The security and resilience of an electricity system largely depend on its ability to match production with demand under all conditions, including weather variations, failures, and contingencies. The widespread adoption of renewable energy sources (RES) complicates this balance due to the lack of large-scale storage capacity of electricity. Renewable energy production is influenced by weather and daylight, and the inability to store electricity leads to curtailments, resulting in wasted energy and financial burdens for investors, producers and consumers. As electricity demand grows rapidly, the stability of the energy mix cannot rely solely on gas storage and batteries. Nuclear energy remains a crucial source, as it is difficult to achieve a globally stable electricity supply system with renewable energy sources and hydrocarbons alone due to their limited energy density. This is one reason for the renewed interest in nuclear power, reminiscent of the early 1970s before the 1973 energy crisis. Small modular reactors (SMRs) offer a potential solution by providing continuous high-density energy production without the need for large, costly nuclear power stations and lengthy manufacturing processes.
Practically speaking, future electricity consumption (measured in kWh) and power availability (measured in kW) will increasingly become disconnected over time. As electrical power lags behind future energy demand, it will be necessary to shift peak demand windows, which are already calculated in advance based on the next day’s solar or wind duration. With growing needs for larger energy storage, strategic reserves of electricity will be calculated on an annual scale or even longer. Promising technologies, such as the super-critical CO2 cycle or pumped storage of thermal energy, could become competitive within the next decade, but not before. According to 2023 IEA reports, nearly 35% of CO2 emission reductions by 2070 will come from technologies currently in the prototype or processing phase. About 40% of emission reductions will rely on technologies that have not yet been commercially developed for mass market applications.
Energy transformations, whether involving coal, oil, or natural gas, are inherently slow and have taken decades. The same applies to large-scale electricity storage and the development of SMRs. Before the COVID-19 pandemic, conservative factions in the Western world strongly supported fossil fuels and nuclear energy, opposing renewables, while liberal factions supported renewables and highlighted the dangers of radiation. However, the war in Ukraine has shifted perspectives, leading especially the EU to expand its Taxonomy to include gas and nuclear energy as supported investments by state bodies and affiliated banking organizations. Alongside, the oil and gas industry turned the fight against carbon dioxide and methane emissions into a profitable business, subsidized by governments. Meanwhile, the main issue with RES—lack of large-scale electricity storage—stays evident. The absence of large electricity storage capacity means that any reduction in production and grid transport incurs additional costs for investors. Small scale nuclear reactors aim to address this by providing a flexible, high-density base load without the need for construction of large nuclear power plants, and many consumers who previously opposed nuclear energy now support it, believing it will reduce electricity tariffs.
From an investment perspective, large gigawatt-scale reactors, like coal plants and pumped water storage, face several challenges. They require long construction times—at least a decade for a one-gigawatt nuclear power plant, and over 3-4 years for hydraulic pumped storage or coal-burning projects. These large projects are long-term assets. Most nuclear reactors in the US and Europe will reach the end of their operational life by the 2030s, requiring tens of billions for decommissioning which will strain state budgets. Investors are reluctant to support new gigawatt-scale reactors, but SMRs present a new investment opportunity with state-backed funding. At first glance, SMRs promise modularity and manufacturing facilities comparable to those of photovoltaics and wind farms, although they may lack a flexible supply chain. However, integrating SMRs into the energy mix requires a decade of planning, development, and regulatory work, along with multiple layers of security, supply chains, and waste management.
Although batteries have a relatively short lifespan of around 10 years, they offer significant advantages. A 500-megawatt battery energy storage system can be deployed within 12 to 18 months and one-gigawatt offshore wind facility can become operational after just 10 months of construction. Before the COVID-19 pandemic, battery storage costs were around $190 per kilowatt-hour, but they have since fallen below $100, with prices dropping today by an additional 40%. In contrast, nuclear production has consistently experienced significant budget and schedule overruns.
Solar and wind power have a history of near-zero cost or schedule overruns during construction worldwide. Their strong market penetration is driven by modular and fast manufacturing processes, enabling economies of scale through a global supply chain and standardized production. These technologies can be deployed in less than a year, with large units of hundreds of megawatts built quickly and relocated for various applications. However, on average, renewable energy sources (RES) can only provide about a third of the energy needed for electricity services compared to thermal energy. Despite the rapid market penetration of renewable energy sources (RES), reliance on natural gas for electricity generation persists. The stability of the energy mix cannot rely solely on gas storage and batteries because photovoltaic and wind technologies can only convert about 30% of solar or wind power into electricity, whereas thermal power from combustion is more efficient.
In the short term, the development of nuclear energy does not seem at once necessary, as constructing new nuclear facilities, including small modular reactors, takes years. A notable example of this context is Europe, which saw a 20% drop in gas demand in 2023 due to the combined use of wind and solar energy, along with reduced consumption by citizens and energy-intensive industries. However, in the medium term, nuclear energy will be crucial to meet future electricity capacity needs, which cannot be fulfilled solely through the expansion of batteries and natural gas.
