This paper presents the business case for small fusion reactors. The conventional view in fusion research is that “economy of scale” means that small reactors are not economically viable compared to their larger counterparts. However, empirical evidence shows how the importance of the “economy of scale” is overrated. Firstly several studies show that large investment projects are usually delivered over budget and late. Large projects (or megaprojects) are more likely to go over budget and larger the project greater the overall risk. On the contrary, small plants are more manageable investments. Firstly, for the same power installed, there is more chance to exploit the advantages from learning and co-siting economies. Since the overall investment is a fraction of a large plant, the overall “bankability” is better and the financing easier. Secondly, small plants are more easily usable for cogeneration and load following. This is becoming a fundamental design criteria for power plants to be delivered after 2030. Lastly, the division of a large investment into smaller investments provides investors with “degrees of freedom” to hedge some of the risks and exploit valuable opportunities. The “Real Options approach” is a mathematical framework able to price these options. In summary, small fusion reactors can represent a more credible and faster route to deployment than large fusion reactors.

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