Nuclear Business Platform spoke with George Borovas, Head of Nuclear from Hunton Andrews Kurth on the advantages and challenges of small modular reactors (SMRs). The video of interview can be found below.
George Borovas is head of the firm’s Nuclear practice and Managing Partner of the Tokyo office. George advises governments, lenders and sponsors on the development of civilian nuclear power programs and the financing and construction of nuclear power plants. He has worked on projects and transactions in the UK, the US, Russia, Europe, the Middle East, North Africa, Japan, South Korea, Southeast Asia, China, Australia and South Africa.
Nuclear Business Platform (NBP): Many emerging countries are leaning towards SMRs instead of the traditional large reactors. Why do you think this is the case? Perhaps you can also touch on the advantages which SMR seems to have over large reactors.
George Borovas (GB): This is a very exciting time for nuclear and SMRs. Small modular reactors are providing a new dimension for nuclear. They have a lot of attractive features that make it interesting for developing countries to look at. They are smaller. So, they’re easier to construct. They don’t require that long of a construction time that we discussed last time. They’re easier to finance because the amounts that were talking about are much more reasonable compared to large reactors. They are in addition to this, have their newer technology. So they have inherent safety features which maybe today’s reactors do not have, and they can also use them in places where you couldn’t traditionally use a large reactor like a small island. For instance, if you have a grid problem, a small grid, or with applications like mining. So there’s a number of reasons why a lot of the countries are looking at SMRs, and it’s definitely going to be a very, very exciting time. I think a lot of these projects will go ahead using the SMRs technology eventually.
NBP: You touch on the advantages that small modular reactor possesses. How about the challenges in your opinion?
GB: Well, one danger that we have as an industry with SMRs is to be overconfident and to focus on the positives, you know, small amount of financial, require relatively small financing, shorter construction periods, and all the rest. In the end, these technologies will be first-of-a-kind, And anybody that is working on any project, not only nuclear, but in general, when you’re looking at a first-of-a-kind development, you have a lot of risk, and somebody has to accept the risk. So I think the biggest challenge that is facing today’s SMR technologies and their capability to become implemented into a project is exactly that. How are you going to make it into a project? SMR companies are very, very savvy, technologically, but they’re not necessarily working on the construction and development side, the project development. So this is the key thing that I think that a lot of these projects, a lot of these countries that are looking for, to the SMR model is to understand what kind of risks they’re willing to accept for a first-of-a-kind technology, or do they want to have an nth of a kind build after the SMR has been built somewhere else. So those are the questions that I see that industry is now trying to figure out with different SMR potential projects around the world.
NBP: So do you think that it could be that SMR developers are more focused on the technology, the development of the technology, to get it up and running first, before they start thinking about all the issues that you mentioned. Should they be thinking about all this questions as they develop their technology?
GB: SMRs vendors, of course, they are going to be focusing on their technology, because that is their product. However you, they always have to remember that their customers, which is going to be a country or utility, is not buying technology. What they’re buying is electricity and energy. In order to get electricity and energy, you need to have a completed project that has been successfully completed and is operating. And that’s where project developers and integrators are going to become very, very important. So if I was looking at a SMR company today, I would say, okay, who are you collaborating with in order to put these projects together in a, in a in a way that makes sense from a risk allocation point of view. And those are the kind of discussions that have that. In my view, They should be having at this point
NBP: While we’ve been talking about SMRs, does this spell the end of large reactors? Do large reactors still have a role to play, and what are the advantages and type of country profile, which should still be looking at large reactors?
GB: Not at all. I mean, the question of whether this is going to displace large reactors. I do think that large reactors have a market and have a very good market. And there’s a number of projects that are going to go ahead with large reactors over the next few years, and we’re already seeing them going on and some of them that will happen in the near future as well. The thing that you have to remember, of course, about large reactors, the opposite of the SMRs is that most of the ones that are now in the market have finally been proven. They have been built, they’ve been constructed. They are operating. So right now you’ve taken away the first of a kind of risk. They become much more bankable. They have lower down the risk with these operating plants and operating reference plants. So there is a lot of knowledge now about how to build them and operate them.
So I think that a lot of countries that are looking to develop nuclear programs will also consider the large reactors. Now, I think, with the SMR again, as I said before, you get a different dimension. And maybe there are reasons for a particular country to be looking at the SMR model because of issues of scale or financing or looking into future technologies. But I do think that large reactors that exist today will be continued to be built around the world. And I think that for a number of countries that need a lot of power base load power, large reactors make a lot of sense.
One thing that’s very, very important, that’s the negative side of the SMRs is that you lose the economies of scale. With a large reactor. Yes, you take a lot of the risk. You take a lot of time and in construction. But, you know, you put down a reactor that’s 1400, 1600 megawatts all-in-one. So you look at the UAE, For instance, we had four large reactors APR 1400 at a total of fifty-six hundred megawatts that are slowly coming online in the UAE that is going to cover 25 percent of the electricity consumption of the UAE, which is pretty remarkable from one nuclear power plants. four units.
NBP: What should SMR developers do differently to ensure that they don’t make the same mistakes as large reactors?
GB: Yeah, exactly. And that’s precisely the thing that they should be looking at, you know, looking at the large reactor program. So what went wrong there? Why were the delays in the construction? What happened? The cost overruns. How did the regulatory system impact the reactor program? And mind you, here with the SMRs, you’re going to have probably an evolving regulatory structure, maybe a regulator that has very little capability when it comes to, you know, SMRs or knowledge with things like that. So there’s a number of risks that you have to keep identifying. So, again, the way that I would look at this as do not just focus on the technology, which of course, is important, to make sure that all works well. And it’s good and safe and all the all the great things that all the SMR developers have.
But to look at the project and just say, okay, how do I make this successful project? Because again, your end product is electricity and energy. And that’s where you want to be focused. I think a focus on that upfront before you start getting into the details of the project about risk allocation, talking to your host country about what kind of risks that will host countries willing to take. How is the regulator going to affect the project? Where’s the supply chain going to come? How are you going to deal with first-of-a-kind issues? All these issues are things that SMR developers should be looking at right now.
NBP: Any final words from your end, George?
GB: Great questions. And I think that the right kind of questions that the countries around the world and developers around the world should be asking
Hunton Andrews Kurth
Hunton Andrew Kurth has a full scope nuclear practice advising on most high profile nuclear power projects around the world including the unique experience advising governments on program development including UAE and Egypt. www.huntonak.com