Cost and Profitability Analysis of Modular SMRs in Different Deployment Scenarios

The loss of economies of scale affects Small and Medium sized Reactors’ (SMRs) overnight construction costs, as compared to Large Reactors (LRs) and is particularly burdensome to the financial performance of a capital intensive project as a Nuclear Power Plant (NPP). Nevertheless, multiple SMRs projects have factors that mitigate the loss of economies of scale. Furthermore, by exploiting investment scalability, SMRs are able to limit the capital investment and to self-finance the construction of later units with operating cash flow from early deployed units. In our forecasted scenarios, SMRs lower profitability for the shareholders may be counterbalanced by savings in Equity capital investment, as compared to LR. This reduces sunk costs and investment risk of SMRs project under uncertain market conditions, in a “merchant plant” scenario where business profitability is as valuable as business risk.