Decarbonization of electricity grids has, to date, been largely accomplished through the introduction of renewable generation technologies (e.g. hydro, wind, solar and biomass). These "traditional" decarbonization technologies have succeeded in reducing the amount of carbon-based generation required to support grid electrification. However, given the intermittent generation profile of these technologies, and in the absence of large-scale grid connected storage (e.g. batteries, pumped storage and compressed air storage), different technologies need to be explored and pursued in order to further decarbonize our electricity grids. Recently, Canadian governments have renewed their interest in nuclear generation but with a "smaller" focus – small modular nuclear reactors ("SMRs") have potential to materially contribute to decarbonization. However, like other nascent technologies, SMR's do not come without regulatory, technological and societal challenges.
What are SMRs?
SMRs are factory-built nuclear reactor facilities that are significantly smaller than traditional nuclear power plants. The modules are small enough that they can be transported by train, ship and/or truck and in this way are intended to be effectively "turn-key". Unlike traditional nuclear facilities, which require large areas to generate 600-1400 megawatts ("MW"), SMRs can be installed on small grid, edge-of-grid or off-grid sites where the power generation needs vary from 3-300 MW.1 For an approximate reference, a traditional nuclear plant could power a large city, whereas an SMR can power a small city or village.2
Factory construction, mobility and advanced technologies make SMRs an attractive alternative to traditional nuclear. SMRs have the potential to be manufactured to fixed specifications in large quantities and could be deployed by conventional transportation methods without extensive on-site construction. In Canada, Canadian Nuclear Laboratories3 has targeted 2026 as the timeline for having operational demonstration units. It predicts that shortly after, SMRs could be available commercially.4
How are SMRs regulated?
The nuclear industry in Canada is first federally regulated by the Canadian Nuclear Safety Commission (the "CNSC"). SMRs are classified as Class IA nuclear facilities under the Federal Class I Nuclear Facility Regulations. This is the same classification as traditional nuclear facilities and thus, the CNSC can apply the same criteria to regulate both types of facilitates. To facilitate regulatory efficiency and safety, the CNSC offers the Vendor Design Review program. This program allows reactor vendors to submit designs and then receive advanced feedback on any potential regulatory or technical issues.5
While SMRs are subject to federal regulation, provinces are responsible for regulating related areas such as health, environment, transport and labour. This includes legislation to address the transportation of dangerous goods, health and safety including emergency preparedness, resource exploration and extraction, crown land management, and environmental effects.6
In 2018, Natural Resources Canada partnered with provincial and territorial governments, and various other stakeholders, to gather feedback on the development and deployment of SMRs in Canada (the "Roadmap"). The Roadmap concluded that Canada's regulatory framework was well positioned to react to the growth of SMRs, but requires some modernization to reflect their smaller size. This Roadmap advanced into an Action Plan in 2020 (the "Action Plan"). The Action Plan reiterated many of the points raised in the Roadmap, highlighting goals of supporting the development, demonstration and deployment of SMRs. It also identified four shorter-term regulatory goals: (i) to revise the Nuclear Security Regulations, 2018 and produce related regulatory documents; (ii) to increase regulatory efficiency; (iii) to increase public and Indigenous engagement in development of the SMR regulatory framework; and (iv) to develop enabling frameworks for the global deployment of SMRs. These goals are intended to guide the CNSC, and federal and provincial governments to ensure Canada has a robust and comprehensive regulatory framework in place when SMRs are ready to be commercially deployed.
What interest is there in SMRs?
The economic forecast for SMRs is promising, with an estimated domestic market value of $5.3B from 2025-2040 and global market value of $150-$300B in the same time frame. Being the world's second-largest producer of uranium in the world, Canada is in a coveted position to provide a reliable source of fuel for SMRs and for this reason is also positioned to be an international player in the commercial development of SMRs.7 Domestically, the Roadmap has identified three major areas in Canada for SMR use. First, on-grid power generation to assist in phasing out the use of coal for electricity generation. Second, on-grid and off-grid heat and power for heavy industry. Third, off-grid power, heat and water desalinisation in remote communities who currently rely on diesel fuel.
Interest from provinces is high, with provincial governments making various commitments and taking steps to consider how SMRs could integrate into their respective economies. In August of 2020, Alberta signed a memorandum of understanding with Ontario, Saskatchewan and New Brunswick to support the advancement and deployment of SMRs. In Alberta, industry has expressed interest in the use of SMRs in oilsands production, as an efficient method of producing the steam required for extraction methods.8 In Ontario, Ontario Power Generation has plans to build an SMR at its Darlington Nuclear Generating Station as early as 2028.9
Not surprisingly, like the decarbonization technologies that have come before, the economic challenge for SMRs relates to economic viability in the face of the current and perceived development costs for nuclear ventures and competition.10 In December of 2020, the Federal Government announced funding for initiatives to lower greenhouse gas emissions. However, no funding was directed to SMRs as an option. This lack of federal investment is significant, as the development cost of SMRs is currently high. For example, an SMR recently received approval from the United States Nuclear Regulatory Commission. The design cost of that SMR alone is estimated at nearly $1B, while it is expected that another $500MM will need to be invested before actual construction can begin.11 Decarbonization aside, competition from cheap natural gas - particularly in Canada and the United States – is an obstacle in the development and adoption of SMRs as a viable decarbonization technology. Without governmental programs and financial support promoting SMRs, industry alone is unlikely to invest in the high up-front costs associated with developing and installing SMRs.12
What operational challenges do SMRs face?
While SMRs mitigate many of the operational challenges of traditional nuclear: size; cost; complexity and construction and installation, SMRs will initially still carry the stigma and perceived risks associated with traditional nuclear. In this regard, to the extent that SMRs progress towards becoming a serious option for decarbonization of our electricity grids, efforts need to be made to address the perceived risks so as to establish confidence in the ability of SMRs to operate safely while proving to be a viable source of low-carbon energy.13
Key to the development of SMRs is waste management and security. The Nuclear Waste Management Organization ("NWMO"), is responsible for long-term management of nuclear waste in Canada and disposal is regulated under the Nuclear Safety and Control Act and its subordinate regulations.14 While SMRs produce less nuclear waste than traditional reactors, the issue of radioactive waste still exists. Nuclear waste needs to be safely stored and transported to secure facilities. SMRs have often been proposed as a solution for electricity generation in remote areas, but this proves problematic from a waste perspective as any nuclear waste would need to be transported over long distances.15 There is currently no permanent nuclear waste storage site in Canada; however, the NWMO, established by the federal Nuclear Fuel Waste Act, is actively working to select a site.16 The goal is to develop a deep geological repository that nuclear waste could be safely and permanently stored in. Currently, low and intermediate level waste from SMRs can be safely stored in Canada at regulated temporary sites.17
According to the Roadmap, Canada's existing legislative, policy and technical framework related to nuclear waste management is sound. Canada's current solution for long-term disposal of spent fuel waste is sufficiently flexible to accommodate new fuel types, like those that may be used in SMRs.
As SMRs advance in their development, they represent a potential alternative to "traditional" decarbonization technologies. The potential applications are wide ranging: grid electrification; remote generation in isolated communities or industrial operations; and steam-generation at industrial sites. Various governments and government agencies have already initiated efforts to promote and develop SMRs, including efforts to adapt the current nuclear regulatory framework in Canada. Perhaps these efforts combined with the goal of decarbonization will make SMRs the "new", albeit small, nuclear.
1. Natural Resources Canada "Small Modular Reactors (SMRs) for Mining: Frequently Asked Questions", (March 9, 2020); Government of Canada "A Call to Action: A Canadian Roadmap for Small Modular Reactors" (November 2018).
2. Ontario Ministry of Energy, Northern Development and Mines, "Small modular reactors", (February 28, 2020).
3. Canadian Nuclear Laboratories is a subsidiary of Atomic Energy of Canada Limited, a federal Crown corporation.
4. Natural Resources Canada "Small Modular Reactors (SMRs) for Mining: Frequently Asked Questions", (March 9, 2020).
5. CNSC, "Small modular reactors", (November 19, 2020).
6. NWMO, "Regulatory Oversight".
7. John Gorman, "New nuclear needs to be in our energy mix", National Post (November 10, 2020).
8. Hannah Kost, "Alberta signs on to help develop nuclear reactor technology", CBC (August 7, 2020).
9. Ontario Power Generation, "OPG resumes planning activities for Darlington New Nuclear" (November 13, 2020).
10. Bloomberg, "Small modular reactors challenge natural gas", JWN (December 7, 2020).
11. Matthew McClearn, "Ottawa holds back on new funding for small nuclear reactors", The Globe and Mail (December 18, 2020).
12. Bloomberg, "Small modular reactors challenge natural gas", JWN (December 7, 2020).
13. Lois Parshley, "When It Comes to Nuclear Power, Could Smaller Be Better?" Yale Environment 360 (February 19, 2020).
14. NWMO, "Who we are".
15. Canadian SMR Roadmap, "Waste Working Group Report" (July 2018).
16. Hannah Kost, "Alberta signs on to help develop nuclear reactor technology", CBC (August 7, 2020).
17. Government of Canada "A Call to Action: A Canadian Roadmap for Small Modular Reactors" (November 2018).
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