The high capital costs associated with setting up new nuclear power plants are a major factor restraining the growth of the global nuclear power market. Building a new nuclear power plant requires massive investments running into billions of dollars. According to data from the World Nuclear Industry Status Report 2022, the construction costs for plants commissioned in the recent decade have surged significantly compared to the previous decades. For instance, the Hinkley Point C nuclear power station currently under construction in the U.K. is expected to cost around USD 27 billion. Similarly, the Vogtle 3 and 4 reactors under construction in the U.S. are estimated to cost over USD 27 billion. Such high capital expenditure poses major budgetary challenges for utility companies and governments. The long construction periods of 5-10 years also means blocking huge amounts of capital for prolonged durations. Given the high risks and uncertainties involved in nuclear projects, many investors are reluctant to provide funds. The huge funds required also raise the price of electricity generated, impacting the affordability and competitiveness of nuclear power. The budgetary constraints and difficult investment environment have led to the cancellation of many planned projects in recent years. For example, projects worth over 180 GW of capacity have been cancelled or suspended in different countries like Japan, the U.S., and the U.K. since 2010, according to data from the International Atomic Energy Agency.
Opportunities: Small modular reactors
Small modular reactors (SMRs) present a compelling opportunity for growth in the global nuclear power market. SMRs offer several advantages over traditional large-scale nuclear plants that could help surmount many of the economic and social barriers impeding expansion of nuclear energy around the world. SMRs are significantly smaller in size and power capacity compared to conventional nuclear reactors. Individual SMR units typically range from 50-300 MW electric each—small enough to be factory-fabricated and transported fully assembled to sites where power is needed. Their modular design allows for staggered construction, where additional units can be added as power demand grows. This “scalable” approach helps reduce upfront capital investment risks for utilities. SMRs also have enhanced safety features such as passive cooling systems and their small footprint allows various siting options including at decommissioned coal plants. Current trends around the world indicate growing interest in SMRs. According to a report by the International Atomic Energy Agency (IAEA) in 2021, over 70 SMR designs are in development globally with 15 countries having national programs. Recent public funding commitments and agreements also point towards increased SMR deployment in the coming years. Similarly, Canada and Poland have signed an agreement for the export of Ontario-based GE Hitachi's BWRX-300 in early 2023.
Nuclear Power Market Report Snapshots
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