The SMR Paradox

Rolls-Royce SMR won the Great British Energy competition in mid-2025. ČEZ signed for up to 3 GW of capacity at Temelín in the Czech Republic. China's HTR-PM at Shidaowan entered commercial operation in December 2023, becoming the world's first fourth-generation reactor to do so. The Small Modular Reactor (SMR) revolution is real. But it has a timing problem that few want to discuss.

Artificial intelligence infrastructure needs power now. Data centres across Europe, North America, and Asia require gigawatts of reliable electricity before 2030. Yet even the most advanced SMR programmes will not deliver meaningful capacity until the mid-2030s. This five-year gap, between when demand peaks and when supply arrives, is the defining challenge of nuclear energy's next decade.

The numbers tell a compelling story, until you check the delivery dates. Ontario Power Generation received construction approval in May 2025 for the G7's first grid-scale SMR at Darlington. The BWRX-300 is not expected online until late 2030. Canada's programme is the fastest in the Western world.

Compare that with the demand side. Global Energy Monitor data shows 114 GW of gas-fired capacity in the US pipeline, more than double the levels from a year ago. Gas plants deploy in 12 to 18 months. SMRs take five to ten years from approval to first power. The market is not waiting.

Westinghouse targets design certification for the AP300 by 2027. Construction would begin around 2030. First power is slated for 2033. That is a full three years after the capacity crunch peaks.

In the UK, Rolls-Royce SMR was selected as preferred bidder for three units at Wylfa. If licensing completes in 2026, first concrete could pour in 2027. First power by 2031 remains the best case. This is Europe's most advanced SMR programme.

The cost challenge is fundamental. NuScale's Carbon Free Power Project, the only US NRC-certified SMR design, saw its target electricity price surge from £46 ($58, €54) to £70 ($89, €83) per megawatt hour before cancellation in November 2023. The project's estimated construction costs had risen from £4.2bn ($5.3bn, €5bn) to £7.3bn ($9.3bn, €8.6bn). First-of-a-kind costs are real and unforgiving.

Regulatory timelines compound the problem. The NRC's design certification for NuScale took over six years. Westinghouse's AP300 is still in pre-application engagement. Even with expedited procedures, these are multi-year processes across every jurisdiction.

Supply chain readiness remains the overlooked bottleneck. Building an SMR requires specialised components, qualified fuel, and trained workforce. X-energy's TRISO fuel facility in Oak Ridge will not begin production until 2027. No fuel, no reactor.

China is the exception that proves the rule. The HTR-PM at Shidaowan produces 210 MWe from twin pebble-bed reactors driving a single turbine. It achieved commercial operation after a decade of construction. Meanwhile, China has 32 reactors under construction, including its Linglong One demonstration SMR in Hainan. The lesson: sustained state commitment delivers results, but not quickly.

Canada's Darlington project offers a Western model. OPG's BWRX-300 secured construction licensing in April 2025 and provincial approval in May. The alliance model brings OPG, GE Vernova Hitachi, AtkinsRéalis, and Aecon into integrated project delivery. It aims to reduce the cost and schedule overruns that plague nuclear construction. The first unit targets end of 2030. Four units would deliver 1,200 MW.

For industrial heat applications, Dow Chemical and X-energy submitted their construction permit to the NRC in March 2025. Four Xe-100 reactors would replace ageing gas-fired generation at Dow's Seadrift, Texas, facility. The NRC published an 18-month review timeline, faster than typical. This is where SMRs find their niche: replacing industrial fossil assets, not competing head-to-head with large reactors for baseload.

The gap between SMR ambition and SMR delivery creates a dangerous void. Global Energy Monitor reports that globally, gas-fired capacity in development rose 31% in 2025, reaching 1,047 GW. The US alone accounts for a quarter of the world's operating gas fleet. Texas has 80.6 GW of gas in development, a fourfold increase in a single year.

This is the 114 GW gas problem. Every SMR that misses a 2030 deadline hands market share to gas. Every cost overrun, like NuScale's 53% price increase, reinforces the narrative that nuclear cannot compete. The paradox is clear: the technology that could solve the long-term problem is losing the short-term race.

Regulators are beginning to respond. The UK's Generic Design Assessment is further advanced for Rolls-Royce SMR than for any other design in Europe. Canada's CNSC approved the Darlington licence in just over two years from application. The US NRC's 18-month timeline for the X-energy review signals a shift toward faster process.

Cross-border recognition is emerging. The NRC and CNSC are collaborating on joint reviews of the BWRX-300. Such cooperation could eventually compress timelines by years, not months.

Three principles should guide SMR investment decisions. First, match the reactor to the use case. SMRs excel where large reactors cannot deploy: remote locations, industrial heat, modular additions. Second, accept that gas bridges the gap. The 114 GW US gas pipeline exists because demand will not wait for 2035 SMR supply. Third, invest in the ecosystem. Fuel fabrication, supply chains, and workforce training are the real bottlenecks, not reactor design.

For infrastructure investors, the immediate opportunity sits with projects that have cleared regulatory milestones. OPG Darlington, Rolls-Royce SMR at Wylfa, and the Dow-X-energy partnership represent the credible near-term pipeline. Projects without construction licences face five to ten years before revenue.

The strategic play is positioning in supply chain and fuel. X-energy's Oak Ridge facility and Rolls-Royce SMR's Module Development Facility at Sheffield represent early-mover infrastructure bets. Estimated UK economic contribution from a Rolls-Royce fleet: up to £54bn ($69bn, €65bn) over 80 years.

The timing arbitrage favours gas in the near term but nuclear in the long term. Smart capital hedges both.

The SMR paradox is not about technology. The reactors work. China proved that. Canada is building one. The UK has chosen its design. The paradox is about time. Data centres need power by 2030. The most credible Western SMR programmes deliver power from 2030 to 2033. Gas fills the gap today. The winners invest in SMR ecosystems now while gas keeps the lights on. Nuclear must be ready when the real scale-up begins after 2030.

Gas wins the sprint. Nuclear wins the marathon. The race has already started.

Next week: What the UK Gets Wrong About Nuclear-AI (And How to Fix It)

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