SMRs may represent a viable option to decrease the average capital at risk in the nuclear business, with respect to LR projects. Financial risk is related to the amount of invested capital. Banks usually apply credit risk control through loans portfolio diversification. The same applies to the shareholder investor (e. g. a utility). Very high capital exposure in a single project represents a stress on the balance sheet and a relevant financial and industrial risk exposure, so that a nuclear generation project could be viewed as a ‘bet the farm’ endeavour for a shareholder utility, due to the size of the investment and the length of time needed to commission a nuclear power facility.

A model has been proposed for relating the risk premium to the risk size (Goldberg and Rosner, 2011). The assumption is that the risk premium associated with a project is a function of the wealth of the sponsoring entity, as might be measured by, for example, NPV and debt to equity ratio. The mathematical expression for this relationship shows risk premium rising at an exponential rate as the size of the project approaches the size of the investor-firm.

If the investment size in different base load technologies is compared with the average annual revenues of a utility (Figure 10.5), it becomes evident that SMRs should be viewed more favourably by the investor community and bear lower risk premium than very large reactors. (Examples of current annual revenues for some US utilities: Exelon — $23.5 billion, Duke Energy — $19.6 billion.)

A rating methodology reported in Table 10.5 shows that business diversification in low versus high risk (i. e. nuclear) businesses is among the risk metrics considered in the evaluation of the merit of credit of a company. In this sense, SMRs allow a better industrial risk diversification, on account of a limited investment on total capital budget. In case of small-sized market or reduced capital budget availability, by including SMR in a portfolio mix it is possible to grant a business diversification,

that would be pre-empted by a large plant, reducing the investment risk (Locatelli and Mancini, 2011a).