Small modular reactors find industrial viability amid rising uranium demand

A new study from the University of Michigan suggests that small modular reactors (SMRs) are more economically viable for industrial applications than for the general electricity market. The analysis indicates that SMR electricity generation costs remain at least 36 percent higher than average wholesale electricity prices in US markets, even when accounting for a 20 percent reduction in capital costs during later production phases.

However, the industrial sector shows significant potential. With the support of hydrogen tax credits, approximately 91 gigawatts of SMR capacity could become profitable, primarily serving process heat and hydrogen production for steel, ammonia, and refinery plants. Without these credits, profitability is limited to less than 1 percent of investigated sites.

Simultaneously, the global resurgence of nuclear energy—driven by new reactor construction and the high power demands of AI data centers—is creating potential supply challenges for uranium. Projections suggest that global uranium demand could more than double by 2040, potentially reaching over 150,000 tons per year. Analysts warn of a possible supply gap of up to 46,000 tons annually by 2040, noting that while sufficient resources exist, the 15-to-20-year lead time required to bring new mines into production poses a significant logistical challenge for the expanding nuclear infrastructure.