In an era where the quest for sustainable and secure energy sources is intensifying, Small Modular Reactors (SMRs) have emerged as beacons of hope for the global nuclear industry.
The 2018 report by the Intergovernmental Panel on Climate Change (IPCC) analysed 90 pathways aligning with a 1.5°C warming scenario. It concluded that to maintain global warming below 1.5°C, nuclear energy generation needs to increase from the current 370 gigawatts to approximately 1,160 gigawatts by 2050. It took nearly five years for world leaders to translate it into a clear policy commitment, announced in December 2023 in Dubai at COP-28 climate conference: tripling the existing nuclear capacity by 2050.
The declaration was signed by 22 countries, led by the United States, Canada, Japan, Britain and France, bot notably not by Russia and China, the current leaders in the global nuclear sector. Nearly 40% of all reactors currently under construction in the world are based on the Russian designs with Rosatom, the Russian nuclear energy giant, holding over 80% market share in export new build. China follows closely with about one third of the world’s total reactor under construction, predominantly in its vast home market.
The United States still has the largest nuclear power plants fleet in the world, slightly over 100 gigawatts of installed capacity, but it is rapidly aging. The average age of a U.S. reactor is now almost 43 years (compared to the average of 10 years in China), 18 reactors accounting for almost 15 GW of capacity are older than 50 years and due to retire soon. Yet over the last 25 years the U.S. has managed to build only two reactors with about 2.5 GW total capacity. Their construction was mired in delays and cost overruns: the first reactor, Watts Bar-2, was under construction for 43 years, building the second, Vogtle-3, took 10 years and brough its vendor, Westinghouse Electric Company, to the state of bankruptcy.
Europe has managed to connect to the grid also two reactors, one in Finland (Olkiluoto-3, 17 years construction time) and Slovakia, which restarted earlier suspended Mochovce-3 Communist-times project based on the Russian design.
The popular narrative has it that the key problem of the new nuclear build, at least in the OECD counties, is size. Large infrastructure projects are intrinsically more prone to delays, yet in the nuclear sector the effect has been amplified by the first-of-a-kind nature of the projects, supply chain and regulatory challenges. It is theorised that smaller, factory-manufactured and deployed in series reactors would help to overcome the problem. Some forecasts suggest that SMRS would account for nearly half of all nuclear capacity additions in the coming decades.
The New Nuclear Watch Institute’s recent report sheds light on this pivotal shift of the nuclear industry towards the SMR technologies, warning of Russia and China’s potential dominance and its geopolitical ramifications. The report predicts that if the current trends prevail Russia’s flagship export SMR design, RITM-200 is expected to be the most common model in the world by 2050, holding the biggest market share by installed capacity with the geographical presence spanning from the Arctic to Africa and from Myanmar and Sri Lanka to Turkey.
Russia’s expansion into the SMR market is underpinned by its comprehensive government support and a sophisticated “reactor-as-a-service” model, which Rosatom has been successfully marketing over the last decade with its large reactor design VVER-1200. Instead of trying to sell construction projects to existing nuclear-operating utilities, Rosatom has shifted its strategy towards nuclear newcomer countries offering them a “one-stop-shop” for everything they might need: from drafting nuclear laws and regulations and training personnel to a “turn-key” fuel cycle management, including fresh fuel supply, spent fuel recycling and waste management. In Turkey, Rosatom is using a “build-own-operate” model, which means that the host country is relieved from the hassle of managing the operations of the plant, it only pays for electricity at a fixed price.
The strategy is expected to work even better in the SMR segment, where most of the prospective energy users would be relatively small final customers: remote mines’ developers, small communities, island territories and so on. They have neither capabilities, nor capacity to develop their own nuclear operators, they would find it difficult to source uranium, order its enrichment and the fabrication of fuel and then deal with used fuel and radioactive waste.
The RITM-200 reactors, particularly designed for floating and onshore off-grid applications, represent a blend of technological innovation and fast scalability kickstarted with the series manufacturing of its transport modification for the latest generation nuclear icebreakers. NNWI estimates that Rosatom’s RITM will be the first in the world to reach the stage of a cost parity with large reactors and even natural gas, in terms of the final cost of electricity, positioning Russia as a front-runner in the global SMR landscape.
China, not far behind, is steadily advancing in the SMR race. With designs like the ACP100, China aims to capture a significant market share by 2050. This ambition mirrors China’s broader strategic goals, leveraging technological prowess to bolster its global energy influence.
While Russia and China have pre-selected their flagship designs in each niche and would be pouring resources into enabling the fastest scaleup, the OECD vendors are going to compete with one another in a number of overcrowded market segments. Geopolitical fragmentation further complicates the scene, as different regions adopt varied approaches to SMR deployment, driven by diverse political and economic priorities. Russia, China, and their BRICS+ “multipolar world” allies are likely to use the promise of SMRs to bring the swathes of the Global South into their geopolitical orbits. Leveraged by generous export finance options and “turn-key” supply schemes, the reactors which are already in series deployment would offer value OECD vendors would find difficult to match.
According to the report, being a first mover in this competitive market matters even more than being technologically advanced. Given the limited size of the market and the importance of series manufacturing for cost efficiency and economic viability, early entrants are likely to establish a dominant position. For OECD countries, this implies an urgent need to enhance support mechanisms for SMR development to keep pace with Russia and China.
The potential geopolitical implications of Russia’s and China’s dominance in the SMR sector are profound. Operating SMRs in the host countries means decades and millions of dollars of trade in fuel supply and waste management, the presence of security units on the ground protecting the plant, joint projects in developing critical mineral resources and many more.
The emerging leadership of Russia and China in this field is not just a testament to their technological capabilities but also a reflection of their broader geopolitical ambitions. As the world navigates the challenges of energy transition, understanding the geopolitical undercurrents shaping the SMR sector will be crucial.