Lecture 8: What Investors Need to Know About Small-Modular and Microreactors

Microreactors and small modular reactors currently fail to provide a clear pathway to cheaper, reliable electricity compared to existing large-scale nuclear or renewable energy systems. These smaller designs generally suffer from worse cost-efficiency due to their size, and their projected economic benefits rely on unproven assumptions about mass manufacturing and factory fabrication.

• Economic baseline — A power grid using wind and solar with storage requires costs below $131 per megawatt-hour to be competitive, which small nuclear designs have yet to demonstrate [01:09].

• Scaling disadvantage — Statistical analysis of hundreds of reactors indicates that doubling the size of a reactor reduces capital costs by 20%; therefore, reducing size typically increases the cost per unit of power [05:31].

• Cost inflation — Historical records of nuclear construction projects show that final costs are typically 207% higher than initial predictions, meaning reliance on early-stage cost estimates is risky [44:32].

• Technical maturity — Many modern "advanced" concepts, such as high-temperature gas and molten salt reactors, are based on designs from the 1960s that were previously abandoned due to persistent issues with corrosion, fuel abrasion, and low reliability [18:31].

• Market reality — Commercial contracts for data centers are often misinterpreted as proof of viability; these agreements usually involve buying electricity from existing grids rather than funding the construction of new, unproven reactor designs [13:18].

• Manufacturing scale — To achieve meaningful price drops through learning, thousands of units must be produced; there is no current industrial evidence that nuclear reactors can be mass-produced with the efficiency required to lower costs [57:34].

• Licensing delays — The path from the conceptual design of a reactor to final license approval typically takes approximately 20 years, making these designs too slow to meet immediate energy demands [1:09:15].

• How does the cost of standardizing individual reactor parts compare to standardizing the entire reactor assembly?

• What regulatory frameworks are necessary to transition nuclear construction from custom builds to factory mass production?