Less than three years after Gov. Greg Abbott announced the creation of the Texas Advanced Nuclear Reactor Task Force, Texas has emerged as one of the nation’s leading testing grounds for small modular nuclear reactors (SMRs), a technology that has long been discussed but with few real-world examples to demonstrate it.
Officials and companies are betting that small nuclear reactors can help provide needed power to the Texas grid while bringing investment and jobs, although serious questions remain about cost, timelines and whether the technology can deliver on its promise.
The University of Texas at Austin’s Bureau of Business Research estimates that average demand on the grid could nearly triple by 2050, driven by data centers, electric vehicles and electrification of the Permian Basin oil fields.
Unlike the large nuclear power plants that have operated in Texas for decades, the new generation of small modular reactors are designed to be built in factories and shipped in batches for assembly on site. Supporters say they can provide reliable power while reducing emissions. Critics counter that no one has yet proven that the technology can be used on time and at a cost that makes economic sense.
In Texas, some projects now extend beyond research. Each uses different technology and targets different purposes. This summer, some of these companies face tests that could affect the trajectory of the entire industry.
Texas’ main power grid, operated by the Electric Reliability Council of Texas (ERCOT), will generate about 45% of its electricity from natural gas in 2023, followed by wind at 24%, coal at 14%, nuclear at 9% and solar at 7%. Over the past decade, the grid has become increasingly reliant on wind and solar power, but both are intermittent—they rely on the weather to generate electricity.
“I don’t know if we have enough wind, solar and (battery) storage to meet the 200, 300 gigawatts of load that are coming over the next few decades,” Texas Public Utility Commission Chairman Thomas Gleeson said at a Feb. 11 meeting in Austin. “If you believe in clean energy and care about the environment, nuclear power has to be part of the solution.”
“There are two differences with nuclear power: natural gas power is emissions-intensive and more expensive to operate once built than a nuclear power plant,” said Olivier Beaufils, director of U.S. central operations at consulting firm Aurora Energy.
But small nuclear reactors are expensive to build, and Bofils said they require customers willing to sign long-term agreements to buy power at a price high enough to make economic sense.
The explosion of data centers in Texas helps solve this challenge. Unlike most electricity consumers, large data centers operate around the clock, require large amounts of electricity on a consistent basis, and are built by large technology companies that can afford long-term power purchase agreements.
What is SMR?
Small modular reactors are nuclear power plants designed to generate 300 megawatts or less, a fraction of the two large reactors currently operating in Texas that generate more than 5,000 megawatts: Comanche Peak Nuclear Generating Station southwest of Fort Worth and the South Texas Project near Matagorda Bay.
This technology is not entirely new. Small reactors have been powering submarines since the 1950s. But the current generation is designed to be built in factories and shipped to be assembled on site.
Engineers are exploring several approaches: high-temperature gas reactors that use uranium wrapped in graphite spheres; molten salt reactors that use liquid fuel instead of solid rods; and sodium-cooled fast reactors that can use conventional fuels in a more compact design. Each requires trade-offs in terms of cost, security, scalability and regulatory readiness.
No small modular reactor has yet reached commercial operation in the United States. In 2023, NuScale Power, the first company to receive federal approval for a small modular reactor design, canceled its planned project in Idaho after costs rose and it was unable to secure adequate utility commitments.
Globally, Russia has been operating a floating nuclear power plant (a reactor mounted on a barge that powers remote Arctic communities) since 2020, and China connected a high-temperature gas reactor to the grid in 2021. In Canada, construction of an SMR in Ontario begins in 2025 and is intended to provide power to the grid.
Texas is positioning itself as a leading site for commercial-scale nuclear reactors. With $1.2 billion in support from the Department of Energy’s Advanced Reactor Demonstration Program, X-energy plans to build four 80-megawatt reactors at Dow Chemical’s Seadrift chemical plant on the Texas coast. It is expected to start generating electricity for the plant in the early 2030s, with excess electricity being fed to the national grid.
From working group to law
A “gold rush” for artificial intelligence and data centers has accelerated interest in the technology in Texas, where the state’s push for nuclear energy has moved from executive mandate to legislation in less than two years.
In August 2023, Abbott issued a directive to the Public Utilities Commission to establish the Texas Advanced Nuclear Reactor Working Group, which brought together industry, academia, and government to study how to position Texas as a center for advanced nuclear reactors.
By June 2025, the Texas Legislature passed House Bill 14, establishing the $350 million Texas Nuclear Development Fund to encourage the development of nuclear projects, the largest state-level commitment to nuclear energy in the country.
Meanwhile, the federal ADVANCE Act, signed in July 2024 with bipartisan support, directs the Nuclear Regulatory Commission to streamline its review process and cut licensing fees for advanced reactor developers by more than half.
Two different models in Texas
In Abilene, about 200 miles west of Dallas, Natura Resources is building the first advanced liquid-fueled research reactor in the United States in nearly 40 years. The project is located at Abilene Christian University, a $25 million research facility due to be completed in September 2023.
Natura has raised $120 million in private funding and received another $120 million from the Legislature.
Natura’s technology uses molten salt as fuel and coolant – the design was last tested at Oak Ridge National Laboratory in the 1960s. The company is starting by building a 1-megawatt research reactor in Abilene, aiming to prove to regulators and investors that the technology is effective and safe.
Its commercial reactor, still under development, is designed to generate 100 megawatts of electricity, enough to power approximately 65,000 to 70,000 homes in Texas.
Excess heat from electricity generation can drive thermal desalination systems. In the Permian Basin, oil and gas operations produce large amounts of contaminated water known as produced water, meaning a single reactor can simultaneously generate clean electricity and treat water that would otherwise become wastewater.
Douglass Robinson, founder and CEO of Natura, said the heat generated by the reactor could evaporate the water, leaving salt and other contaminants behind for processing, and then condense the steam into clean water.
“When we generate electricity, the waste heat from that generation is heat that we can use for desalination,” Robinson said. “So we’re doing both at the same time.”
The company hopes to have the Abilene research reactor operational by the end of 2026 or early 2027. If successful, the next step will be commercial deployment of its larger 100 MW design.
Aalo Atomics takes a different approach. The Austin-based startup, founded by Canadian-born engineer Matt Loszak, is designing sodium-cooled fast reactors, a technology that uses solid fuel like traditional nuclear power plants and is purpose-built for factory-scale production.
Each unit will generate 10 megawatts of electricity, enough to power approximately 6,000 to 7,000 homes in Texas, and the reactors will be sized to fit a standard truck. Aalo’s business model will consist of five such installations totaling 50 MW.
Loszak said the company plans to start up its first 10-megawatt test reactor in about five months after completing prototype testing in late December as part of its efforts toward commercial deployment.
“Our goal is to have a plant that can produce 20 or 30 gigawatts a year,” Loszak said. “All of our decisions stem from this mentality of mass manufacturing in the factory.”
Cost and waste challenges
Despite the momentum, fundamental challenges remain.
The cost is perhaps the greatest. A grid modeling analysis conducted for the UT study tested what the starting construction price of SMRs would be in the ERCOT market when competing with wind, solar and natural gas.
The conclusion: Nuclear power will only be built if current capital costs fall to $3 million per megawatt or less. But current industry forecasts from the National Renewable Energy Laboratory put SMR costs between $2.9 million and $10.1 million per megawatt, meaning nuclear power may not be cost-competitive in Texas until 2040 without significant cost reductions through regulatory reform, construction efficiencies or financial instruments.
“If we want to choose to be leaders in this space, we need to think hard and we need to incentivize participation,” said Matt Kammer-Kerwick, a researcher at the University of Texas Business Research Bureau.
Licensing is another hurdle. Even the fastest Nuclear Regulatory Commission review process can take 18 months or more. For companies developing newer reactor designs, the NRC requires operating data from demonstration reactors before approving a commercial license.
Then there is the problem of where to throw the trash. In the United States, there is no permanent solution for nuclear waste, and spent fuel rods can remain radioactive for thousands of years.
In 2020, Abbott joined environmentalists and oil companies in opposing the issuance of a federal license to a company that wanted to store spent nuclear fuel in West Texas. Critics of SMRs argue that smaller plants will still produce waste that has nowhere to permanently dispose of it.
Kammer-Kerwick compared this moment in the emerging small nuclear industry to the history of artificial intelligence, which experienced decades of false starts before its current surge.
“Are we ready for SMR now? There are a lot of signs that we are,” he said. “Let’s talk again in six months.”
Disclosure: The Dow Chemical Company and the University of Texas at Austin have been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization funded in part by donations from members, foundations and corporate sponsors. Financial backers play no role in the Tribune’s journalism. Find their full list here.
