Demand-led SMRs: A 'government-last' model to power industrial growth through privately funded SMRs

What is a demand-led SMR? 

A demand-led SMR (small modular reactor) is a nuclear energy project where deployment is driven by confirmed private sector electricity demand — typically from large industrial energy buyers such as hyperscalers — rather than by government procurement or speculative capacity planning. In a demand-led model, long-term power purchase agreements (PPAs) from creditworthy offtakers anchor the investment case, enabling private capital to fund construction with minimal public subsidy. 

What is the 'Government-last' model for nuclear financing? 

The 'Government-last' model is a financing framework for SMR deployment in which the private sector leads investment and Government acts as an enabler rather than a funder. Under this model, hyperscaler demand anchors the revenue case through long-term PPAs, private capital finances construction, and Government provides a targeted, standardised support package to de-risk residual regulatory and market uncertainties — with zero expected cost to taxpayers.

Why are hyperscalers interested in nuclear energy? 

Hyperscalers - including companies like Amazon, Microsoft, and Google - are pursuing nuclear energy because AI-driven data centres require large volumes of firm, 24/7 low-carbon electricity that intermittent renewables alone cannot reliably provide. Nuclear SMRs offer long-term price certainty, baseload reliability, and alignment with corporate net zero commitments, making them an increasingly attractive component of hyperscaler energy strategies globally. 

How much could AI and data centres contribute to UK GDP? 

AI and cloud computing could deliver up to £550 billion in cumulative UK GDP uplift by 2035, according to independent estimates quoted in Baringa's demand-led SMR report. Capturing this economic value depends on the UK's ability to provide sufficient reliable, low-carbon electricity to power hyperscale data centre infrastructure at pace and scale.

Can SMRs be built without taxpayer funding? 

Yes. Baringa's report sets out a 'Government-last' financing model in which privately funded SMRs can be deployed with zero expected cost to taxpayers. Private demand from hyperscalers anchors the investment case, while a standardised Government Support Package reduces residual risk without requiring direct public expenditure or consumer bill impacts. 

How much could SMRs reduce industrial electricity prices? 

Baringa's analysis shows that demand-led SMR deployment, supported by a standardised Government Support Package, could reduce industrial electricity PPA prices by up to 30% compared to unsubsidised alternatives - offering significant long-term cost advantages for large energy buyers while maintaining commercially viable returns for investors. 

What is the UK's window of opportunity for SMR deployment? 

The UK has an estimated 12-month window to establish credible, demand-led SMR projects before hyperscalers commit their long-term energy contracts to other markets. With global competition for AI infrastructure investment intensifying, coordinated action across industry and Government within the next year is critical to securing early-mover advantage and first power by the mid-2030s. 

What is the Advanced Nuclear Framework? 

The Advanced Nuclear Framework is a UK Government policy initiative that provides the strategic foundations for advanced nuclear deployment, including SMRs. It sets out the regulatory, planning, and policy environment intended to support new nuclear projects. Baringa's report builds on this framework, arguing that the critical next step is translating policy intent into bankable, investable propositions through a 'Government-last' financing model that can complement the Government-led programme, but unlock demand-led SMR deployment.  

Who benefits from demand-led SMR deployment? 

Demand-led SMR deployment creates value for multiple stakeholders: hyperscalers gain access to firm, low-carbon power at competitive prices; the nuclear industry secures a commercially viable order book and pathway to fleet-scale deployment; Government achieves economic growth, energy security, and industrial strategy objectives with minimal fiscal exposure; and taxpayers face zero expected cost. 

How many investors have been consulted on the SMR financing model? 

The demand-led SMR financing model presented in Baringa's report was developed through engagement with over 100 potential investors, alongside deep analysis of UK energy market structures, regulatory frameworks, and commercial risk allocation. This extensive stakeholder engagement underpins the model's commercial credibility and investability.