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Texas has emerged as a central proving ground for small modular nuclear reactors as electricity demand is expected to rise and the state’s grid leans on generation sources that can fluctuate with weather. Less than three years after Gov. Greg Abbott announced the Texas Advanced Nuclear Reactor Working Group, officials and companies are betting that the smaller reactors—built in factories and assembled on site—could help support reliable power while attracting investment and jobs, even as questions persist about whether the technology can be delivered on cost and schedule.
The case for small nuclear in Texas is tied to projected load growth on the Electric Reliability Council of Texas, or ERCOT, grid. The Bureau of Business Research at the University of Texas at Austin estimated that average demand on the grid could nearly triple by 2050, driven by data centers, electric vehicles and the electrification of the Permian Basin oil fields. Supporters argue that small modular reactors could add capacity in a form that complements intermittence from wind and solar, which depend on weather to produce power.
ERCOT’s existing mix shows how much the grid already relies on gas, wind and solar. In 2023, ERCOT drew about 45% of its electricity from natural gas, followed by wind at 24%, coal at 14%, nuclear at 9% and solar at 7%. The growing reliance on wind and solar over the past decade has increased attention on how much dispatchable generation could be needed as new demand comes online, according to people speaking at energy and utility discussions, including a February conference in Austin.
Thomas Gleeson, chair of the Public Utility Commission of Texas, said at that Feb. 11 conference that he did not know whether wind, solar and battery storage would be sufficient for “the 200, 300 gigawatts of load that are coming over the coming decades.” He added, “If you believe in clean energy and care about the environment, nuclear has to be a part of that solution.” Olivier Beaufils, head of U.S. Central at consulting firm Aurora Energy, said nuclear’s role differs from natural gas because gas generation is “emissions-intensive” and more expensive to run than a nuclear plant after construction, while also emphasizing that small reactors face a financing barrier.
Beaufils said small nuclear reactors are expensive to build and require customers willing to sign long-term agreements to buy the power at a price high enough to make the economics work. That long-term demand, he said, aligns in part with the “explosion of data centers coming to Texas,” which operate around the clock and need consistent high volumes of electricity. The AP report describes those data centers as built by big tech companies that can afford long-term power purchase agreements, which could make the reactor economics more viable than for many traditional utility buyers.
Small modular reactors are nuclear plants designed to produce 300 megawatts of electricity or less, compared with the more than 5,000 megawatts generated by Texas’s two large nuclear plants. Those existing facilities are the Comanche Peak plant southwest of Fort Worth and the South Texas Project near Matagorda Bay. The technology builds on earlier work—small reactors have powered submarines since the 1950s—but current designs aim for factory fabrication and shipment for assembly on site, and the industry is exploring multiple approaches.
Engineers are developing several reactor types, each with trade-offs. The report outlines high-temperature gas reactors that use uranium encased in graphite spheres, molten salt reactors that use liquid fuel rather than solid rods, and sodium-cooled fast reactors that can use conventional fuel in a more compact design. None of the small modular reactors have yet reached commercial operation in the United States, and the industry has seen setbacks elsewhere: NuScale Power canceled its planned Idaho project in 2023 after costs rose and the company could not secure enough utility commitments.
Texas’s push is also framed as a policy and regulatory acceleration. In August 2023, Abbott issued a directive to create the Texas Advanced Nuclear Reactor Working Group, bringing together industry, academia and government to study how to position Texas as a hub for advanced nuclear. By June 2025, the Texas Legislature passed House Bill 14, which established a $350 million Texas Nuclear Development Fund, described in the report as the largest state-level commitment to nuclear energy in the country. The report also points to federal action: the ADVANCE Act, signed in July 2024, directed the Nuclear Regulatory Commission to streamline reviews and cut licensing fees for advanced reactor developers by more than half.
Several Texas projects are now moving beyond studies, each using a different technology and targeting different end uses. In one major effort, X-energy plans four 80-megawatt reactors at Dow’s Chemical’s Seadrift chemical plant on the Texas coast. The project is backed by $1.2 billion from the Department of Energy’s Advanced Reactor Demonstration Program and is expected to start producing power for the plant—and potentially send excess electricity to the grid—in the early 2030s.
In West Texas, Natura Resources is building an advanced liquid-fuel research reactor at Abilene Christian University, with a $25 million research facility completed in September 2023. The report says Natura has raised $120 million in private funding and received another $120 million from the Legislature, and that its molten salt design uses the same substance as fuel and coolant. Natura first is building a 1-megawatt research reactor in Abilene to demonstrate safety and workability to regulators and investors, while its commercial reactor design targets 100 megawatts, described as enough to power about 65,000 to 70,000 Texas homes.
The Natura design also aims to use waste heat for thermal desalination. The report says the excess heat from power generation could drive systems that treat produced water—contaminated water from oil and gas operations in the Permian Basin—turning it into a waste stream suitable for disposal. Douglass Robinson, Natura’s founder and CEO, described the approach by saying that the waste heat from electricity generation could be used for the desalination “So we do both at the same time.” The company hopes to have its Abilene research reactor operational by the end of 2026 or early 2027, with subsequent commercial deployment planned for the larger 100-megawatt design if the demonstration succeeds.
Aalo Atomics is pursuing a separate path. The Austin startup, founded by Canadian-born engineer Matt Loszak, is designing a sodium-cooled fast reactor intended for factory mass production, with each unit producing 10 megawatts—enough, the report says, to power roughly 6,000 to 7,000 homes in Texas. Its commercial concept consists of five units totaling 50 megawatts. Loszak told the report the company aims to activate its first 10-megawatt test reactor within about five months after prototype testing at the end of December, and he said the company’s goal is “to have a factory that can produce 20 or 30 gigawatts per year,” describing decisions made around that factory approach.
Despite the momentum, the report describes fundamental challenges that could determine whether small nuclear reactors take hold in Texas and beyond. Cost is central, with one grid modeling analysis for the UT study finding nuclear would begin to be built in the ERCOT market only when upfront capital costs fall to $3 million per megawatt or below. The report says industry projections from the National Renewable Energy Laboratory place SMR costs between $2.9 million and $10.1 million per megawatt, meaning nuclear may not be cost competitive in Texas before 2040 without major cost reductions driven by regulatory reform, construction efficiency or financial tools.
Licensing also remains a hurdle. The report says even at its fastest, the Nuclear Regulatory Commission’s review process takes 18 months or more, and that for newer reactor designs, the NRC requires operating data from demonstration reactors before approving commercial licenses. Waste disposal is another issue, because nuclear waste has no permanent solution in the United States and used fuel rods can remain radioactive for thousands of years. Abbott joined environmentalists and oil companies in 2020 to oppose a federal license for a company that sought to store spent nuclear fuel in West Texas, and critics of SMRs argue smaller plants will still produce waste without a clear long-term storage path.
Kammer-Kerwick, a researcher at the UT Bureau of Business Research, compared the current moment for small nuclear to the earlier history of artificial intelligence, saying it went through decades of false starts before gaining momentum. He told the report, “Are we ready for SMR now? There are a lot of indications that we are,” adding, “Let’s talk in six months.”