing Asian region has seen the most significant decline, with the number of people without access to electricity falling by over 90% between 2000 and 2023. Growing energy demand provides potential for SMRs to bridge the supply-demand gap, particularly in areas where traditional large-scale nuclear reactors may need to be more practical and cost-effective.

Furthermore, countries worldwide are establishing ambitious decarbonization targets to combat climate change and cut greenhouse gas emissions. The shift to low-carbon energy sources, such as renewables and nuclear power, is a critical strategy for meeting these objectives. Nuclear energy, particularly SMRs, is renowned for providing a consistent and dispatchable source of carbon-free electricity, supplementing intermittent renewables such as solar and wind. For instance, In 2023, the European Union (EU) adopted a package of recommendations to reduce net greenhouse gas emissions by at least 55% by 2030 compared with 1990 levels. This will allow the EU to become the first climate-neutral continent by 2050. SMRs provide a low-carbon alternative to fossil fuel-based power generation, assisting governments in meeting their emissions reduction targets and climate pledges under the Paris Agreement.

Global Small Modular Reactor Market Restraints:

High Cost

Nuclear power facilities, particularly SMRs, require considerable upfront financial inputs in design and engineering, regulatory approval, manufacturing, construction, and infrastructure development. A small modular reactor (SMR) is predicted to cost more than USD 303 million, with a levelized cost of electricity (LCOE) of USD 36 per MWh. This compared to USD 5.5 billion for a 1,144-MW reference plant, which costs USD 92/MWh. However, the target power price has increased by 53%, from USD 58 per MWh in mid-2021 to USD 89/MWh. The project's expected construction cost has jumped by 75%, from USD 5.3 to USD 9.3 billion. The higher target price results from several variables, including increases in the producer price index, interest rates, and material costs.

Additionally, the high initial capital costs of nuclear energy projects, including SMRs, make it difficult for project developers to secure financing and attract investment, particularly in competitive energy markets where alternative energy sources like natural gas and renewables provide lower upfront costs and faster returns on investment. Uncertainties about project financing and returns on investment may delay or impede the development and deployment of SMRs, resulting in project cancellations or postponements.

Global Small Modular Reactor Market Opportunity:

Enabling Grid Modernization and Resilience

In remote or isolated areas with limited access to reliable energy, such as Arctic villages or island nations, SMRs can be a crucial component of grid modernization initiatives. For example, in the Arctic region, where harsh weather conditions and logistical obstacles render typical energy sources unreliable, SMRs present a possible solution for supplying continuous and robust power to distant populations, industrial sites, and military installations.

In 2023, the US Department of Energy (DOE) will contribute up to USD 39 million to the Grid Modernization Initiative (GMI) lab call for proposals. The GMI is a collaboration between the DOE and national laboratories to develop tools, concepts, and technologies for measuring, analyzing, predicting, protecting, and controlling the electric grid.

Furthermore, in island states and territories such as the Caribbean or Pacific islands, energy infrastructure is frequently subject to extreme weather events, natural disasters, and supply chain disruptions. SMRs can provide a consistent and resilient source of electricity, mitigating the effects of such issues. Countries that deploy SMRs in rural or off-grid areas can increase energy reliability, reduce reliance on diesel generators and imported fuels, and strengthen energy security and resilience.

Moreover, SMRs have grid-friendly features like load-following, quick ramp rates, and black start capabilities, making them ideal for integrating renewable energy sources, balancing intermittent generation, and stabilizing system frequency and voltage. Furthermore, in highly populated locations, SMRs can function as distributed energy resources (DERs) or microgrid assets, providing backup power during grid outages, lowering transmission losses, and improving overall grid efficiency and stability.

Regional Analysis

North America Dominates the Global Market

The global small modular reactor market analysis is conducted in North America, Europe, Asia-Pacific, the Middle East and Africa, and Latin America.

North America is the most significant global small modular reactor market shareholder, estimated to grow at a CAGR of 8.9% over the forecast period. It is attributed to the United States, which has made significant investments in advancing this young technology, has a strong presence of top SMR manufacturers, and conducts rigorous research on creating efficient nuclear technology. Several private sector enterprises nationwide have received R&D approvals to commercialize small modular nuclear reactor technology.

Asia-Pacific is anticipated to exhibit a CAGR of 9.4% over the forecast period. Modular reactors are being developed and installed in Asia-Pacific countries to fulfill rising energy demand and nuclear capability. Furthermore, governments in these countries are increasingly focusing on lowering carbon emissions and introducing renewable resources for power generation, which is expected to boost the growth of the Asia-Pacific Small Modular Reactor Market in the coming years.

Additionally, China has approved the construction of a demonstration SMR, ACP100 SMR, for electricity generation, heating, steam production, and saltwater desalination. By 2030, India is expected to overtake the European Union as the world's third-largest energy user, fueling the trend toward compact modular reactors.

Europe has aggressively researched SMRs for clean and dependable energy generation. SMRs provide various benefits, including improved safety features, scalability, and flexibility, consistent with Europe's ambitions for energy transition. According to an International Atomic Energy Agency (IAEA) report, numerous European countries, including the United Kingdom, Poland, and the Czech Republic, have expressed interest in using SMRs to meet energy needs while lowering carbon emissions.

Segmental Analysis

The global small modular reactor market is segmented based on reactor type, connectivity, deployment, power rating, location, and application.

The market is further segmented by reactor type into Light Water Reactor (LWR), Fast Neutron Reactor (FNR), and Heavy Water Reactor (HWR).

Light Water Reactors (LWRs), known as thermal-neutron reactors, are expected to dominate the Global Small Modular Reactor Market over the forecast period. Light Water Reactors (LWRs) are the most popular type of nuclear reactor utilized worldwide to generate electricity. They employ ordinary water as a coolant and neutron moderator, and they run at lower temperatures and pressures than other reactor types. LWRs are further classified as pressurized (PWRs) and boiling water reactors (BWRs). PWRs employ high-pressure water to transmit heat from the reactor core to a steam generator, whereas BWRs generate steam directly within the reactor core. LWRs are prominent in SMR designs due to their proven technology, reliability, and safety features.

Based on connectivity, the market is fragmented into Off-Grid and Grid Connected.

The grid-connected segment had the largest market share in 2023, accounting for more than two-thirds of the worldwide small modular reactor market revenue. It is expected to continue its lead during the forecast period. Grid-connected SMRs are reactors integrated into the centralized electric grid infrastructure, supplying power to the grid and communicating with other grid-connected generation sources, transmission lines, and distribution networks. Grid-connected SMRs function as distributed energy resources (DERs) or microgrid assets, providing baseload power, load balancing, and grid stability services.

The market is classified by deployment into Single Module Power Plants and Multi Module Power Plants.

The single-module power plant segment had the largest market share in 2023, accounting for about three-quarters of the worldwide small modular reactor market revenue. It is expected to continue its lead during the forecast period. Single Module Power Plants comprise a single SMR unit, which typically has a capacity ranging from a few megawatts (MW) to a few hundred megawatts. These freestanding devices are intended to be self-contained and adaptable, allowing for autonomous operation and deployment in multiple places. Compared to traditional large-scale nuclear power plants, single-module power plants provide advantages such as flexibility, scalability, and speedier deployment timelines. They are appropriate for applications requiring lesser electrical generation capacity, such as isolated villages, industrial sites, military bases, and off-grid areas.

Based on power rating, the market is sub-segmented into Up to 100 MW, 101 to 200 MW, and 201 to 300 MW.

Up to 100 MW had the largest market share in 2023, accounting for about half of worldwide small modular reactor revenue, and are expected to continue their dominance during the forecast period. SMRs with up to 100 MW power ratings are intended to generate smaller-scale electricity for various uses, including distant villages, industrial sites, military installations, and off-grid areas. These SMRs provide a compact and modular option for satisfying localized energy needs and can be deployed as standalone units or in multi-unit combinations to increase capacity as needed.

Based on location, the market is divided into Land and marine.

The land category had the largest market share in 2023, accounting for over three-quarters of global small modular reactor revenue. It is expected to retain its dominance during the forecast period. Land-based SMRs are reactors installed and operated on land, including onshore places such as industrial complexes, power plants, research centers, and distant or isolated areas with available land. Land-based SMRs can be used for various purposes, including grid-connected electricity generation, off-grid power delivery, district heating, industrial process heat, and desalination. They provide advantages such as accessibility to infrastructure, access to cooling water supplies, and simplicity of regulatory compliance compared to marine-based installations. Land-based SMRs are appropriate for urban and rural settings, promoting energy transition, economic development, and security.

The market can be bifurcated by application into Desalination, Power Generation, and Industrial.

The power generation segment will continue its leadership position during the predicted period. SMRs' principal application is to generate electricity for grid-connected or off-grid power supplies. SMRs can offer baseload, load-following, or peaking power to meet changing electrical demands in cities, industrial parks, isolated settlements, and military facilities. SMRs have advantages over traditional large-scale nuclear reactors, including compactness, scalability, and better safety features. They are appropriate for replacing outdated fossil fuel facilities, promoting renewable energy integration, and improving grid dependability and resilience. SMRs can also be used as distributed energy resources (DERs) or microgrid assets, which help to create decentralized and sustainable energy systems.

Recent Developments

• April 2024- Mitsubishi Electric Corporation (TOKYO: 6503) and Mitsubishi Heavy Industries, Ltd. (TOKYO: 7011) announced that they have completed the integration of their respective power-generation systems businesses into Mitsubishi Generator Co., Ltd.
• March 2024- TerraPower submitted a construction permit application to the US Nuclear Regulatory Commission for the Natrium Reactor Demonstration Project.
• March 2024- Technip Energies and GE Vernova were advancing the UK's transition to net zero with one of the world's first commercial-scale gas-fired electricity and carbon capture projects.