Construction and operational cost requirements for competitive small modular reactors in Europe

Small Modular Reactor (SMR) is gaining attention as a technology for possible integration in future renewable-intensive energy systems, for the sake of energy security and supply stability. However, there is limited knowledge about the conditions under which it would be economically competitive with existing technologies and infrastructure. This study identifies cost thresholds for SMR competitiveness and assesses its potential impact on the European energy system. Using a stochastic energy system optimization model combined with sensitivity analysis, we vary SMR cost parameters to identify construction and operational cost levels that make SMR economically viable, and assess the system-wide impacts of its integration. Results indicate that SMR could become competitive if construction costs stay below approximately 7400 euros/kW and operational costs below 230 euros/kW. With costs lower than these levels, SMR can contribute to reducing overall system costs, partly replace portions of traditional nuclear and renewable energy, reduce transmission and storage infrastructure needs, limit renewable curtailment, and support electricity price stability and emission reductions. We further illustrate that learning effects can contribute significantly to improving future SMR competitiveness. These findings provide reference points and insights into the potential benefits of SMR integration, offering valuable input for policymakers, system planners, and researchers focused on future energy transitions. • Provide cost thresholds for SMR ensuring its competitiveness in reducing total energy system costs. • SMR can partly replace traditional nuclear and compete with onshore wind and solar energy. • Inclusion of SMR centralizes high-volume transmission lines around Germany. • SMR can reduce curtailed production of onshore and offshore wind energy. • Integrating SMR can reduce the need for extensive battery storage expansion.