This blog is based on the recent Frost & Sullivan analysis, “Small Modular Nuclear Reactor Industry, Global, 2025–2040,” authored by Manoj Shankar, Industry Analyst, Energy & Buildings Practice.
Rising demand for low-carbon baseload power is increasing investment in small modular reactors (SMRs), particularly as data centers expand and countries focus on energy security. This investment is moving pilot projects through regulatory review, although only a few units are expected to begin operating over the next five years. Deployment could accelerate in the mid-2030s, with 18.65 gigawatts (GW) expected online by 2040.
This growth now depends on the first projects in Canada, the United States, and the United Kingdom. Delivering them reliably and within budget could lower costs by 25% to 30% for later projects. Factory fabrication and repeat deployment could support these cost reductions.
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Top 3 Strategic Imperatives Are Shaping the Small Modular Reactor Industry
- Transformative Megatrends
Growth in renewable energy and the closure of coal-fired plants are reducing baseload power on the grid. Lower baseload capacity can make the grid harder to manage and affect security of supply. SMRs could address this need by providing steady, low-carbon power.
- Competitive Intensity
Renewed interest in nuclear power is creating opportunities for established reactor companies. New developers, backed by private equity and technology investors, are also entering the industry. Their entry is increasing competition among technology providers.
- Geopolitical Chaos
Russia’s invasion of Ukraine placed energy security higher on the political agenda. Europe’s dependence on Russian gas led to sharp price increases for industrial and residential customers. Supply difficulties also increased interest in domestic energy sources.
SMR Growth and Deployment at a Glance
What Will Determine the Success of SMR Deployment?
For SMRs to gain wider adoption, developers must address four requirements:
- Government Support
Projects need tax incentives and faster permitting to move forward. Low-cost, long-term infrastructure loans can make them easier to finance. Access to suitable land and resources can further improve project viability.
- Successful First Projects
Early projects must show that costs can be controlled. Land-based reactors must also demonstrate lower costs and easier grid integration. Their performance will influence later deployments.
- Committed Power Buyers
SMRs need customers willing to pay a premium for continuous electricity. Long-term demand from these buyers can support project development. In government-backed projects, access to long-term finance can help reduce electricity costs.
- Secure Supply Chains and Standard Designs
Projects need a secure supply of materials and components. They also need standard designs that can be produced at scale. This can lower costs, shorten approval and delivery times, and simplify grid integration.
Key Barriers to Reactor Deployment
Despite growing interest, several barriers could limit development over the next 15 years:
- High Costs and Limited Financing
SMRs remain costly and lack a proven operating record, making them harder to finance. With most nuclear investment directed toward larger reactors, less funding is available for the manufacturing facilities needed to reduce costs.
- Public Resistance and Regulatory Delays
Public resistance can make nuclear projects harder to develop. Lengthy safety and regulatory reviews for new designs can further delay construction and increase costs.
- Competition from Renewables and Energy Storage
Falling costs have increased renewable energy deployment, with natural gas and coal often used to balance the grid. As battery storage becomes cheaper, it provides another option for balancing renewable generation.
- Limited Standardization and Industry Cooperation
The lack of standard designs makes regulatory approval more difficult. Without stronger cooperation among stakeholders, projects could face delays and cost overruns, while technology readiness could progress more slowly.
Companies to Action: Nuclear Reactor Developers to Watch
Several developers are moving their reactor designs forward through projects, partnerships, and public and private funding:
- NuScale Power develops 77 megawatt-electric (MWe) pressurized water reactor modules that can be combined to provide up to 924 megawatts (MW). Through ENTRA1 Energy, the company is pursuing opportunities in the United States, Japan, and Romania, including an agreement with the Tennessee Valley Authority for up to 6 gigawatts (GW) of capacity. Its technology development has received funding from the United States Department of Energy (DOE), Fluor Corporation, and private investors.
- TerraPower is developing the 345 MW Natrium reactor, which can increase output to 500 MW using molten salt storage. Its first project is being developed in Kemmerer, Wyoming, while partnerships with nVision Energy and Sabey Data Centers support plans for further deployments. The DOE and investors, including Bill Gates, Nvidia, and Hyundai, have provided funding for these projects.
- GE Hitachi Nuclear Energy has developed the 300 MW BWRX-300 using existing boiling water reactor technology. Ontario Power Generation selected the design for four units at its Darlington site, while several US utilities are considering it for future projects. The company is also pursuing opportunities in the United Kingdom and the United Arab Emirates.
Growth Opportunities in the SMR Market
- Develop Reactors at Existing Power Plant Sites
As coal-fired plants close, countries need other sources of reliable, low-carbon power. Decommissioned fossil fuel plant sites could support new reactor projects by providing land, grid connections, and existing transmission and distribution infrastructure.
For developers, the opportunity lies in:
- Assessing decommissioned fossil fuel plant sites for reactor deployment
- Partnering with technology companies that require continuous electricity
- Using existing grid connections and securing long-term power purchase agreements
- Partner with Governments and Local Companies
Nuclear markets are closely regulated, and governments often control how projects are developed. Working with governments and local companies can help developers enter these markets, meet local requirements, and establish domestic manufacturing.
For companies, the opportunity lies in:
- Pursuing government-to-government agreements in regulated markets
- Working with local companies that have experience in the energy and nuclear industries
- Partnering with export-import banks and international financial institutions to secure long-term project finance
The Future of Small Modular Reactors
The next phase of development will be shaped by the cost and performance of the first commercial projects. Successful delivery could make standard designs and factory production more practical, preparing the industry for repeat deployments. Providers should secure material supplies, form local partnerships, and assess sites with existing grid connections.
According to Frost & Sullivan, total investment in SMRs is expected to reach $151.45 billion by 2040. To participate in this growth, providers will need regulatory support, project finance, and committed power buyers.
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Frequently Asked Questions (FAQs)
What are small modular reactors (SMRs)?
Small modular reactors (SMRs) are advanced nuclear reactors that typically generate up to 300 megawatts-electric per module. Their components are designed for factory production and transport to the project site. They can be deployed as single units or combined to meet larger power requirements.
Are there any operating small modular reactors?
Yes. SMR plants are operating in China and Russia, while projects in other countries are under construction or development. However, the number of operating plants remains limited because most SMR designs are still moving through development, licensing, or first-of-a-kind deployment.
What is the problem with small modular reactors?
The main problems are high initial costs, limited operating experience, long regulatory reviews, and difficulty securing long-term finance. The lack of standard reactor designs can also increase approval and manufacturing costs. Wider adoption will depend on whether the first commercial projects can control costs and operate reliably.
Who has the best SMR technology?
There is no single best SMR technology because each design serves different power and industrial needs. Technologies vary by reactor type, capacity, fuel, coolant, safety systems, and intended application. Buyers should compare regulatory progress, project readiness, cost, supply-chain capacity, and suitability for the planned use.
What is the lifespan of an SMR?
Many SMRs are designed for an operating life of at least 60 years, while some developers target up to 80 years. The actual lifespan will depend on the reactor design, maintenance, component replacement, operating performance, and regulatory approval.
What are the three types of nuclear reactors?
Three widely used reactor types are pressurized water reactors, boiling water reactors, and heavy water reactors. Pressurized water reactors keep water under pressure, while boiling water reactors produce steam inside the reactor vessel. Heavy water reactors use heavy water as a coolant or moderator, although other types, including gas-cooled, sodium-cooled, and molten salt reactors, are also available.
