The ‘Nuclearization’ of Energy: Relevance of Small Modular Reactors in ‘Viksit Bharat’

Policy Update

Meenu Mohan

Ms. Sitharaman specified that R&D funding announced early this year in the interim budget will be made available for this sector. This policy update marks a pivotal moment in India’s journey towards energy security and sustainability, aligning with the global push for cleaner and more efficient energy sources. The commitment to SMRs reflects not just an investment in technology but a strategic move towards self-reliance in energy production.

What are SMRs?

The terminology of Small Modular Reactors (SMRs) is self-explanatory. They are ‘Small’, for they make up a fraction of the size of a conventional nuclear reactor. Typically, their energy generation capacity ranges from about 30-300 MWe. As per the International Atomic Energy Agency (IAEA) standards, this definition covers a broad range of micro and medium reactors. The term ‘Modular’ means that systems and components can be factory-assembled and transported as a unit to a location for installation.

SMRs are advanced reactors that harness nuclear fission to generate heat for electricity production or direct application. There are currently four SMRs in advanced stages of construction in Argentina, China, and Russia, and several existing and newcomer nuclear energy countries are conducting SMR research and development.

Bharat Small Reactors are nothing but the already in-use 220 MWe Pressurized Heavy Water Reactors (PHWRs) with minimal improvements. PHWRs are already installed in Narora (Uttar Pradesh), Rajasthan, Kakrapar (Gujarat), Kalpakkam (Tamil Nadu), Kaiga (Karnataka) and so on.  However, introducing modularity to the same requires further studies, as mentioned in the Budget. 

The Nuclear “Comeback”: Contextualizing the Emergence of SMRs

While nuclear power promises clean, reliable energy, it has a complex history that demands careful consideration. In the 1940s and 1950s, small-capacity nuclear reactors were initially developed for military purposes. With increasing nuclear anxiety surrounding the Cold War, the gatekeeping of enrichment processes, harrowing nuclear accidents, and denuclearization debates, research shifted to increasing capacities of existing power plants, improved waste disposal and safety mechanisms, and effective enrichment. 

Geopolitical Power Plays

The current geopolitical landscape, marked by de-globalization trends and civilizational clashes, is prompting many countries to reassess their energy sources. The Russia-Ukraine war and ongoing crises in the Middle East have fueled energy price volatility and heightened energy security concerns, leading to a renewed global interest in nuclear energy.

As India’s energy needs predominate its import requirements, energy security is vital not just for development, but to de-risk its economy from global price fluctuations and import dependencies. An energy-secure Indian economy is the closest it gets to being self-reliant. 

Powering Remote Regions

The two main barriers to expanding energy access are the lack of grid infrastructure and the high costs of rural grid connection across the world. According to the IAEA, a single power plant, of any kind, should account for no more than 10% of the total installed grid capacity. SMRs can also be installed in remote off-grid locations. This could provide continuous power supply to the hinterlands and the resource-deprived areas. SMRs are also conceptualized in such a way that their Systems, Structures, and Components (SSCs) are manufactured in a controlled factory environment and then transported to the project site and installed to optimize the time and cost of the SMR project. 

Features of modern nuclear reactors like a passive safety system like gravity flow of water instead of pumping, and the reduced size of the emergency planning zone are deployment advantages. Microreactors can be deployed in freshwater-deficit regions for desalination. SMRs offer flexibility, ease of construction and maintenance. They are suitable for cogeneration and non-electric applications in addition to installation in remote regions with less developed infrastructure. Energy can accelerate economic growth and development of the local community, which are essentials for a nation aiming at inclusive growth. 

Arduous Ambitions of Net-Zero

The power sector accounts for 40% of global energy-related emissions and needs a complete revamp to achieve net-zero goals. As the world grapples with climate change, nuclear energy is experiencing a resurgence.  A growing body of evidence indicates that nuclear power remains one of the lowest Greenhouse Gas (GHG) emitters in life-cycle analysis. The International Energy Agency (IEA) has projected the global nuclear-installed power capacity to more than double its capacity by 2050 in its Net Zero Emissions 2050 Scenario. 

During the 26th Conference of Parties (CoP 26) of the United Nations Framework Convention on Climate Change (UNFCCC), India committed to expanding its non-fossil energy capacity to 500 GW by 2030 and achieving Net Zero by 2070. According to the IAEA, nuclear power saves 1 Giga tonne of carbon emissions annually.

A Viable Substitute for Conventional Energy

Currently, out of the total CO2 emissions of the energy sector, electricity generation contributes to 40% and the balance 60% comes from the use of fossil fuels in industrial process heat, heating in buildings, cooking, and transport. In a future where the reliance on fossil fuels and conventional energy sources is expected to decline significantly, nuclear power could play a crucial role in providing baseload power and maintaining grid stability. 

Decommissioned or existing fossil fuel power plants and associated land assets can be repurposed into SMRs. These sites often offer pre-existent advantages such as rail connectivity, land and water availability, power evacuation infrastructure, and remote locations away from population centers.  

A Beneficial Complement for Renewable Energy 

Many of the current familiar renewables like wind and solar power have a tendency to be variable, depending on the time and seasons. Cogeneration SMR systems, apart from providing for both electricity and process heat requirements, have the potential to complement variable renewables through flexible operations. 

Nuclear energy can also be a source for generating heat and hydrogen, along with electricity. Hydrogen has the highest calorific value of all known fuels and produces clean energy. Certain classes of SMRs fulfill the criteria for being an emission-free energy source and can also be used to produce hydrogen which supports decarbonization of hard-to-abate sectors of the economy.  A multitude of applications including electricity generation, grid integration of renewables, process heat, desalination, and hydrogen production are opening up new avenues for deeper and accelerated adoption of nuclear technology. Thus, they can play a crucial role in achieving energy transition goals effectively.

Advantages 

• Scalable
  • Can be of varying capacities 
• Adaptable
  • Can repurpose existing power stations’ infrastructure, seamlessly integrate with renewables for flexibility and low carbon co-products
• Remote Refueling
  • SMRs may require refueling at remote locations, enhancing operational flexibility.
• Transportable Reactor Units
  • Fuelled reactors can be transported to the site, reducing on-site construction complexity.
• Factory-Based Commissioning
  • Significant commissioning work is conducted in a controlled factory environment, improving quality control and efficiency.
• Remote and Autonomous Operation
  • SMRs support remote and autonomous operations in surveillance, control, and testing, reducing the need for on-site personnel.
• Extended Refueling Intervals
  • SMRs have longer refueling intervals, minimizing downtime and maintenance needs. This is typically 3-7 years, but can be as long as 30 years for advanced SMRs

Specific Benefits upon Comparison with Conventional Nuclear Reactors

 While their working principles remain the same, the differentiating factor amongst nuclear reactors is how each reactor type approaches the safety function, overall simplicity, and cost of the plants.  

Understanding the Barriers to SMR Deployment

SMRs are not expected to reach the commercial market until after 2030, and while they are anticipated to have lower initial capital costs per reactor, their economic viability remains unproven until they are deployed on a larger scale. Nuclear reactors are highly complex systems that must adhere to strict safety regulations, addressing numerous potential accident scenarios. The licensing process is lengthy and varies by country, indicating that standardization will be necessary for SMRs to achieve widespread adoption. 

According to The Ecologist, “Every independent economic assessment finds that electricity from SMRs will be more expensive than that from large reactors…It’s highly unlikely that potential savings arising from standardized factory production will make up for those diseconomies of scale.” Additionally, a historical lack of investment and funding, coupled with high costs compared to renewables, further hampers progress.

Disadvantages

Nascent Stage of Development
With more than 80 SMR designs, most are still in the development phase, highlighting the early-stage nature of the technology (see figure below). The lack of mature, operational models presents challenges in establishing a proven track record for commercial deployment.

Lack of Standardization
The availability of multiple SMR technology alternatives, each with varying supply chain, regulatory, and operational requirements, has led to significant variability. Prioritizing a single technology for large-scale commercial deployment is critical. Moreover, existing nuclear reactor safety standards may not fully address the unique safety needs of these innovative designs, adding further complexity to standardization efforts.

Geopolitical Challenges
Geopolitical instability and the concentration of research in a few nations make technological advancements both exclusive and difficult to access. These factors hinder international collaboration and render supply chains unresilient, slowing global SMR development and deployment. However, while nuclear energy can be a hedge against volatile energy prices, it also introduces potential risks, especially in geopolitically unstable regions. For instance, nuclear facilities could become targets in conflicts or exacerbate tensions due to fears of nuclear proliferation.

Viability Gaps

• High Initial Investment: High capital requirements, coupled with a general perception of risk, often discourage potential investors. M. V. Ramana, Simons Chair in Disarmament, Global and Human Security at the University of British Columbia, notes, “The hardest challenge to overcome is economics. Nuclear energy is an expensive way to generate electricity.”
• Regulatory Hurdles: Licensing new and innovative technologies, such as SMRs, can be challenging. Additionally, stringent liability regulations for civil nuclear reactors deter foreign investment, further complicating the path to commercialization.

Nuclear Waste Management
The distributed nature of SMRs could lead to concerns over the de-localization of nuclear waste management. However, nations with established nuclear programs have existing methods for handling spent fuel, as highlighted by the Indian government’s think-tank NITI Aayog in its report on SMRs’ role in the energy transition.

Fewer Operational Models
According to the International Energy Agency (IEA), most SMR designs are still in development. The lack of operational units limits practical data on their performance and safety, prolonging the technology’s acceptance and deployment.

Public Perception and Engagement
Public perception remains a significant barrier to the deployment of nuclear energy, including SMRs. Historical examples, such as halted nuclear projects in Germany and Japan following public protests, underscore the power of societal opposition. For SMRs to gain broader acceptance, focused efforts to educate the public on their safety, environmental benefits, and risk mitigation are essential. Addressing long-standing fears of nuclear disasters will be crucial in shifting public opinion.

The Way Ahead

The future of SMRs hinges on resolving key regulatory, financial, and technological hurdles. Without significant investment and policy support, SMRs may remain more of a theoretical solution than a practical one. Policymakers must also weigh the benefits of SMRs against other cleaner, potentially cheaper energy alternatives like solar, wind, and storage technologies, which continue to see rapid cost reductions.

Safety Standards

Technology readiness levels of existing SMR designs need improvements for consideration by utilities, investors, and governments for deployment. To accelerate their development, designers, operators, and regulators must strengthen safety analysis capabilities. The SMR industry, conventional nuclear sector, and regulatory bodies are actively working together to tackle licensing challenges and develop alternative solutions. The IAEA and other international organizations are supporting these efforts and promoting the harmonization of regulatory approaches.

Need for a Regulatory Roadmap

Currently, about 80 SMR designs are under development globally, with some being innovative and unlicensed, and others using modern manufacturing methods uncommon in the nuclear industry. To expedite SMR deployment, harmonizing the regulatory system is crucial. SMR stakeholders and international regulatory bodies are working to connect regulators, operators, technology vendors, governments, and policymakers to accelerate global harmonization of codes, standards, and licensing.

Fostering Private Participation

Private sector participation in SMR deployment can be fostered through several key incentives: political backing for SMR initiatives, a supportive regulatory framework led by national regulators, a well-established nuclear supply chain, and a successful proof of concept to boost investor confidence. Additionally, a clear Civil Nuclear Liability Framework and an effective energy policy with incentives for low-carbon technologies are crucial. Providing seed capital for innovation, funding for demonstration and commercialization, and financing for scaling operations are essential to the growth of SMR projects.

Alternative avenues for private investment in SMRs have emerged, particularly in Canada, the USA, and the UK, where technology vendors are attracting investment from non-traditional sources. High-net-worth individuals, often through family offices, provide early-stage financing, offering patient, risk-tolerant capital that traditional venture funds do not. While these investors seek commercial returns, their value-driven decisions allow them to accept higher risks and longer periods of illiquidity. However, this alone is not enough to propel the sector.

Engineering, Procurement, and Construction (EPC) firms play a pivotal role in later-stage development and construction. In the USA and UK, equity partnerships with EPC firms allow vendors to share risks and access equity from large firms’ balance sheets, facilitating the commercialization of SMR technology.

Incorporating Current Developments: Industry 4.0 

Manufacturing SMR modules in a controlled factory environment are crucial for cost optimization, enabling the use of advanced industrial techniques not feasible at construction sites. Industry 4.0 has transformed modern manufacturing through the integration of technologies like Cloud computing, IIoT, AI, and ML, improving automation, control, and quality. To fully leverage these advancements in SMR production, the industry should adopt Industry 4.0 principles, including integrated command centers, real-time monitoring with analytics, AI-driven equipment health prognostics, system performance monitoring, safety and security, and asset digitization.

Micro-reactors

Microreactors can serve niche electricity as well as heat applications of the future such as powering microgrids and remote off-grid areas, quickly restoring power in areas affected by natural disasters, and also for seawater desalination. 

Embracing Innovation with Caution for a Sustainable Future

Although SMRs offer potential benefits, their late entry into the market raises questions about their role in the urgent global decarbonization effort, with faster-deploying clean technologies currently prioritized. However, since innovation is an ongoing process, investing in the same albeit risky, may pay off great dividends. 

In conclusion, the integration of Small Modular Reactors (SMRs) into India’s energy landscape represents a strategic leap toward achieving energy security and sustainability. By emphasizing SMRs in the Union Budget 2024-25, the government is setting the stage for a transformative shift in how India meets its energy needs. SMRs offer significant advantages, including scalability, flexibility, and the potential to enhance energy access in remote areas, all while supporting the nation’s commitment to reducing greenhouse gas emissions and achieving net-zero goals.

References

• An obituary for small modular reactors. (2019, March 25). The Ecologist. https://theecologist.org/2019/mar/11/obituary-small-modular-reactors
  
• Gordon, O., & Gordon, O. (2022, September 20). Small modular reactors: What is taking so long? Energy Monitor. https://www.energymonitor.ai/sectors/power/small-modular-reactors-smrs-what-is-taking-so-long/
  
• Ramana, M. V. (2012). The Power of Promise: Examining Nuclear Energy in India. Penguin UK.
  
• Small modular reactors. (n.d.). https://www.iaea.org/topics/small-modular-reactors

• Sitharaman, N. (2024). BUDGET 2024-2025. In GOVERNMENT OF INDIA (pp. 1–4). https://www.indiabudget.gov.in/doc/budget_speech.pdf

• The Role of Small Modular Reactors in the Energy Transition | NITI Aayog. (n.d.). https://www.niti.gov.in/whats-new/role-small-modular-reactors-energy-transition

About the Contributor – Meenu Mohan is a Research Intern at the Impact and Policy Research Institute, and holds a BSMS Degree in Mathematics from IISER, Bhopal. Her research interests include Data Analytics, Foreign Policy and Geopolitics, and Disarmament.

Acknowledgement – The author extends sincere thanks to Dr. Arjun Kumar for the invaluable opportunity, and to Sarah Ansari and Geetam Acharya for their informative inputs.

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