Small Modular Reactors vs. Renewables: Which Is More Cost-Effective?

The global energy transition is unfolding at a critical moment. Nations are under mounting pressure to meet rising electricity demand while cutting emissions and keeping costs manageable. The debate often centers on two very different approaches: renewables, like solar and wind, versus nuclear’s new frontier – Small Modular Reactors (SMRs). Each has unique strengths, risks, and cost profiles, making the choice a pivotal one.

For more detail, you can access the in-depth article, Small Modular Reactors (SMRs) vs. Renewables: A comparison of two radically different energy technologies – which is more cost-effective?, by Denis Koshelev.

The Case for Solar Energy

Over the past decade, solar photovoltaic (PV) power has become one of the most cost-competitive electricity sources worldwide. Thanks to mass manufacturing (especially in China), falling installation costs, and steady technological improvements, the price of solar has plummeted. Between 2009 and 2021, the costs of utility-scale solar fell by about 90%.

In Canada, utility-scale solar installations range from roughly C$1,866/kW in Ontario to even more competitive levels in sunnier provinces like Alberta. When viewed through the lens of the Levelized Cost of Electricity (LCOE), solar remains one of the cheapest and most scalable clean power options.

Wind Power’s Strong Position

Wind energy, both onshore and offshore, has also seen impressive cost reductions. Land-based wind power costs dropped nearly 60% between 2012 and 2022, reaching about $32/MWh in recent years.

Capital costs for onshore wind in Canada are estimated at C$1.6–1.9 million per megawatt, with ongoing operations and maintenance costs remaining low, typically between 1 and 2 cents per kilowatt-hour. As turbines get larger and more efficient, costs are expected to continue trending downward, keeping wind highly competitive.

The Promise and Peril of Small Modular Reactors (SMRs)

SMRs are designed as a more flexible, smaller-scale alternative to traditional nuclear plants. Advocates highlight their potential for modular construction, enhanced safety features, and suitability for diverse settings, from urban grids to remote industrial sites.

However, the economics of SMRs remain uncertain. First-of-a-kind (FOAK) projects, such as NuScale in the states have experienced significant cost overruns and even cancellations. Current estimates suggest SMR capital costs can exceed $5,000/kW, far above those for solar or wind. While proponents argue that costs could fall with mass production and government support, SMRs today remain riskier and more expensive.

Operating costs also present challenges. Analyses suggest SMR operating expenses could reach $15–35/MWh, and history shows nuclear project costs are often underestimated. By contrast, utility-scale renewables already benefit from proven economies of scale.

The Comparative Bottom Line

When measured by upfront construction costs and LCOE, solar and wind are the clear leaders. Utility-scale solar can be built for about $1,150 to $1,600/kW, while onshore wind costs $1,900 to $2,300/kW. SMRs and large nuclear plants, on the other hand, can run many times higher once financing and delays are factored in.

That said, nuclear’s advantage lies in its ability to provide steady, carbon-free baseload power, a role renewables alone cannot yet fully replace. The question for policymakers is whether the high cost of SMRs is justified by the reliability they bring to the grid.

The future of energy investment will hinge on this balance: the low cost and rapid deployment of renewables versus the dispatchable reliability of nuclear.