One of the more talked about highlights of the President’s energy budget is his growing support for small modular reactors (SMRs). This includes $30 million for research and development and $67 million for licensing activities. While the President should be commended for recognizing the potential of SMRs, his approach unfortunately misses the mark.

Research and Development, Yes; Commercialization, No

The federal government does have a legitimate role to play in providing some basic research and development money to fund projects that may hold potential but are too risky for the private sector. And the President’s nuclear energy budget does provide basic R&D in other accounts such as the Nuclear Energy Enabling Technologies (NEET) program, which is slated to get $97.364 million. NEET is charged with investigating crosscutting technologies with applicability to multiple reactor designs, including small, modular reactors.

Indeed, the emergence of SMRs can in part be attributed to basic government R&D. Often ignored, however, is that this research was not focused on commercial energy production but rather on national security requirements. Entrepreneurs and investors took that national security research and spun off commercial enterprises.

Today these companies are moving that technology from government labs and into the marketplace. Testament to this progress is that the U.S. Nuclear Regulatory Commission is expecting six advanced reactor design applications to be submitted some time in the next 18–24 months. These include small light water reactors, high-temperature gas-cooled rectors, and liquid-metal-cooled fast reactors.

What this all makes clear is that these programs are well beyond the basic R&D stage and into the commercialization process. Thus, providing $30 billion in SMR R&D seems to be simply using taxpayer money to offset the costs of doing business for a handful of companies that have already benefited from significant public investment.

Yet many of these companies insist that without such public support, they cannot move forward. Such conclusions are based on one or a combination of three things:

  1. The underlying technology is economically dubious. This may well be the case, but is yet unknown. The only way to determine the economic viability of SMRs is to introduce them into the marketplace. Doing so should not, however, be a public policy decision and should instead be left up to the private sector.
  2. Companies want subsidies or preferential treatment to increase profits. This too may be accurate, but it should not be sufficient to stop private investment if the underlying economics are credible. And given the significant private investments already made absent specific federal SMR R&D programs, one can conclude that investors are confident in the economic potential of SMRs.
  3. Regulatory risk outweighs the potential financial benefit of greater investment. New nuclear designs cannot be introduced into the marketplace without a regulatory framework. The absence of such a framework makes SMR investment prohibitively risky without some way to offset that risk, which the federal R&D program would partially do.

A lack of research and development or not having a specific Department of Energy (DOE) program dedicated to SMRs is not the problem. Establishing them is merely a symptom of the problem: the absence of a predictable, fair, and efficient regulatory framework to allow the introduction of SMRs into the marketplace.

Establishing a Regulatory Framework

The Obama budget essentially acknowledged the regulatory problem in his budget, which requests $67 million for DOE to work on licensing technical support for small light water reactors. While the intent is correct, the approach is wrong. The Administration is relying on the same bureaucratic, taxpayer-funded process that is stifling large reactor certification when it should use this opportunity to establish a new, more efficient licensing pathway.

Instead of paying for DOE bureaucrats to get in the way of commercial progress, the Administration should commit to ensuring that the U.S. Nuclear Regulatory Commission is fully equipped and prepared to regulate new reactor designs. This should include high-temperature gas-cooled reactors and liquid-metal-cooled fast reactors as well as small light water designs. This would provide a strong regulatory foundation for each of the expected design certification applications. The DOE should have no role in the process. If a company wants to get its reactor design certified for commercial use in the U.S., it should be able to go straight to the NRC for that service.

Such an approach would substantially decrease the risk associated with getting designs certified, which in turn would alleviate the need for public support. Then, instead of seeking taxpayer funds to offset regulatory risk, reactor designers could develop investors to support the certification process.

Build the Framework and They Will Come

Nuclear energy is already clean, safe, and affordable. Introducing small reactors could make it transformational. But the federal government should not drive the process. It should be supported by the market. If the underlying technology is as strong as many of us believe it to be, the federal government needs only to provide a predictable, stable, efficient, and fair regulatory environment. The rest will happen on its own—or it won’t.