Although the specific (per kWe) overnight capital costs and investment costs tend to be higher for SMRs, as discussed in Section 6.2, the corresponding absolute capital outlay (in currency units, such as USD) is always significantly smaller for small reactors.

Projects with small capital outlay could be more attractive to private investors operating in liberalised markets in which the cost of financing and capital at risk are as important as the levelised unit product cost assuming the certainty of the production costs and the stability of the product prices.

Although the world electricity markets are still mainly regulated (see Section 6.1), the tendency is toward more liberalisation (see reference [6.14]) and, therefore, it is useful to examine the investment related performance of SMRs according to figures of merit alternative to the levelised unit electricity cost (LUEC).

The examinations of the above mentioned kind are being performed by a research team at the Politecnico di Milano (Italy) in collaboration with the Westinghouse Electric Company (United States), see reference [6.15]. The studies are focused on comparison of the incremental deployments of SMRs versus large reactors in terms of cash flow profiles and also include sensitivity analyses. The preliminary conclusions presented in reference [6.15] are as follows:

• Incremental capacity increase with SMRs reduces the front-end investment and the capital — at-risk compared to capacity increase with large reactors, see Figure 6.8.

• Lower interest during construction of SMRs helps compensate the higher specific overnight capital costs.

• SMRs may more easily attract investment.

• Notwithstanding the higher specific overnight capital costs, incrementally deployed SMRs could be comparable to large reactors in terms of profitability.

• The deployment schedules for incrementally built SMRs need to be carefully optimised to avoid delays which shift the cash inflow forward.

Two deployment scenarios have been considered in [6.15]: Four 300 MWe SMRs incrementally deployed according to different construction schedules, versus one large 1 200 MWE reactor (Figure 6.8). Comparison of the scenarios of Figure 6.8 shows that a more staggered build of SMRs reduces

the capital-at-risk (maximum negative values of the cash flow), but moves the cash inflow forward in time.

Figure 6.9 and Figure 6.10 from [6.15] show that the staggered build of SMRs enables a partial self-financing of the subsequent SMR projects (at the expense of the profits obtained from sales of electricity from the already built and commenced units). The more staggered the SMR build is, the broader the options for self-financing. This feature of incremental capacity increase could be attractive to those utilities who wish to increase the installed capacity using mostly their own funds, with minimum reliance on external loans.

An assessment or a detailed analysis of the results presented in reference [6.15] is beyond the scope of this report, in which the LEUC has been selected as a figure-of-merit to analyse nearer-term deployments of advanced SMRs, see the discussion in Section 6.1. However, studies such as [6.15] could facilitate broader involvement of private investors (specifically, those from non-nuclear sector) to support development and deployment of advanced SMRs and, therefore, should be encouraged.

Figure 6.8. Construction schedules (top) and cumulative cash flows (bottom) for the deployment of four 300 MWe SMRs versus one 1200 MWe large reactor (an example of calculations performed in reference

[6.15] )

As for large nuclear power plants, the public-private partnership is an attractive option for financing the project. In the case of SMRs, the private-public partnerships involving private investors from a non-nuclear sector already have some history, since the capital requirements are smaller than for very large nuclear projects. As it has been noted in Chapter 5, the State Atomic Energy Corporation "Rosatom" and the private JSC "Evrosibenergo" have formed a public-private joint venture company "AKME Engineering" to develop and deploy the SVBR-100 small lead-bismuth cooled reactor (see Section 4.2.6) by 2017. Within this joint venture company the financing is provided by the privately owned JSC "Evrosibenergo".

Public-private partnerships are also being considered for development of new small and modular reactors in the United States, see Section 5.

Figure 6.9. Sources of SMR financing for the first deployment scenario of Figure 6.8 (an example of

calculations performed in reference [6.15])

4 SMRs (300 MWe) over 11 years

180 160 140 120

100

s

80

Ш

60 40 20 0