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SMRs will help in Poland’s transition, but it may take a while

On 13 July this year, [Polish mining firm] KGHM received a fundamental decision from the Polish Ministry of Climate and Environment regarding the construction of a small modular nuclear power plant. This is the first of several decisions required to build nuclear power plants – a similar one was recently issued for a large-scale power plant being built by the company Polskie Elektrownie Jądrowe. Orlen Synthos Green Energy is also awaiting the fundamental decision for six locations.

The topic of Small Modular Reactors (SMR) has been a matter of public interest in Poland for the past two years. Currently, the number of announced SMR from various Polish entities exceeds 100. The majority, 76 reactors, are planned by Orlen Synthos Green Energy, a joint venture between the state-owned fuel and energy giant Orlen and one of Europe’s largest chemical companies, Synthos. They plan to construct BWRX-300 reactors in cooperation with the American-Japanese company GE Hitachi. Other SMR reactor manufacturers, such as Nuscale, Last Energy, Rolls Royce and EDF, also have plans for SMR development in collaboration with Polish partners. SMRs have been included in the proposal to update Poland’s energy transformation strategy (PEP2040 – Polityka Energetyczna Polski 2040) but the projected development of SMRs by the Ministry is estimated to reach about 2.1 gigawatts (GW) in 2040.

Poland is not the only country in the EU showing significant interest in SMRs. Countries actively supporting the development of SMR technology include the Czech Republic, Denmark, Romania and Estonia. Some EU countries provide financial support for SMR through developmental subsidies for example Belgium (100 million euros in May 2022) and France (1 billion euros up to 2030 which includes 500 mln euros support for Nuward reactor development). In Poland, in July 2023, the national development bank: BGK (Bank Gospodarstwa Krajowego) financed MS Galleon (a company associated with Orlen Synthos Green Energy) with the amount of 440 million euros, mainly for BWRX-300 development.

The most obvious application of SMRs in Poland, as in other countries interested in this technology, seems to be the production of electricity for the industrial sector. Currently, the industrial sector consumes one-third of Poland’s electricity demand. KGHM alone, which plans to build a 6-reactor VOYGR power plant (462 MWe total), uses approximately 3 terawatt hours (TWh) of electricity annually (1.8 per cent of the national demand). As decarbonisation progresses and with this electrification of some economic segments, the energy needs of the industry are expected to increase significantly. For example, in a net-zero scenario, Poland’s metallurgical industry would need to increase its annual electricity consumption from the current 6-7 TWh to over 30 TWh.

Another promising application of SMRs in Poland appears to be district heating. Poland has one of the most developed district heating networks, covering 40 per cent of households. However, over 80 per cent of the 53.5 GW in Poland’s district heating network comes from fossil fuels, mainly coal. Apart from that 46 per cent of all Polish households use direct coal and wood burning for heating purposes and even though they are not connected to district heating it might change in the future. Some of the SMRs announced by Orlen Synthos Green Energy, including one planned near Warsaw, are intended for heat production. According to calculations by Think Atom, even if we assume an increase in heat demand in Warsaw from the current 9 TWh to 14 TWh in the future, three 300 MWe nuclear reactors could meet up to 80 per cent of the city’s heat demand.

Despite optimistic market forecasts, experts are somewhat more sceptical about the timeline for SMR development. According to a foresight study conducted by the Polish Economic Institute experts believe that the first SMR should be expected around the mid-2030s and the installed capacity is not likely to exceed 5 GW until the mid-2040s. This uncertainty is attributed to the certification processes in the United States and Canada, where the first SMR projects will be established. Additionally, historical data show delays in the implementation of First-of-a-Kind (FOAK) projects in nuclear energy.

Legislative issues may also prove to be an important barrier. The process of obtaining permits for the construction of a nuclear power plant is a long-term process, which in the case of nuclear reactors – including SMRs – is much more demanding than in the case of other types of power plants. It is worth mentioning that a legal change is being prepared in Poland, which does not reduce the requirements, but improves the organisation of the path of obtaining decisions. For example, according to the amendment being prepared, the Investor will be able to submit significant fragments of the Location Report for its assessment even before the stage of submitting the application for obtaining a decision on determining the location of the investment in the construction of a nuclear power facility. This will allow for a more effective determination of whether the location is suitable for investment.

Costs could also be a challenge for SMR development. Although the unit costs are lower than those of large-scale nuclear power plants, the costs per MWh may not necessarily be lower. Recent estimates by NuScale Power indicate a 53 per cent increase, from 58 US dollars/MWh in 2021 to 89 US dollars/MWh in 2023. This cost already considers the US government’s support through the Inflation Reduction Act (IRA), without which the cost could be as high as 119 US dollars/MWh. To address this issue, both cost optimization by producers and support and guarantees from governments during reactor construction may be necessary. Additionally, there should be further debate about the future of nuclear energy in the EU taxonomy, which currently supports nuclear investments only until 2045. Harmonisation of regulations in the nuclear energy sector and standardisation of SMR certification in Europe could also accelerate investment implementation and reduce costs.

Despite the challenges, SMR technology represents a significant opportunity to support the energy transition, especially in Poland, with its high public acceptance of nuclear technologies – according to RePlanet research, public support for the use of the latest nuclear technologies for electricity production in Poland is 84 per cent, which is higher than in France (69 per cent) or the USA (61 per cent). Also, the vast majority of experts (88 per cent) surveyed by the Polish Economic Institute believed that support for SMR would be at a similar or higher level than in the case of large-scale nuclear energy. Social acceptance is crucial and investors should pay special attention to dialogue, giving local communities significant insights into plans for construction and the operation of reactors (including information about the disposal of radioactive waste) and allowing them to have a real influence on decisions regarding reactor placement in their neighbourhoods.

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