This is the first part of a feature story which previously appeared on the website of Peace Magazine on July 1, 2022.
In 2006, Elizabeth Holmes, founder of a Silicon Valley startup company called Theranos, was featured in Inc magazine’s annual list of 30 under 30 entrepreneurs. Her entrepreneurship involved blood, or more precisely, testing blood. Instead of the usual vials of blood, Holmes claimed to be able to obtain precise results about the health of patients using a very small sample of blood drawn from just a pinprick.
The promise was enticing and Holmes had a great run for a decade. She was supported by a bevy of celebrities and powerful individuals, including former U.S. secretaries of state Henry Kissinger and George Shultz, James Mattis, who later served as U.S. secretary of defense, and media mogul Rupert Murdoch. Not that any of them would be expected to know much about medical science or blood testing. But all that public endorsement helped. As did savvy marketing by Holmes. Theranos raised over $700 million from investors, and receive a market valuation of nearly $9 billion by 2014.
The downfall started the following year, when the Wall Street Journal exposed that Theranos was actually using standard blood tests behind the scenes because its technology did not really work. In January 2022, Holmes was found guilty of defrauding investors.
The second part of the Theranos story is an exception. In a culture which praises a strategy of routine exaggeration, encapsulated by the slogan “fake it till you make it”, it is rare for a tech CEO being found guilty of making false promises. But the first part of Theranos story—hype, advertisement, and belief in impossible promises—is very much the norm, and not just in the case of companies involved in the health care industry.
Small Modular Nuclear Reactors
Nuclear power offers a great example. In 2003, an important study produced by nuclear advocates at the Massachusetts Institute of Technology identified costs, safety, proliferation and waste as the four “unresolved problems” with nuclear power. Not surprisingly, then, companies trying to sell new reactor designs claim that their product will be cheaper, will producing less—or no—radioactive waste, be immune to accidents, and not contribute to nuclear proliferation. These tantalizing promises are the equivalent of testing blood with a pin prick.

And, as was the case with Theranos, many such companies have been backed up by wealthy investors and influential spokespeople, who have typically had as much to do with nuclear power as Kissinger had to with testing blood. Examples include Peter Thiel, the Silicon Valley investor; Stephen Harper, the former Prime Minister of Canada; and Richard Branson, the founder of the Virgin group. But just as the Theranos product did not do what Elizabeth Holmes and her backers were claiming, new nuclear reactor designs will not solve the multiple challenges faced by nuclear power.
One class of nuclear reactors that have been extensively promoted in this vein during the last decade are Small Modular Reactors (SMRs). The promotion has been productive for these companies, especially in Canada. Some of these companies have received large amounts of funding from the national and provincial governments. This includes Terrestrial Energy that received CAD 20 million and Moltex that received CAD 50.5 million, both from the Federal Government. The province of New Brunswick added to these by awarding CAD 5 million to Moltex and CAD 25 million in all to ARC-100.
All these companies have made various claims about the abovementioned problems. Moltex, for example, claims that its reactor design “reduces waste”, a claim also made by ARC-100. ARC-100 also claims to be inherently safe, while Terrestrial claims to be cost-competive. Both Terrestrial and ARC-100 claim to do well on proliferation resistance. In general, no design will admit to failing on any of these challenges.
Dealing with any of these challenges—safety enhancement, proliferation resistance, decreased generation of waste, and cost reduction—will have to be reflected in the technical design of the nuclear reactor. The problem is that each of these goals will drive the requirements on the reactor design in different, sometimes opposing, directions.
Economics
The hardest challenge is economics. Nuclear energy is an expensive way to generate electricity. In the 2021 edition of its annual cost report, Lazard, the Wall Street firm, estimated that the levelized cost of electricity from new nuclear plants will be between $131 and $204 per megawatt hour; in contrast, newly constructed utility-scale solar and wind plants produce electricity at somewhere between $26 and $50 per megawatt hour according to Lazard. The gap between nuclear power and renewables is large, and is growing larger. While nuclear costs have increased with time, the levelized cost of electricity for solar and wind have declined rapidly, and this is expected to continue over the coming decades.
Even operating costs for nuclear power plants are high and many reactors have been shut down because they are unprofitable. In 2018, NextEra, a large electric utility company in the United States, decided to shut down the Duane Arnold nuclear reactor, because it estimated that replacing nuclear with wind power will “save customers nearly $300 million in energy costs, on a net present value basis.”
The high cost of constructing and operating nuclear plants is a key driver of the decline of nuclear power around the world. In 1996, nuclear energy’s share of global commercial gross electricity generation peaked at 17.5 percent. By 2020, that had fallen to 10.1 percent, a 40 percent decline.

The high costs described above are for large nuclear power plants. SMRs, as the name suggests, produce relatively small amounts of electricity in comparison. Economically, this is a disadvantage. When the power output of the reactor decreases, it generates less revenue for the owning utility, but the cost of constructing the reactor is not proportionately smaller. SMRs will, therefore, cost more than large reactors for each unit (megawatt) of generation capacity. This makes electricity from small reactors more expensive. This is why most of the early small reactors built in the United States shut down early: they just couldn’t compete economically.
SMR proponents argue that the lost economies of scale will be compensated by savings through mass manufacture in factories and as these plants are built in large numbers costs will go down. But this claim is not very tenable. Historically, in the United States and France, the countries with the highest number of nuclear plants, costs went up, not down, with experience. Further, to achieve such savings, these reactors have to be manufactured by the hundreds, if not the thousands, even under very optimistic assumptions about rates of learning. Finally, even if SMRs were to become comparable in cost per unit capacity of large nuclear reactors, that would not be sufficient to make them economically competitive, because their electricity production cost would still be far higher than solar and wind energy.
At this point, there is often an objection from advocates of nuclear power. This is not a fair comparison, they say, because solar and wind energy depend on the sun shining and the wind blowing. But, the idea that the electric grid cannot be reliably operated if much of the electricity comes from variable sources like solar and wind power is just a myth. Suffice it to say that despite the differences in their characteristics, the comparison in generation costs between nuclear power and solar and wind energy is not invalid. And the large difference in these costs means that there is ample scope to pay for complementary technologies needed to accommodate the variability of solar and wind power.
There are other historical reasons to be doubtful of the exuberant promises made by SMR proponents. In reality, the actual cost of projects is much higher than the advertised cost. One independent study showed that 175 of the 180 nuclear power projects examined took had final costs that exceeded the initial budget by an average of 117% (and took, on average, 64% longer than projected).
Cost escalations are already apparent in the case of the NuScale SMR, arguably the design that is most developed in the West. The estimated cost of the Utah Association of Municipal Power Systems project went from approximately $3 billion in 2014 to $6.1 billion in 2020—this is to build twelve units of the NuScale SMR that were to generate 600 megawatts of power. The cost was so high that NuScale had to change its offering to a smaller number of units that produce only 462 megawatts, but at a cost of $5.32 billion. In other words, the cost per kilowatt of generation capacity is around $11,500 (US dollars). That figure is around 80 percent more than the per kilowatt cost of the infamous Vogtle project at the time its construction started. Since that initial estimate of $14 billion for the two AP1000 reactors, the estimated cost of the much delayed project has escalated beyond $30 billion. As with the AP1000 reactors, there is every reason to believe that if and when a NuScale SMR is built, its final cost too will vastly exceed current official estimates.
The bottom line—nuclear power, whether from large or small nuclear reactors, is just not economically competitive. But this is not what you will hear from the vendors of small modular reactors.
M. V. Ramana is the Simons Chair in Disarmament, Global and Human Security at the School of Public Policy and Global Affairs, University of British Columbia and the author of The Power of Promise: Examining Nuclear Energy in India.