Introduction

The SMR revolution is happening now.  No longer just "PowerPoint reactors," U.S. technology companies have moved into the "build" phase, with smart partnerships in the face of tough competition from Russia, China and new and old European companies. The question for Türkiye is whether Turkish companies will be leaders or followers in this revolution?

Why Now?

The quest for energy security has been one of the most significant drivers of geopolitics. Hydrocarbons (coal, oil, natural gas) have played and will continue to play an important role in global energy supply. However, hydrocarbon supplies are vulnerable to politically driven instability. Today, the war in Iran and the closing of the Straits of Hormuz has raised global hydrocarbon supply uncertainty at precisely the moment that global energy demand is growing dramatically to feed power hungry data centers and artificial intelligence.

Concurrently, the European Union is driving global industry to find carbon-free energy sources, notwithstanding the U.S.’s schizophrenia on decarbonization policy. Global experience with the extreme supply and price variability of wind and solar electricity shows the need to supplement variable sources with steady, baseload power.

Nuclear power plants offer some of the most stable, reliable, carbon-free electric power and industrial heat on the planet. Now small modular reactors (SMRs) are changing the nuclear game. Instead of 8-12 year (or more!) construction times, SMRs (generally defined as capable of producing 50-300MW of electricity from a single unit) can be built and operational in 3-5 years with key components built and assembled in a cost- and quality-controlled factory concurrent with site work. With inherent safety features like self-shutdown and continuous self-cooling, SMRs can be placed in industrial zones and urban areas to deliver power and heat for industrial processes, water desalination, and hydrogen generation directly to the customer. As SMRs move beyond first-of-a-kind (“FOAK”) in the next few years, they will have clear answers to nuclear’s biggest challenges: cost and time to market.

The world’s richest companies – Amazon, Dow Chemical, Google, Meta, and Microsoft to name a few – have committed to invest in and buy gigawatts of power from SMRs. Long-time suppliers like Westinghouse and General Electric Vernova (“GEV”) are joined by billion-dollar capitalized newcomers to nuclear like Holtec, Kairos, NuScale, Oklo, Terrapower, X-energy. All have applied for or received licenses for SMR-class reactors from the U.S. Nuclear Regulatory Commission and many have already broken ground on nuclear construction for commercial scale FOAK reactor projects across North America. Five companies, GEV, Holtec, NuScale, Terrapower, and X-energy have received hundreds of millions of dollars from the U.S. government to offset FOAK costs and risks.

Is Türkiye Competitive?

So where is Türkiye in today’s nuclear game? The government has set ambitious goals to have 20 GW of nuclear power capacity by 2053, including 5 GW from SMRs. The large, RosAtom reactor project at Akkuyu has proceeded much more slowly than planned. But even if Russia hadn’t created so many problems for RosAtom globally with its war against Ukraine, a FOAK build under the conditions set by the Russian agreement would be bound to encounter difficulties and delays. The two other sites for large reactors designated by the government - Sinop and Igneada - have yet to recover from the loss of the lead project companies. Media reports that Canadian, Chinese, Russian, and South Korean firms have explored revised projects but agreeing on bankable, commercial terms appear to be the major sticking points.

But there is much good news. The Turkish companies that won contracts to support the Akkuyu project are joining some of Türkiye’s most important industrial groups who have already certified nuclear supply chain capabilities. The Ministry of Energy and Natural Resources, after some delay, is working to issue regulations to facilitate SMR development. And, the Ministry of Industry is finalizing a competition to support development of a unique, Turkish design for an advanced SMR.

Can Turkish companies catch up to the decades of development work and the billions of dollars in investments competitors have made in research, design, supply chain, and deployment skills? Maybe. Success will likely depend on how government and industry work together to take advantage of existing skills - engineering, procurement and management (EPC), infrastructure development, and the nuclear-grade supply chain – which could jump start a domestic nuclear industry first for Türkiye’s internal needs and for regional and global development.

What Can Industry Do?

Form strong partnerships.  From their foundations, Türkiye’s major construction companies have leveraged foreign partnerships to advance skills at home and build market share abroad.  Nuclear offers the same opportunity.

Take calculated risks. Every new project requires moving through the learning curve.  Even "proven" technologies abroad must go through FOAK learnings to deploy at home.  Akkuyu is a case in point.

Invest (at home, not just abroad). Learning by investing in projects outside Türkiye is a proven model. Simultaneously, Turkish firms must invest at home to drive the market and develop a fleet of SMRs.  Foreign investors have strong competition for their investment dollar and need to see local partners have skin in the game to help mitigate risk perceptions.

What Can Government Do?

Invest in people. Not just nuclear engineers and plant operators, although there is already growing global demand. Craft skills at nuclear grade - electricians, pipe-fitters, welders are in short supply.

Clarify the laws and regulations.  Industry has been waiting for new laws and regulations that account for the enhanced safety and inherent repeatability of SMR plants.  Finishing work now will give industry the clarity it needs to make better, faster investment decisions.

Address market dysfunctions. Long-term investments like nuclear need stable, long-term returns.  Electricity market mechanisms that vary pricing with an eye on demand management have the unintended consequence of creating wild price fluctuations, particularly at times when unmanageable variations in solar and wind power oversupply the market.

Stabilize macroeconomic policies. Efforts to reduce inflation and bring markets into better balance must continue. No matter how attractive an investment in nuclear in Türkiye may appear, macroeconomic policy fluctuations increase volatility and the perception of risk. In the end, Türkiye is competing with global peers, from Poland and Romania to Indonesia, Malaysia and Vietnam, for nuclear investment dollars. Perceptions of risk can become the deciding factor even when other conditions favor Türkiye.

Conclusion

Türkiye enjoys a unique position in the world today. Located at the world’s historic cradle and crossroads of civilizations, blessed with a young, well-educated population, and hosting strong export industries, Türkiye can develop a robust civil nuclear energy ecosystem to fuel further growth and development. The opportunity is there if Industry and Government work together with the right, strong international partners.

Introduction

A common misconception about SMRs (small modular reactor) is that they are simply smaller versions of the large nuclear plants built in the mid-20th century. That is somewhat true for early SMR designs based on traditional reactors like PWRs (pressurized water reactors) and BWRs (boiling water reactors) — though modern water-cooled SMRs such as the BWRX-300 and NuScale's VOYGR are themselves far from miniaturized legacy plants, incorporating passive safety features and substantially reduced emergency planning footprints. But for Gen IV (Generation IV) SMRs, that comparison does not hold. These newer designs operate in fundamentally different ways: they use different coolants, achieve higher fuel efficiency, and have much smaller emergency planning zones. Most importantly, these reactors are designed to stay safe on their own, using natural physical processes like heat flow and gravity, instead of relying heavily on complex backup systems or human intervention.

Among the most commercially advanced Gen IV SMR designs are the Xe-100 HTGR (high-temperature gas-cooled reactor), developed by X-energy, and the Natrium SFR (sodium fast reactor), developed by TerraPower. Both secured funding under the U.S. Department of Energy's Advanced Reactor Demonstration Program. X-energy has attracted Dow Chemical as a major industrial process-heat customer and Amazon as a power offtake partner through Energy Northwest. Together, Amazon and X-energy have committed to deploy more than 5 GWe of Xe-100 capacity across the United States by 2039 — equivalent to approximately 63 individual 80-MWe reactor modules, or roughly 16 quad-pack plants — the largest commercial SMR deployment target on record.¹ TerraPower signed an agreement in January 2026 with Meta for up to eight Natrium reactors (345 MWe each, approximately 2.8 GWe combined baseload capacity), the largest single commercial commitment in the Natrium's history. Taken together, these commitments imply a combined fleet of more than 70 advanced Gen IV reactors from two designs by the late 2030s — a scale at which both programs are projected to reach NOAK (Nth-of-a-kind) economics by 2040 — industry analysis suggests NOAK status is achieved after as few as five to seven units for modular SMR designs — where serial factory production and learning-curve cost reductions are expected to deliver generation costs broadly competitive with combined-cycle gas. As of Q2 2026, both reactors are in active construction or licensing phases in the United States. The March 2026 issuance by the U.S. NRC (Nuclear Regulatory Commission) of the first construction permit for a non-light-water commercial reactor in more than 40 years — Kemmerer Unit 1 — marks a regulatory watershed that deserves careful attention from the global energy and infrastructure communities.

A Different Physics: Why Gen IV Is Not a Miniaturization

The defining characteristic of conventional nuclear power — whether in large PWRs, BWRs, or their LWR (light water reactor)-based SMR successors — is the use of water as both a coolant and a neutron moderator. This reliance on water imposes a chain of consequential constraints: the reactor must operate at high pressures to keep water in a liquid state, at gigawatt scale it must be located near a substantial body of water for cooling and emergency heat removal, and its safety architecture must account for loss-of-coolant accidents which have historically defined the most serious civilian nuclear incidents. These constraints are not merely engineering inconveniences: they determine where a plant can be built, who can finance it, and what it can do beyond generating electricity. Water-cooled SMRs mitigate these constraints through smaller absolute water demand and, in some designs, optional air-cooled condensers at modest efficiency cost; Gen IV designs eliminate the safety-related water requirement entirely.

LWR fuel efficiency compounds these limitations further. After extracting less than 5% of the available nuclear energy, LWR fuel must be discarded without further use as nuclear waste — driven by physical degradation and isotope composition changes to the ceramic pellets in which it is housed. Effectively, with LWRs we forego more than 95% of the nuclear energy that was deposited on our planet as stored supernova explosion energy over billions of years. This makes terrestrial uranium a finite and ultimately limited resource — unless and until humanity develops an economically viable method to extract the estimated 4.5 billion tonnes of uranium dissolved in the world's oceans — over 250 times current identified terrestrial reserves — which would extend the nuclear fission fuel supply by thousands of years.

Gen IV SMRs break each of these constraints simultaneously. The Xe-100 uses inert helium gas as its coolant and graphite as its moderator, operating at lower system pressure with a reactor outlet temperature of approximately 750°C (delivering steam at ~565°C), and is fueled by TRISO pebbles that achieve approximately twice the burnup of conventional LWR fuel through continuous online refueling without reactor shutdown. SFRs use liquid sodium as their coolant in a pool-type configuration at near-atmospheric pressure. Neither design is susceptible to the pressurized steam explosions or loss-of-coolant accident scenarios that characterize LWR safety analyses. Neither requires proximity to a river, lake, or ocean. Neither depends on active pumping systems or operator intervention to achieve a safe shutdown state.

Passive Safety and the Reduction of Emergency Planning Zones

Perhaps the most consequential — and commercially underappreciated — implication of Gen IV reactor physics is the dramatic reduction in the EPZ (Emergency Planning Zone) required around the plant. Under NRC regulations, conventional large LWRs are required to maintain a plume exposure EPZ of approximately 10 miles (~16 km) in radius and an ingestion pathway EPZ of approximately 50 miles (~80 km). These distances reflect the speed and magnitude of a potential radiological release from a large PWR or BWR under severe accident conditions.

Gen IV SMRs operate under an entirely different accident physics regime. Because the Xe-100's TRISO fuel particles are individually encapsulated in ceramic and carbon layers and can withstand temperatures exceeding 1,600°C without failure, the potential for a large-scale radiological release is physically precluded — not merely made unlikely through engineered controls. X-energy has formally proposed to the NRC that the Xe-100's EPZ coincide with the site boundary, requiring no offsite emergency planning and no evacuation or sheltering plans for surrounding communities. This is consistent with the NGNP (Next Generation Nuclear Plant) HTGR program, which established a technical basis for an EPZ at approximately 400 meters for high-temperature gas-cooled reactors. The practical implication is transformative: a Gen IV HTGR can be located adjacent to an industrial facility, a data center campus, a university, or an urban energy district — configurations categorically unavailable to the current large-reactor nuclear fleet. Light-water SMRs are moving in the same direction — the NRC has approved NuScale’s EPZ sizing methodology under which a site-boundary EPZ is achievable on a site-by-site basis, and Finland's STUK removed distance-based safety zones for new nuclear plants in 2024, enabling the plan to site light-water heating reactors underground in central Helsinki.

SFRs achieve equivalent EPZ reduction through a distinct but equally compelling physical mechanism. Operating as a pool-type reactor at near-atmospheric pressure — compared to the ~155-bar operating pressure of a conventional PWR — SFRs are inherently incapable of the rapid, pressurized loss-of-coolant events that drive large LWR emergency planning requirements. In any postulated accident scenario, the large mass of liquid sodium in the pool provides enormous passive heat removal capacity, and the slow accident progression — measured in hours rather than minutes — affords extensive response time well before any offsite dose consequence could approach EPA Protective Action Guides. TerraPower has designed its SFR to comply with the NRC's 2023 Emergency Preparedness Final Rule (10 CFR 50.160), which employs a consequence-oriented approach to EPZ sizing for advanced reactors: rather than mandating a fixed 10-mile radius, the rule requires the licensee to demonstrate that the dose at the site boundary would not exceed protective action guideline levels under any credible accident scenario. If that demonstration is made — and the SFR's design characteristics strongly support it — no offsite emergency planning, public notification systems, or evacuation drills are required. This opens the same siting universe for SFRs as for the Xe-100: former industrial sites, energy parks adjacent to population centers, and landlocked locations that could never host a conventional nuclear facility.

This reduced EPZ also directly enables one of the Xe-100's most significant economic advantages: the delivery of heat as heat to co-located industrial consumers. When high-temperature process heat is delivered directly from the reactor to an adjacent industrial site — bypassing the conventional conversion to electricity and reconversion to thermal energy — the system's total energy utilization rises dramatically. In CHP (combined heat and power) mode, high-temperature gas-cooled reactors can achieve total energy efficiencies of approximately 90%, according to assessments conducted under the EU-funded ARCHER research program. This compares with the 33–37% electrical efficiency of conventional nuclear plants and the 60–80% typical of fossil-fueled CHP systems. The ability to physically site a Gen IV reactor at or immediately adjacent to the industrial consumer — made possible precisely by the elimination of the large-radius EPZ — is the enabling condition for realizing this efficiency premium.

Comparative Overview: Xe-100, Natrium, and Conventional Designs

The table below summarizes the principal technical and operational distinctions between the Xe-100, SFRs, and conventional LWR-based SMRs and large nuclear power plants. These distinctions are not incremental: they represent a categorical difference in what these reactors can do, where they can be built, and how they respond under abnormal conditions.

Table 1: Comparative Technical and Operational Profiles — Xe-100, Natrium, and Conventional LWR Designs. Sources: U.S. DOE; X-energy NRC Licensing Topical Report; TerraPower Natrium FAQ; National Academies of Sciences, Engineering, and Medicine (2023); NRC EPZ regulations; X-energy Emergency Planning White Paper (NRC ML23240A746).

Fuel Flexibility: From Reprocessed LWR Waste to Thorium

One of the most consequential — and least widely appreciated — advantages of Gen IV fast-spectrum reactors is their capacity to serve as consumers of the spent fuel generated by the existing global fleet of LWRs. The transuranic elements (plutonium, americium, curium, neptunium) that constitute the most radiologically persistent fraction of LWR spent fuel are, in a fast neutron spectrum, fissile fuel. SFRs are capable of fissioning these isotopes rather than merely storing them, thereby transforming an accumulated long-term liability into an energy resource and substantially reducing the required longevity and footprint of deep geological repositories. The U.S. National Academies of Sciences, Engineering, and Medicine has reported that the SFR core design demonstrates a three-fold increase in discharge fuel burnup and a four-fold reduction in spent fuel inventory compared to an equivalent 1.0-GWe LWR plant.¹⁴

Both reactor types also offer a pathway to thorium-based fuel cycles. Thorium — approximately three to four times more abundant in Earth's crust than uranium — cannot sustain fission independently but converts under neutron irradiation into uranium-233, a highly effective fissile material. Research confirms that thorium improves void reactivity coefficients in sodium fast reactor designs, and Th-232 to U-233 cycles offer long-term fuel security and waste minimization benefits. While commercial thorium fuel fabrication infrastructure does not yet exist at scale, Gen IV reactor platforms provide the correct neutron environment to realize this potential — an option unavailable to the LWR fleet.

Medical Isotope Production: A High-Value Co-Product

The global medical isotope market was valued at approximately USD 4.2 billion in 2024 and is projected to reach USD 8.4 billion by 2034, growing at a compound annual rate of 7.3%. This market is chronically supply-constrained, not for lack of demand, but for lack of appropriate production infrastructure. The core problem is reactor physics: conventional LWRs generate a thermal neutron spectrum that is poorly suited to producing many of the highest-value radioisotopes used in modern oncology. The fast neutron flux of SFRs is not merely a different tool — it is, for a specific and highly valuable class of isotopes, the only practical one at commercial scale.

In March 2026, TerraPower Isotopes announced the development of a USD 450 million, 250,000-square-foot dedicated facility in Philadelphia for the production of Ac-225 (actinium-225), an alpha-emitting isotope with demonstrated clinical efficacy in targeted alpha therapy for leukemia, melanoma, and an estimated 50 forms of cancer. Current global Ac-225 production from legacy Cold War stockpiles amounts to approximately 1 Ci annually at ORNL — the world's primary supplier — with total global output estimated at less than 3 Ci, a fraction of clinical trial demand. Market analyses project the addressable Ac-225 market will expand from approximately USD 75 million in 2024 to USD 250 million or more by 2033 as dedicated production infrastructure is built out. With over 50 active clinical trials globally relying on Ac-225, the Financial Times reported in July 2024 that pharmaceutical companies are in a position where they "would pay anything" to secure adequate supply of this material. Fast reactors irradiate radium-226 target feedstock to produce Ac-225 at yields reported to be substantially higher than in thermal reactors. TerraPower's stated plan is to expand Ac-225 production twenty-fold through its Natrium-based program.

The economics of the isotope co-production model are striking. A single gram of radium-226 — when irradiated in a fast reactor and converted to Ac-225 — can, after further radiopharmaceutical processing, yield enough material to treat approximately 1,000 cancer patients, implying a treatment value approaching USD 10 million per gram of starting material.¹⁹ Plutonium-238, produced by irradiating neptunium-237 targets in fast neutron flux, is the only power source capable of sustaining NASA deep-space missions beyond Jupiter. The U.S. Planetary Science Division currently pays approximately USD 150 million per year for its Pu-238 program, targeting 1.5 kg of annual production. Californium-252 — a neutron source used in cancer brachytherapy, reactor startup, and industrial neutron radiography — is priced at approximately USD 27 million per gram, making it one of the most valuable substances produced by human industry. Table 2 below provides indicative annual production estimates and market values for the principal isotopes where SFRs hold a decisive production advantage over conventional LWRs. All production quantities are estimates derived from published data for analogous high-flux research reactors, scaled to Natrium parameters (840 MWt thermal, fast neutron spectrum). Actual output would depend on irradiation campaign design and target loading configurations.

Table 2: Indicative Annual Isotope Production Estimates — Single Natrium Sodium Fast Reactor (840 MWt thermal). Production quantities are conservative estimates based on published ORNL/DOE isotope production campaign data and analogous high-flux reactor scaling to Natrium parameters. Actual output depends on irradiation campaign design and target configuration. Annual values reflect prevailing market prices and do not include radiopharmaceutical processing or distribution margins. Note: Lu-177 is also producible in thermal reactors; the SFR's primary advantage is higher specific flux enabling greater weekly output. All isotopes listed represent either a decisive fast-reactor production advantage or naturally accumulating byproducts not recoverable from conventional LWR fuel cycles.

Taken together, the isotopes listed in Table 2 represent a potential co-product revenue stream on the order of USD 330 million to over USD 900 million per year from a single Natrium unit — before accounting for the value of the reactor's primary 345 MWe electricity output and molten salt storage dispatch capacity. Even at conservative estimates, the isotope economics alone could materially change the financing calculus for these reactors, reducing the effective cost of clean electricity generation and creating a compelling dual-revenue investment thesis that has no precedent in the history of civilian nuclear power.

Grid Integration and Industrial Decarbonization

Conventional nuclear power plants are designed as baseload assets: they produce electricity at a near-constant rate irrespective of grid demand. For most of the twentieth century, this was a virtue — predictable, always-on generation was precisely what grid operators required. In electricity systems with high and growing penetrations of variable renewable generation, however, this characteristic has become a source of commercial tension. Baseload nuclear competes directly for dispatch priority against zero-marginal-cost wind and solar, leading to curtailment or reduced revenue during periods of peak renewable output. Conventional LWRs cannot load-follow rapidly, and their capital intensity makes it economically damaging to reduce output. This mismatch between nuclear's operating profile and an increasingly renewable grid represents one of the central challenges of the energy transition — one that both SFRs and the Xe-100 address directly, albeit through entirely different design approaches.

The Natrium SFR resolves the grid integration problem through its integrated molten salt thermal energy storage system — a design feature unique to TerraPower's architecture — which decouples the plant's electrical output from its reactor thermal output. The reactor operates at a steady 345 MWe, but by charging or discharging the molten salt reservoir, the plant can flex its electrical output between approximately 150 MWe and 500 MWe in response to real-time grid conditions. This transforms what would otherwise be a baseload nuclear facility into a dispatchable asset: one capable of absorbing surplus wind and solar during periods of low demand, storing that energy thermally, and releasing it as a high-power electricity pulse during peak demand intervals — effectively functioning as a grid-scale battery charged by nuclear heat. No other nuclear technology offers this combination of firm, carbon-free baseload capacity and dispatchable storage in a single integrated system.

The Xe-100's contribution to grid integration and industrial decarbonization operates on an entirely different axis. Rather than providing electrical flexibility, the Xe-100 delivers energy directly as heat-as-heat — supplying high-temperature process heat at up to 565°C to co-located industrial consumers without the double energy conversion penalty (thermal to electrical, then electrical back to thermal) that reduces conventional power-only nuclear plants to 33–37% overall efficiency. Applications include hydrogen production via high-temperature electrolysis or steam methane reforming, petroleum refining, petrochemical synthesis, and district heating — sectors collectively responsible for approximately 20% of global CO₂ emissions and where renewable electrification is often technically or economically impractical. Process heat constitutes the majority of global industrial energy demand, much of it required at or below the Xe-100’s ~565°C output — a large and largely unaddressed market for which few low-carbon technologies can compete on continuous, high-temperature supply. When operated in cogeneration mode — delivering electricity and industrial process heat simultaneously — the Xe-100 achieves total energy utilization of approximately 90%, a figure that no competing low-carbon technology can match for continuous high-temperature heat supply. The elimination of the large-radius EPZ, described in Section 3, is the enabling condition for realizing this efficiency: the Xe-100 must be physically adjacent to the industrial consumer for heat-as-heat delivery to be practical, and only a reactor with a site-boundary EPZ can be so sited.

Key Risks and Open Questions

A complete assessment must weigh the risks alongside the promise. Sodium fast reactors carry a mixed operational legacy — Japan’s Monju and France’s Superphénix were beset by sodium-handling problems and low availability — and sodium’s chemical reactivity remains an engineering discipline rather than a solved problem. First-of-a-kind cost and schedule overruns are the rule rather than the exception in nuclear construction, and the cancellation of NuScale’s flagship project on cost grounds is a recent caution. The HALEU fuel supply chain is immature and geographically concentrated, TRISO fabrication has yet to be proven at commercial throughput, and the regulatory frameworks that permit site-boundary emergency planning zones, while increasingly established, remain young. The argument advanced here is that this generation’s physics and order book change the trajectory — but execution risk is real and should be priced accordingly.

Conclusion

The technical and commercial case for Generation IV SMRs rests not on incremental improvements over their predecessors, but on a structural discontinuity. These reactors are defined by a set of characteristics that have no precedent in the history of civilian nuclear power:

• Cannot undergo a loss-of-coolant meltdown — safety is grounded in physics, not engineered redundancy.

• Require no water for safety-related cooling at all — extending siting to arid and water-scarce regions beyond even what water-cooled SMRs achieve, in addition to former coal plants and city-adjacent energy parks.

• Carry EPZs measured in hundreds of meters rather than tens of kilometers, enabling direct industrial co-location and the delivery of heat-as-heat to adjacent consumers at system-level efficiencies approaching 90% in cogeneration mode.

• Extract three times more energy per kilogram of fuel than an equivalent LWR, with a fraction of the spent fuel volume.

• Can consume the transuranic waste of the existing global nuclear fleet, transforming a long-term liability into a fuel resource.

• Open the door to thorium as a fuel — approximately three to four times more abundant than uranium — converting it via neutron irradiation to uranium-233, a pathway that could extend global nuclear fission fuel supply by millennia and is uniquely enabled by the Gen IV fast neutron environment.

• Produce life-saving medical isotopes — including actinium-225 and lutetium-177 — as a high-value commercial co-product.

• SFRs operate as dispatchable storage assets in a renewable-dominated grid, flexing output between 150 MWe and 500 MWe via integrated molten salt thermal storage.

None of this is an argument against water-cooled reactors, large or small — for many grids they are the correct near-term deployment. The case made here is that Gen IV designs have applications that no water-cooled plant can reach. The regulatory milestone of March 2026 — the NRC's issuance of the first construction permit for a non-light-water commercial reactor — and the commencement of construction at Kemmerer, Wyoming confirm that this is no longer a speculative technology horizon. X-energy's NASDAQ IPO in April 2026, raising over USD 1 billion in the largest nuclear IPO on record, confirms that the capital markets have reached the same conclusion. For policymakers, infrastructure investors, and industrial energy users, the most important analytical discipline is no longer asking whether this transition will occur, but positioning to capture the value it will create.

Disclosure: The author is a Senior Partner at Energytools LLC, an energy advisory firm active in this sector. Several quantitative figures in this article are drawn from reactor developers’ published materials and from the author’s own estimates, and should be read as indicative rather than independently audited.

1. Introduction

Türkiye’s energy strategy is entering a new phase, driven by both domestic policy and external economic pressure. The Turkish Climate Law (Law No. 7552), enacted on 9 July 2025, commits the country to achieving net-zero emissions by 2053 and introduces a national Emissions Trading System (ETS), with a pilot phase planned for 2026–2027. This effectively places a price on carbon within Türkiye’s own economy.

At the same time, the European Union’s Carbon Border Adjustment Mechanism (CBAM) extends similar pressure from the outside. On 7 April 2026, CBAM established its first official certificate price of €75.36 per ton of CO₂¹, applying a direct cost to the embedded carbon in goods imported into the EU. For Türkiye—whose exports of cement, iron, steel, and aluminum are particularly exposed—this creates a dual carbon pricing environment: one domestic and one external.

Together, these forces fundamentally reshape the economics of energy and industrial production. Carbon-intensive energy is becoming increasingly costly, while low-carbon, reliable energy sources are gaining strategic importance across both electricity generation and high-temperature industrial heat.

In this context, the question is no longer whether Türkiye should expand its nuclear capacity, but which reactor technologies can deliver the lowest-cost, lowest-risk firm clean energy. This article argues that, given Türkiye’s nuclear capacity targets of 7.2 GW by 2035 and over 20 GW by 2050², and its carbon-exposed industrial base, the optimal path is a diversified portfolio: large pressurized water reactors (PWRs) and water-cooled small modular reactors (SMRs) in the near term, complemented by Generation IV SMRs as a strategic priority for the 2035–2050 period.

2. Why Diversification, Not Standardization

The UAE’s Barakah NPP, manufactured by KEPCO, delivered four APR1400 reactors abroad broadly on budget, though several years behind their original schedule. Standardization captured workforce, supply chain, and regulatory learning curves and now generates 5.6 GW. Türkiye’s announced trajectory of 7.2 GW of nuclear capacity by 2035 and 20 GW by 2050² is roughly four times Barakah’s scale, and the financing, geopolitical, and supply-chain risks of single-vendor dependence are now well understood. Akkuyu NPP started in 2010 as a Build-Own-Operate (BOO) model (4 × VVER-1200, 4.8 GW), but left the plant under full Rosatom ownership and was delayed by Siemens’ withholding of gas-insulated switchgear.³ Türkiye’s emerging hybrid joint-venture model at Sinop (4.8 GW, KEPCO’s APR1400 leading with possible US/Westinghouse participation) and Trakya (5.6 GW, with China’s SPIC offering CAP1400 reactors)⁴ recognizes this. A formal 5 GW SMR mandate layered on top, with TÜNAŞ as state equity vehicle, extends the same logic to distributed industrial sites.

3. The Right Sequence: LWRs Now, Water-SMRs in the 2030s, Gen IV by 2040

Sequencing matters. Through 2035, the workhorse must be proven Gen III+ pressurized water technology — Akkuyu, Sinop, and Trakya can deliver roughly 15 GWe. From the early 2030s, water-cooled SMRs become deployable: GE Vernova-Hitachi’s BWRX-300 received a construction license from the Canadian Nuclear Safety Commission in April 2025 and broke ground at Ontario Power Generation’s Darlington site, with first commercial operation targeted by end-2030.⁵ From the mid-2030s, Gen IV SMRs can become the marginal capacity addition. TerraPower’s Natrium sodium fast reactor (SFR) began nuclear construction at Kemmerer, Wyoming on 23 April 2026 — the first NRC construction permit issued for a non-light-water commercial reactor in over 40 years — targeting 2030-2031 operation.⁶ X-energy’s Xe-100 high-temperature gas-cooled reactor (HTGR) is in NRC review for Dow’s Long Mott Generating Station at Seadrift, Texas, the first US industrial nuclear deployment, with operation in the early 2030s.⁷

First-Of-A-Kind (FOAK) premiums on Gen IV SMRs will be substantial — likely three times Barakah-equivalent unit costs of ~$5,700/kW,¹⁵ similar to BWRX-300’s FOAK estimate of CAD 7.7 billion (USD 5.6 billion) for a single 300 MWe unit at Darlington ($18,500/kW)⁵ and NuScale’s FOAK cost escalation from $10,000/kW in 2015 to $21,500/kW in 2023 that caused its UAMPS project to be cancelled.⁸ Nth-of-a-kind (NOAK) economics are the basis of the long-term thesis that per kW costs will decrease significantly, and they depend on the order books that hyperscaler agreements are now establishing — Meta with TerraPower for up to eight plants, Amazon with X-energy for 5 GW.⁶

This sequencing also aligns with Türkiye’s siting reality. Akkuyu, Sinop, and Trakya (İğneada) effectively exhaust the seismically and hydrologically suitable large-reactor sites. SMRs require dramatically less cooling water — high-temperature gas-cooled designs such as the Xe-100 require no water for cooling and hence can serve inland industrial corridors at Aliağa, Iskenderun, Mersin, Konya, and Kayseri that PWRs cannot serve. Under the US NRC’s December 2023 performance-based emergency preparedness rule for SMRs and advanced reactors, the Emergency Planning Zone (EPZ) may be limited to the plant site boundary,¹⁷ enabling co-location with industrial demand centers, eliminating transmission losses on the heat side and improving Gen IV economics significantly.

4. The Heat-as-Heat Argument for Gen IV SMRs

The strategic case for Gen IV is not primarily about electricity, where water-cooled designs remain competitive. It is about industrial heat. A PWR converts roughly 33% of its thermal output to electricity, and when that electricity is then used in industrial heating processes — after transmission and electric-heater losses — the effective primary-energy efficiency drops to about 28%. By contrast, Gen IV high-temperature reactors will deliver process heat directly at 565-750 °C, with heat-exchanger efficiencies of 85-95%. The factor-of-three advantage in primary-energy use is the single most underappreciated economic argument in the SMR debate.

Even where Gen IV reactor outlet temperatures fall below the highest industrial process requirements, hybrid architectures bridge the gap. TerraPower’s Natrium design stores reactor heat at 565 °C in a special molten nitrate salt, which decouples reactor output from grid demand and can be electrically or chemically boosted to the 1,000-1,200 °C range required for steel reheating, or paired with high-temperature electrolyzers for hydrogen production at substantially higher efficiency than conventional electrolysis. Cement kilns at 1,450 °C remain harder to serve directly, but partial substitution of fossil heat input with nuclear-derived process heat can still cut the carbon intensity of the clinkering line significantly.

Gen IV reactors are no longer theoretical – both HTGR and SFR technologies work. China’s HTR-PM reactor has been in commercial operation since late 2023 with inherent passive safety in commercial-scale tests.⁹ Russia’s BN-800 SFR has been in commercial operation at Beloyarsk since 2016. The open question is whether these designs can reach NOAK Western economics.

For Türkiye, this matters because of CBAM. Natural gas combustion releases approximately 53 kg CO₂ per MMBtu under EPA reference factors.¹⁰ At the current EU ETS reference price of €75.36/tCO₂¹ and full CBAM phase-in by 2034, the implicit carbon penalty on gas combustion is about €4/MMBtu, or approximately $4.70/MMBtu.¹¹

Layered on top of current Turkish industrial gas pricing of approximately $13.50/MMBtu Tier 1 and $18/MMBtu Tier 2 via BOTAŞ^12,13, plus emerging Turkish ETS allowance costs and the consensus EU ETS forward curve to €100-120/tCO₂ by 2030, the all-in fuel cost for CBAM-exposed Turkish exporters likely reaches $22-26/MMBtu by the mid-2030s. Vendor projections for NOAK Gen IV high-temperature heat in the $7-12/MMBtu equivalent range — still subject to FOAK-to-NOAK execution risk — would be unambiguously competitive at that point.

5. The Fuel-Cycle and Regulatory Preconditions

The conventional Turkish preference for LWRs is correctly grounded in fuel-supply security: low-enriched uranium (≤5% U-235) is a globally-traded commodity supplied by Urenco, Orano, Cameco, Kazatomprom, and Rosatom — a mature, diversified market. Gen IV designs largely require high-assay low-enriched uranium (HALEU, 5-20% U-235), which is currently produced commercially only by Russia’s Tenex and China’s CNNC.¹⁴ Centrus Energy, the sole Western HALEU producer, has delivered roughly one metric ton since October 2023 and is targeting 12 MT/year of HALEU production sometime after 2030.¹⁶ While there are no reliable forecasts for worldwide HALEU demand, the US Department of Energy projects US demand will exceed 50t/yr by 2035 and 500t/yr by 2050.

The honest framing for Türkiye is therefore sequenced: 1) secure LEU off-take agreements with Western suppliers for the 2025-2035 LWR fleet, 2) establish HALEU supply partnerships for the first Gen IV deployments; and 3) pursue domestic enrichment capability by 2040 on the same template that built Türkiye’s defense industry. Aselsan, Roketsan, and Baykar evolved from licensed manufacturing through joint development to fully indigenous design and export over roughly 25 years; the same trajectory is feasible for nuclear fuel-cycle services with sustained state commitment. Istanbul Technical University’s planned nuclear technopark and TENMAK provide the institutional core.

The Nuclear Regulatory Authority (NDK), established in 2018, must scale in parallel. The US ADVANCE Act of 2024 and the May 2025 Executive Orders restructuring the United States Nuclear Regulatory Commission (NRC) produced measurable acceleration — the Natrium construction permit was issued roughly nine months ahead of initial estimates, and the Xe-100 review was compressed from 36 to 18 months. Similarly, NDK can be organized to evaluate and support advanced reactors. The precedent and IAEA Milestones support are both available.

6. Conclusion

This thesis is not without risks, and they should be stated plainly. The HALEU on which Gen IV designs depend is today available only from Russia and China — the very dependence Türkiye’s diversification strategy seeks to reduce — so the fuel-cycle sequencing set out above is a precondition, not a detail. First-of-a-kind cost and schedule overruns are endemic to nuclear construction, and Türkiye’s own experience at Akkuyu, where commissioning has slipped well beyond the original timeline, is a sobering precedent for a 2040 Gen IV target. And the NDK will need to build advanced-reactor licensing capability largely from a standing start. None of these undermines the strategic logic; all of them argue for beginning the enabling work now.

Türkiye is too large, too industrially diverse, and too CBAM-exposed to bet on a single nuclear technology. The right portfolio combines Gen III+ PWRs through 2035 (Akkuyu, Sinop, Trakya), water-cooled SMRs in the early 2030s for distributed industrial sites, and Gen IV SMRs from the late 2030s onward that can decarbonize industrial heat directly rather than via the lossy electricity-to-heat conversion. The capital cost of nuclear remains high, and the FOAK premium on Gen IV SMRs will be substantial. But Türkiye’s demand growth, its CBAM exposure, and the structural inefficiency of decarbonizing industrial heat through electricity make the diversified portfolio not just defensible but optimal. The currently dominant view in Ankara — that proven water-cooled designs alone are sufficient — captures the near term correctly but understates the medium term. Gen IV SMRs will define the second half of Türkiye’s nuclear program. The infrastructure decisions that enable them — fuel-cycle agreements, NDK modernization, materials laboratories, workforce — must be made now, not in the late 2030s.

Disclosure: The author is a Senior Partner at Energytools LLC, an energy advisory firm active in this sector. Cost, price, and capacity figures cited here draw on reactor developers’ and vendors’ published materials and on the author’s own estimates, and should be read as indicative rather than independently audited.

Introduction

Türkiye’s nuclear ambitions have largely been analysed through technological sequencing, industrial partnership structures, CBAM (Carbon Border Adjustment Mechanism) exposure, and the economics of Gen IV heat systems. Yet one strategic question remains largely absent from the debate: whether nuclear expansion possesses sufficient public legitimacy in Türkiye.

That absence matters because social legitimacy is not a secondary variable in nuclear development. International experience shows that public acceptance can significantly shape nuclear trajectories. Germany shut down its final three reactors in April 2023 after decades of anti-nuclear mobilisation; Austria has rejected nuclear power since its 1978 referendum; and France's Flamanville EPR became not only an engineering challenge but also a politically contested project.

Recent bibliometric analysis of over 260 studies published between 2000 and 2023 similarly shows that public acceptance, trust, and perceived institutional credibility remain central barriers to nuclear development globally. The importance of a society on board is true even in highly centralized political environments: China for example faces no democratic obligation to seek public consent but anti-nuclear movements have repeatedly halted projects backed by full state and local government support.

Türkiye will not be immune to social acceptance barriers either, and these can still raise costs, produce delays, and generate long-term political friction around nuclear projects. In fact, Akkuyu, Türkiye’s first nuclear power plant, has faced local protests since the beginning of construction, while its Build-Own-Operate model has further complicated efforts to build broad public confidence.

The issue, therefore, is not whether social resistance to nuclear energy can emerge in Türkiye, it can. It is whether Türkiye possesses the social and political assets necessary to build durable public acceptance. The answer is yes.

My argument is that Türkiye possesses two advantages in this regard. The first is a younger generation, increasingly shaped by climate insecurity and energy-transition debates. For this generation SMRs may appear less as symbols of Cold War-era nuclear anxiety and more as critical infrastructure for decarbonisation and sustainable energy production.

The second is a broader techno-nationalist current — particularly visible among older and more politically conservative segments of society, but not limited to them — centred on indigenous industrial capability, strategic autonomy, and national technological advancement.

Neither advantage is automatic. Translating latent sympathy into durable public acceptance will require deliberate strategy, credible institutions, and early community engagement — precisely the areas where Türkiye's track record on large energy projects has left the most room for improvement.

What the data says on Gen Z— and what it does not

Gen Z is consistently identified across international surveys as the generation most personally affected by climate change globally (GlobeScan/BBMG, 2025), and Türkiye is no exception. A 2022 study found that nearly 95 per cent of Turkish youth viewed climate change as one of the country’s most significant threats.

This generational disposition points to an underappreciated dynamic in the Turkish energy debate: climate consciousness may become a key factor shaping how younger Turks evaluate future energy systems, including SMRs. The broader public mood also appears to support this direction. A 2024 KONDA survey found that seven in ten Turks are concerned about climate change.

At the same time, the available data should not be overstated. These findings do not measure attitudes toward SMRs directly, and earlier Turkish studies from 2012 and 2018 reported negative perceptions of nuclear power alongside a negative correlation between environmental literacy and nuclear acceptance. Yet those studies emerged before SMRs entered public discussion, before the current Gen Z cohort came of age politically, and within a substantially different technological and geopolitical context. As a result, they are an incomplete guide to present-day attitudes.

What the existing evidence does suggest is that Gen Z and climate-oriented constituencies may represent a potential base of public acceptance for SMRs. For a generation shaped by climate anxiety, energy-transition debates, and concerns over resilience, support for nuclear energy may depend less on overcoming traditional anti-nuclear fears than on demonstrating how SMRs contribute to decarbonisation, energy security, and system reliability.

This audience also presents a structural advantage absent in older target demographics. Gen Z is digitally fluent, globally networked, and more inclined to organise around causes it perceives as actionable and participatory. Çevik (2022) identifies this capacity for self-organisation as one of the most effective pathways for engaging younger generations. The GlobeScan/BBMG findings reinforce this point: while climate anxiety among Gen Z remains high, active engagement is declining, suggesting that the limiting factor is not concern, but perceived agency. A climate-framed case for SMRs therefore cannot rely on awareness campaigns alone. It must provide tangible avenues for participation and ownership. If it succeeds in doing so, support may develop with a degree of organic, network-driven momentum.

A second pathway: national pride and fuel sovereignty

The younger generation is not the only potential source of social legitimacy for nuclear development. A second constituency emerges from a fast growing techno-nationalist current: older, security-conscious, and industrially minded segments of society for whom strategic autonomy and indigenous technological capability have become a defining part of a collective narrative.

This group is shaped less by climate anxiety than by geopolitical unease. In a world of regional wars, great-power competition, and deepening uncertainty — risks that, as Friedman notes in this issue, are already reshaping global energy supply in real time — Turkish nationalism is increasingly articulated through concrete material capacities: defence industry strength, assertive foreign policy, energy and production independence, drones, chips, rockets, and advanced infrastructure. Technology is not merely admired here; it is understood as the currency of sovereignty.

But this current should not be assumed to translate into automatic support. Akkuyu is instructive. Rather than generating nationwide backing, empirical research shows that support has tracked closely with party loyalty: pro-government constituencies broadly in favour, others largely not. There are various reasons for that polarization. One that is relevant to our argument is that majority ownership and operational control by Rosatom under a Build-Own-Operate model — keeping fuel supply and long-term governance in Russian hands — may have sat uneasily with a political current defined by the rejection of external dependency.

SMRs, by contrast, may present a structurally different opportunity. An indigenous programme associated with domestic design participation, diversified fuel supply, a new supply-chain position for Türkiye, and reduced external dependence reframes nuclear energy entirely within this cognitive frame — not another dependency, but a remedy for dependency. This argument is likely to resonate with precisely that constituency, because the Akkuyu experience has already made the costs of foreign ownership visible and concrete.

In sum, the broader techno-nationalist mood can bring together secular nationalist-materialist currents, conservatives who frame technological advancement as civilisational restoration, and citizens across the political spectrum anxious about external dependencies. That cross-cutting potential is what the current framing of nuclear energy in Türkiye has not yet seriously attempted to reach.

Two deep seated Fears

Identifying potential social assets is not the same thing as successfully mobilising them. Two broad obstacles continue to shape public acceptance of nuclear energy in Türkiye — and can undermine both constituencies identified above: radiation and health fear, and distrust rooted in the historical relationship between local communities and large state-backed projects.

Research on nuclear perception consistently shows that radiation triggers fear disproportionate to statistical risk. In Türkiye, this fear carries historical weight. Chernobyl's fallout reached the Black Sea coast in 1986, contaminating tea-growing regions just before harvest.

The state's response became a case study in how not to manage a radiological crisis: Industry Minister Cahit Aral appeared on television drinking tea from the contaminated region, apparently to reassure the public. The gesture backfired. Rather than calming fears, it became a symbol of official dismissal — earning him the lasting nickname "Becquerel Cahit" — and cemented a perception of cover-up that has proved more durable than any subsequent reassurance.

Many in the region still associate subsequent cancer cases with Chernobyl exposure. When musician Kazım Koyuncu died in 2005, nearly two decades after the fallout reached the Black Sea coast, a headline captured the enduring sentiment: "nuclear took Kazım from us." Whether every perceived link is scientifically proven matters less politically than the fact that the cover-up narrative and the health fears endure together in collective memory.

Yet Türkiye is not categorically anti-nuclear. A 2025 Research İstanbul conducted in July 2025 in the immediate aftermath of Israeli strikes on Iran found that 71 per cent of Turks support developing nuclear weapons. This finding suggests that public attitudes are frame-dependent: nuclear framed as sovereignty and strategic autonomy generates a very different response than nuclear framed as a reactor "next door."

The second obstacle is trust. Large state-backed projects in Türkiye are often viewed through a long-standing community-versus-state lens shaped by experiences with mining, hydroelectric, and resource extraction projects, where local populations were perceived to absorb the environmental and social costs. Any future SMR siting process is likely to be interpreted through that existing filter.

SMRs may offer materially different characteristics from traditional large-scale reactors. Yavuz Arık, writing in this issue, notes that a NuScale-class SMR requires far less land, some Gen IV designs require no major water source, and advanced reactors may not require large evacuation zones under newer emergency planning frameworks. Communicated honestly and early, these features could distinguish SMRs from the large coastal reactor model still associated with "nuclear" in the Turkish public imagination.

An economic engagement of communities

There is an economic case to be made as well. It is not, however, primarily about jobs. Nuclear projects are often justified through employment promises — but construction-phase benefits tend to dissipate once a facility is built, and dependence on a single plant can create long-term vulnerability.

The stronger argument is industrial competitiveness and a new supply-chain possibility. Co-locating SMRs with industrial corridors such as Aliağa, İskenderun, or Zonguldak could provide process heat and low-carbon energy directly to heavy industry, helping Turkish producers remain competitive under mechanisms such as the EU's CBAM.

Beyond energy provision, SMRs also create supply-chain opportunities: advanced reactors require a wide range of components and services that Turkish manufacturers are positioned to provide — generating new products, new markets, and new employment, while potentially establishing Türkiye as a regional hub in the emerging global SMR industry. This industrial agency argument is likely to resonate with precisely the techno-nationalist constituency identified above.

A difficult issue nonetheless remains: radioactive waste. International experience shows that waste management is ultimately a political and social challenge as much as a technical one. Finland's Onkalo repository advanced largely because of long-term local trust and familiarity with nuclear facilities, while projects such as Yucca Mountain in the United States collapsed amid resistance to top-down siting. Türkiye currently lacks a permanent nuclear waste framework. If SMRs are to gain durable legitimacy, questions of waste storage, consent, and local participation will need to be addressed before — not after — siting decisions are made.

Both potential sources of social legitimacy also carry their own risks in relation to these two fears. For younger citizens, climate consciousness may create openness toward SMRs — but the same environmental concern can harden into categorical opposition that amplifies radiation and health fears beyond what technical evidence can easily address. For the techno-nationalist constituency, the risk runs in the opposite direction: strategic urgency and national pride can sideline community voice, deepening the very distrust of state-backed projects that already shape how large energy infrastructure is received. If the two fears outlined above are not addressed directly, the social assets Türkiye currently possesses may prove self-undermining.

What needs to happen

First, fill the data gap. Commission a rigorous, nationally representative survey of Turkish public attitudes toward civilian nuclear and SMR technology. Without this baseline, every social strategy is guesswork.

Second, communication strategies should differ across audiences: climate and decarbonisation concerns are likely to resonate more strongly with younger generations, while sovereignty, fuel security, and technological autonomy may resonate more with older and security-oriented constituencies.

Critically, this communication infrastructure cannot rely solely on direct state messaging. Different intermediaries reach and persuade different audiences: university researchers may carry greater legitimacy among younger and educated segments, while institutions such as TENMAK  (Türkiye’s Energy, Nuclear and Mining Research Agency), NDK (Nuclear Regulatory Authority) or professional organisations may be more effective in communicating technical competence and strategic rationale.

Third, map the community opportunity and begin the conversation early. Identify post-coal and industrial regions where SMR siting makes economic sense — not only through direct employment, but through the broader industrial spillovers created by co-located heat and power. Quantify those benefits for specific communities and begin genuine engagement before sites are selected, not after. Waste management frameworks should also be part of those discussions from the outset, because communities will raise the issue regardless.

The Romanian case is instructive here — not because Romania resolved every controversy around nuclear development, but because its nuclear authorities grasped a principle that Türkiye's recent history of large infrastructure projects has consistently violated: engagement begins before decisions are finalised, not after. From hydroelectric dams to mining concessions, large energy projects in Türkiye have typically arrived at communities as faits accomplis, leaving a residue of institutional suspicion that any future SMR siting process will inevitably inherit. Building a different model now, before sites are chosen and contracts are signed, may prove as consequential for long-term viability as the technology itself.

The window — and what it actually means

Türkiye may possess a more favourable social and political starting position for advanced nuclear adoption than many comparable countries. Several dynamics are converging at once: a younger generation increasingly shaped by climate and energy-security concerns; a broader techno-nationalist narrative that has already proven politically effective in sectors such as defence; industrial regions searching for a post-coal economic future; and a state that now openly frames fuel dependency as a strategic vulnerability requiring diversification. Few countries pursuing nuclear expansion possess all of these conditions simultaneously.

But none of these dynamics automatically translate into public consent. Social legitimacy requires trust, transparency, and early community engagement — precisely where many previous large-scale energy projects in Türkiye struggled. The social license for SMRs will not be won through engineering logic alone.

At the same time, the SMR transition itself remains incomplete. Several advanced reactor projects — including the BWRX-300 in Canada and multiple US demonstration projects — suggest the technology is moving from concept toward early deployment. Yet costs remain high, licensing pathways are still evolving, and the long-term commercial model depends on future scale and standardisation rather than fully demonstrated market maturity.

For Türkiye, this means the relevant question is not whether to rush into deployment tomorrow. It is whether the country will use this interim period to build the institutional trust, regulatory capacity, and community legitimacy that large-scale deployment would eventually require. If those foundations are postponed until after investment decisions are made, the country risks repeating a familiar pattern in which technical execution advances faster than public consent.

1. Introduction

Nuclear energy is experiencing a global renaissance driven by the twin imperatives of energy security and decarbonization. Recently, governments and energy companies are reassessing nuclear power as an indispensable component of the low-carbon energy mix. Central to this renewed interest is the emergence of Small Modular Reactors (SMRs) which promise improved safety profiles, lower capital costs, and greater deployment flexibility compared to conventional large-scale nuclear plants.

Against this backdrop, the legal and regulatory framework governing nuclear energy assumes critical importance. The safe, secure, and peaceful use of nuclear technology requires a robust multi-layered architecture spanning international treaty obligations, agency guidelines, and national legislation. This article surveys the international legal instruments that govern nuclear energy, the specific regulatory challenges posed by SMRs, and a focused analysis of Türkiye's evolving national framework as the country embarks on a significant nuclear energy program.

2. The International Legal Framework

2.1 The Non-Proliferation Treaty and the IAEA Safeguards System

The cornerstone of the international nuclear legal order is the Treaty on the Non-Proliferation of Nuclear Weapons (NPT), which entered into force in 1970. The NPT establishes a fundamental distinction between nuclear-weapon states and non-nuclear-weapon states, obliging the latter to accept safeguards administered by the International Atomic Energy Agency (IAEA) to verify that nuclear material is not diverted from peaceful uses. All states operating nuclear power programs are required to conclude a Comprehensive Safeguards Agreement with the IAEA pursuant to INFCIRC/153.

For states developing SMRs, safeguards implementation presents novel technical challenges, as the distributed and modular nature of SMR deployment may require the development of new safeguards approaches tailored to smaller, scattered facilities.

2.2 Nuclear Safety Conventions

The Convention on Nuclear Safety (CNS), adopted in 1994 in the wake of Chernobyl, is the primary international instrument dedicated to the safety of land-based civilian nuclear power plants. The CNS operates on a self-regulatory model: contracting parties undertake to maintain high safety standards and submit national reports for peer review at triennial review meetings. While the CNS does not establish binding safety standards, it creates a framework for international accountability and the dissemination of best practices.

2.3 Civil Nuclear Liability Regime

The international civil nuclear liability regime is governed by two parallel treaty systems: the Paris Convention on Third Party Liability in the Field of Nuclear Energy (1960), applicable primarily in Western Europe, and the Vienna Convention on Civil Liability for Nuclear Damage (1963), which has broader geographic application. The Joint Protocol (1988) links the two systems, creating a unified legal space for liability claims across signatory states.

Both regimes are built on common principles: strict liability of the operator, channeling of liability exclusively to the licensed operator, limitation of liability in amount and time, and mandatory insurance or financial security. The 1997 Protocol to the Vienna Convention substantially raised the minimum liability cap and extended the geographical scope of compensable damage to include environmental restoration and preventive measures. For SMR deployment, the question of appropriate liability caps for smaller installations — and the insurability of a potentially large number of geographically dispersed units — remains an active area of legal and policy debate.

2.4 IAEA Safety Standards and Their Legal Status

The IAEA develops Safety Standards — comprising Safety Fundamentals, Safety Requirements, and Safety Guides — that represent international consensus on the principles and requirements for ensuring nuclear safety. Although these standards are not legally binding per se, they are frequently incorporated by reference into national regulations and bilateral agreements, thereby acquiring practical legal force. The IAEA's Specific Safety Requirements document SSR-2/1 (Design of Nuclear Power Plants) and SSR-2/2 (Safety of Nuclear Power Plants: Commissioning and Operation) are particularly relevant for both conventional and SMR reactor licensing.

2.5 International Investment Law and FDI in the Nuclear Sector

The intersection of nuclear energy development and foreign direct investment (FDI) is increasingly governed by a sophisticated body of international investment law. As nuclear projects — and SMR deployments in particular — require substantial long-term capital commitments, often spanning decades, the protections afforded to foreign investors under international investment agreements have become a critical component of the overall legal framework within which nuclear energy decisions are made.

2.5.1. Bilateral Investment Treaties and the Energy Charter Treaty

The primary instruments of international investment law are bilateral investment treaties (“BIT”), of which more than 3,000 are currently in force globally. BITs typically guarantee foreign investors a standard of fair and equitable treatment (“FET”), full protection and security, protection against unlawful expropriation or nationalization without prompt, adequate, and effective compensation, and most-favoured-nation (“MFN”) and national treatment standards. In the energy sector specifically, the Energy Charter Treaty (“ECT”) provides a multilateral investment protection framework applicable across its signatory states, including dispute resolution through investor-state arbitration under ICSID, the UNCITRAL Rules, or the Stockholm Chamber of Commerce. However, as the nuclear energy and related technologies are regulated in the above-mentioned specific international law instruments, it is a highly controversial application of the ECT for nuclear-related technologies.

2.5.2. National Security Restrictions on FDI in Nuclear Energy

A distinctive feature of nuclear energy investment is the near-universal imposition of national security-based restrictions on foreign ownership and control. Most jurisdictions maintain legal frameworks that limit or condition FDI in nuclear facilities on grounds of national security, non-proliferation, and strategic interest.

For instance, in the European Union, the Euratom Treaty establishes a separate legal order for nuclear materials that operates alongside — and in some respects overrides — general EU investment and competition law, granting the European Commission rights of first refusal over nuclear materials supply contracts and authority over investment in enrichment and reprocessing facilities. These ownership restrictions interact with international investment law obligations in complex ways: an investment that is admitted subject to conditions cannot later invoke BIT protections to challenge those conditions, but conditions imposed after admission may themselves give rise to investment treaty claims.

2.5.3. Intergovernmental Agreements and 123 Agreements as Investment Frameworks

A distinctive legal mechanism in the nuclear sector is the government-to-government framework agreement, exemplified by the “123 Agreements” concluded by the United States pursuant to Section 123 of the Atomic Energy Act, and by the intergovernmental agreements (“IGA”) that frequently accompany large-scale nuclear power plant projects. These instruments serve dual functions: they satisfy non-proliferation requirements by embedding nuclear cooperation within a legally binding framework of peaceful-use assurances and safeguards commitments, and they provide an investment governance framework by establishing the principal commercial and regulatory terms under which the project will proceed. The Akkuyu Nuclear Power Plant in Türkiye, discussed further below, represents a prominent example of this model: the Russia-Türkiye IGA of 2010 constitutes the foundational legal instrument governing both the non-proliferation and the investment dimensions of the project, operating alongside — and in some respects superseding — the standard host-country regulatory framework.

2.5.4. SMR-Specific Investment Law Considerations

The emergence of SMRs as a commercially viable technology introduces several investment law considerations that do not arise, or arise with lesser acuity, in the context of conventional large-scale nuclear plants. First, the modular and scalable nature of SMR deployment implies that foreign investors may seek to replicate a standardized design across multiple jurisdictions, raising questions about the extent to which investment protections secured in one BIT network can effectively shield a portfolio of SMR assets in diverse regulatory environments. Second, the potential deployment of SMRs by private and commercial actors — rather than state utilities — expands the universe of potential treaty claimants and increases the likelihood of investor-state arbitration in the event of adverse regulatory developments. Third, the long development timelines and FOAK (first-of-a-kind) cost risks associated with SMR projects heighten the importance of pre-investment due diligence on the applicable treaty framework, including the identification of applicable BITs, the scope of any nuclear energy carve-outs or national security exceptions, and the availability of contract-based stabilization clauses in host-country agreements. For states such as Türkiye that are simultaneously developing their nuclear regulatory capacity and seeking to attract foreign capital for SMR deployment, the construction of an investment-friendly legal environment — combining transparent licensing procedures, robust dispute resolution mechanisms, and appropriate investment treaty coverage — will be a prerequisite for commercial SMR development.

3. SMRs and the Regulatory Challenge

3.1 Defining the SMR Regulatory Landscape

Small Modular Reactors present a paradigm shift for nuclear regulation that existing frameworks were not designed to accommodate. The traditional large-reactor licensing model — based on a single-unit, site-specific design, extensive front-loaded safety analysis, and a long sequential review process — creates inefficiencies when applied to factory-fabricated, modular, and potentially multi-unit SMR deployments. Regulatory bodies in leading nuclear states have launched dedicated SMR licensing tracks to address this mismatch.

3.2 Key Legal Issues in SMR Deployment

Several cross-cutting legal issues arise specifically in the context of SMR deployment. First, the question of first-of-a-kind (FOAK) versus nth-of-a-kind (NOAK) licensing raises fundamental questions about the transferability of regulatory approvals across jurisdictions. The economic viability of SMRs depends substantially on the ability of vendors to achieve regulatory recognition of a standardized design in multiple markets without undergoing full site-specific review in each jurisdiction. Multinational regulatory cooperation frameworks, such as the memoranda of understanding between the NRC, the CNSC, and the ONR, represent early steps toward mutual recognition.

Second, the deployment of SMRs at non-traditional sites — including industrial facilities, remote communities, and potentially maritime vessels — raises novel questions regarding applicable liability regimes, emergency planning zones, and physical protection requirements. Third, the potential for advanced reactor designs incorporating novel fuel types or operating conditions (including high-temperature gas reactors, molten salt reactors, and microreactors) may fall outside the scope of existing safety conventions and require either amendment or interpretive guidance.

4. Türkiye's National Nuclear Legal Framework

4.1 Institutional and Legislative Architecture

Türkiye's nuclear energy program has a legal architecture that has evolved substantially in recent years. The primary legislative instrument is Law No. 2690 on the Turkish Atomic Energy Authority (TAEK), which established TAEK as the national nuclear regulatory body responsible for licensing, safety oversight, and radiation protection. TAEK operates under a framework that incorporates IAEA Safety Standards by reference, and Türkiye has concluded a Comprehensive Safeguards Agreement with the IAEA under INFCIRC/540.

The foundational legislation governing nuclear power plant construction and operation is Law No. 5710 on the Construction and Operation of Nuclear Power Plants and the Sale of Energy Generated by These Plants (2007). This law authorized the government to enter into intergovernmental agreements for nuclear power plant construction and established the Electricity Market Regulatory Authority (EPDK) as the body responsible for licensing the sale of nuclear-generated electricity.

4.2 The Akkuyu Nuclear Power Plant

Türkiye's flagship nuclear project is the Akkuyu Nuclear Power Plant, being constructed in Mersin Province under an intergovernmental agreement signed with the Russian Federation in 2010. The Akkuyu project is structured on a build-own-operate (BOO) model, with the Russian state nuclear corporation Rosatom holding a majority stake in the project company, Akkuyu Nükleer A.Ş.

This novel ownership structure raises significant legal questions regarding the application of the international civil liability regime. Türkiye is a party to the Paris Convention on Third Party Liability in the Field of Nuclear Energy. It signed the convention in 1960, and it entered into force for Türkiye in 1968. Türkiye has also joined the related protocols, including the 1988 Joint Protocol linking the Paris and Vienna liability regimes.

The Akkuyu BOO model creates a direct state-to-state dimension in nuclear liability that existing international frameworks were not designed to accommodate. Türkiye's Law No. 5710 provides that the plant operator shall bear civil liability for nuclear damage, but the quantum and international reach of this liability — and the extent to which Russian sovereign immunity might be invoked — remain legally complex issues.

4.3 SMR Prospects and Regulatory Readiness

Türkiye has expressed official interest in incorporating SMRs into its longer-term energy strategy, with references to SMR technology appearing in national energy planning documents. TAEK has engaged in technical exchanges with counterpart regulatory bodies and has participated in IAEA capacity-building programs specifically oriented toward SMR regulation. However, Türkiye's current regulatory framework does not yet contain SMR-specific licensing provisions, and the development of a dedicated SMR regulatory pathway would require both legislative amendments and the development of new technical review capabilities within TAEK.

The regulatory gap is not unique to Türkiye; most countries that have not yet deployed nuclear power are in a comparable position. The IAEA's Country Nuclear Power Profiles and the Nuclear Energy Agency's SMR Regulatory Challenges report both highlight the need for early regulatory engagement and the adaptation of existing frameworks. For Türkiye, the practical experience being accumulated through the Akkuyu project — including inspector training, emergency preparedness planning, and stakeholder engagement — will provide a valuable foundation for any future SMR licensing activity.

5. Conclusion

The legal and regulatory framework governing nuclear energy is undergoing a period of significant evolution, driven by the emergence of SMR technology and the renewed global appetite for nuclear power as a climate solution. The existing international architecture — built around the NPT, the IAEA safeguards system, the nuclear safety conventions, and the civil liability regimes — provides a solid foundation but requires adaptation to address the novel characteristics of advanced reactor designs and non-traditional deployment scenarios.

At the national level, the diversity of approaches taken by leading nuclear states to SMR licensing reflects the absence of internationally harmonized requirements and the competitive pressure on regulatory bodies to enable innovation without compromising safety. For emerging nuclear energy countries such as Türkiye, the challenge is simultaneously to build the regulatory infrastructure required for safe nuclear operation, to integrate into the international nuclear legal order, and to position the country to take advantage of SMR technology as it matures commercially.

Türkiye's trajectory — anchored by the Akkuyu project and shaped by its evolving relationship with international nuclear law — illustrates the broader challenges and opportunities confronting states seeking to develop or expand their nuclear energy programs in the twenty-first century. Getting the legal framework right, both internationally and domestically, is not merely a technical or bureaucratic matter: it is a prerequisite for the sustainable, safe, and legitimate deployment of nuclear energy as a pillar of the global energy transition.

Introduction

In the aftermath of global energy crises and amidst increased commitments towards climate goals through carbon-free energy generation, small modular reactors (“SMRs”) became an important part of global energy discussions. SMRs generally refer to advanced nuclear reactors with an electrical generation capacity of up to approximately 300 MW(e) per module, whereas conventional nuclear reactors frequently exceed 700–1,000 MW(e) per unit. Unlike conventional large-scale nuclear power plants, SMRs are designed with modular construction principles, allowing systems and components to be manufactured in factory settings and later transported for installation.

Their smaller physical footprint creates additional deployment options and allows installation at locations that would not be suitable for conventional nuclear facilities. Modular construction approaches also permit greater standardization and reduce certain implementation challenges commonly associated with large projects. Depending on project requirements, SMRs may be deployed as single-unit facilities or as multi-module installations, allowing generation capacity to expand incrementally as demand increases.

Türkiye and SMRs

The potential relevance of SMRs is particularly notable for Türkiye as electricity demand continues to grow alongside economic development. At the same time, energy security concerns, de-carbonization objectives and most importantly, reducing dependence on imported energy resources remain as significant policy considerations. Türkiye has also continued efforts to strengthen its position as a regional energy hub while participating more actively in broader sustainability and climate initiatives.

Against this background, SMRs are progressively being evaluated as a potential component of Türkiye’s long-term energy strategy and we observe increased efforts from both private and public players on development of SMR technologies. However, technology alone is not the decisive element in successful implementation of such projects. SMR projects involve substantial upfront capital expenditures, long operational periods and complex cross-border financing arrangements which may extend over several decades. Although capital requirements would vary depending on technology, location and project configuration, SMR projects with capacities approaching 300 MW(e) may require investments in the range of several billion (up to four billion) U.S. dollars.

For projects of this scale, access to international financing ultimately becomes one of the crucial considerations. Development finance institutions (“DFIs”), export credit agencies (“ECAs”) and international lenders are likely to play an important role in future SMR projects in Türkiye. Hence legal predictability, sovereign support and bankability become important factors together with technological aspects of the projects.

Türkiye may present a particularly interesting framework in this regard. Over the past decades, Türkiye developed extensive experience in implementing large-scale infrastructure investments through public-private partnership (“PPP”) models while also utilizing intergovernmental agreement (“IGA”) and host government agreement (“HGA”) structures in strategic energy projects.

Structuring Considerations for SMR Projects

SMR projects share many characteristics with large infrastructure investments, but they also involve considerations that are less common in traditional project structures. Long development periods, extensive licensing and dismantling requirements, and the expected participation of technology providers, foreign investors and international financing institutions (“IFIs”) create a more complex environment than many conventional infrastructure projects.

Considering life-cycles of SMRs (up to 60 years), investors and lenders require comfort not only regarding construction and operational risks but also regarding continuity of regulatory treatment, governmental support and revenue guarantees.

For this reason, implementation of SMR projects requires more than project-level contractual arrangements alone. Commercial structures and financing arrangements remain critical, but they also need to be supported by broader sovereign and regulatory frameworks capable of providing long-term stability.

In this context, future SMR-specific domestic legislation, which, we believe, is in the making in connection with potential SMR deployment in Türkiye, and project-specific IGA/HGA structures should operate in a coordinated manner. While domestic legislation would provide the broader regulatory framework, IGA and HGA arrangements would introduce project-specific protections and mechanisms. Such dual-layered structures would provide greater predictability and enhance bankability.

A Layered Framework for SMR Implementation

PPP principles and IGA-HGA structures need not be viewed as competing or alternative concepts. They can address different aspects of the same project structure and can operate as complementary layers within a more complex framework.

PPP models primarily address the commercial and financing architecture of infrastructure projects. Issues such as allocation of construction risks, operational responsibilities, financing arrangements, guaranteed revenue flows through purchase agreements and lender protections typically fall within this layer. IGA and HGA structures also address a different set of issues. Their main role is to establish sovereign commitments, legal stabilization mechanisms and broader regulatory support for projects involving strategic national interests.

These structures can create a framework where established PPP practices continue to govern project financing arrangements, EPC structures, power purchase agreements (“PPAs”), lender direct agreements and project-level risk allocation, while IGA and HGA arrangements provide the sovereign and regulatory foundation supporting implementation of the project.

A potential SMR framework in Türkiye may therefore combine:

• an intergovernmental framework established through an IGA between Türkiye and the technology provider state;
• project-specific or sponsor-specific HGAs entered into between Türkiye as the host government and the relevant project company;
• established PPP and project finance principles already familiar to international lenders and investors active in Türkiye; and
• project level revenue support mechanisms, including long-term PPAs designed to support financing and bankability considerations.

The precise form in which the legal framework would manifest itself may vary from project to project. The State has the flexibility to design such a framework by combining different aspects of the PPP regimes and the IGA-HGA structure. Certain investors may prefer a structure involving direct governmental participation at the equity level through state-owned entities, while others may prefer a structure focused primarily on revenue support and contractual commitments. For example, governmental participation through entities such as Turkish Nuclear Energy Joint Stock Company (“TÜNAŞ”), which has been established to support Türkiye’s nuclear energy initiatives, could potentially provide one form of equity participation within future SMR projects, although the structure adopted would likely vary depending on the specific project and public policy/ investor preferences.

In this respect, long-term PPAs could become one of the principal components of the overall project structure. Rather than functioning solely as commercial offtake arrangements, PPAs would operate as key instruments supporting project bankability and revenue visibility.

Türkiye’s PPP Experience and Its Relevance to SMRs

Türkiye has one of the most developed PPP markets among emerging economies.

Turkish practice commonly defines PPPs as:

“A long term contractual cooperation between a government entity and a private party for providing public asset and/or service, including but not limited to the financing, (re)construction, operation, and maintenance of infrastructure, together with the rendering of services, wherein the respective duties of the parties and allocation of risks are clearly defined.”

Over the years, Türkiye implemented infrastructure projects under various models including build-operate-transfer (“BOT”), build-own-operate (“BOO”), and build-lease-transfer (“BLT”) structures.

City hospital PPPs are one of the most relevant Turkish precedents in this context. The sector itself differs significantly from nuclear projects; however, these projects involved sophisticated financing structures supported by international lenders, ECAs and IFIs. Their contractual frameworks incorporated financing structures, lender direct agreements, EPC and O&M arrangements and mechanisms designed to preserve steady revenue-flow over long project periods.

The significance of these projects does not arise from sectoral similarities with SMRs. Instead, they demonstrate Türkiye’s experience in managing large infrastructure projects involving foreign investors, long-term contractual commitments and financing structures familiar to international project finance markets.

This institutional experience may become particularly relevant for future SMR projects, which are expected to require similar levels of coordination and financing sophistication.

The Role of IGAs in SMR Projects

For strategic nuclear projects, an IGA would serve as the principal intergovernmental framework governing the overall legal structure of the investment.

Türkiye already has prior experience with such arrangements. The Akkuyu Nuclear Power Plant project was developed pursuant to an IGA executed between Türkiye and the Russian Federation in 2010. Similarly, the framework developed between Türkiye and Japan concerning nuclear cooperation also contemplated an IGA-HGA structure.

Beyond the nuclear sector, Türkiye has also utilized comparable sovereign-level contractual structures based on IGAs in strategic cross-border energy projects such as the TurkStream Pipeline Project, Baku-Tbilisi-Ceyhan (“BTC”) Pipeline Project and the Trans-Anatolian Natural Gas Pipeline (“TANAP”) Project.

These arrangements differ from ordinary commercial agreements. Their purpose extends beyond documenting political cooperation and establishes project-specific legal frameworks intended to govern the implementation of strategic investments throughout their lifecycle. Pursuant to the Turkish Constitution, once ratified by the Turkish Parliament the IGAs will be categorized as and have the force of “law” which are also shielded from any constitutionality challenges before the Turkish Constitutional Court. Consequently, IGAs operate both as a specific legal regime applicable to the relevant project as well as enabling the legal basis of the HGAs for setting the basic contractual parameters of the project.

IGAs may also support broader financing considerations and the Akkuyu structure provides a useful example in this context. References to long-term electricity purchase commitments to be specified under separate electricity purchase agreements contributed to greater revenue predictability, and references to specific incentives and tax exemptions aimed to assist the financial well-being of the project.

For institutions such as U.S. EXIM, U.S. International Development Finance Corporation (“DFC”) and other sovereign-backed financing institutions, these forms of sovereign commitment become particularly crucial when evaluating strategic infrastructure investments.

HGAs and Project Implementation

While the IGA establishes the broader sovereign framework, the HGA would function as the principal project-level implementation instrument.

Depending on the structure adopted, HGAs may address matters commonly encountered in large infrastructure projects including permitting coordination, land use arrangements, tax and customs related support mechanisms, workforce commitments and implementation obligations of relevant governmental authorities while the template power purchase agreements, EPCs and the direct agreements with the lenders and separately with the EPC Contractors and O&M Companies may be appended to them.

In practice, HGAs serve a broader function as the project agreement than simply documenting implementation obligations. In large-scale infrastructure projects involving foreign participation and project financing structures, lenders and investors frequently seek clarity regarding governmental undertakings that affect the implementation and long-term operation of the project as well as guaranteed revenue streams and bankable contractual ecosystem. Matters such as allocation of permitting responsibilities, coordination among governmental authorities, land access rights, customs procedures, tax exemptions, incentives and specific implementation commitments often become relevant considerations during project development and financing processes, and general principles applicable to these points are covered within the scope of HGAs such as the case with BTC and TANAP HGAs.

For projects expected to operate over several decades, solid legal framework and contractual certainty become increasingly important. Changes in regulatory treatment, delays affecting critical project milestones or uncertainties regarding implementation obligations may directly affect financing assumptions and project economics. HGAs, which are also announced in the Official Gazette of Türkiye, operate as one of the principal interfaces between sovereign-level commitments and practical project implementation that provide carved-in-stone contractual regime and function as an important bankability instrument by translating broader sovereign commitments into project-level contractual obligations and implementation mechanisms.

In the context of SMRs, one possible approach would involve separate project companies entering into separate HGAs for each individual project. Another approach could involve a broader HGA structure covering multiple projects to be developed by the same project company or by investors operating under the same IGA framework. Such an approach could become particularly relevant where an initial SMR project is followed by additional facilities or modules developed by the same project participants, whether at the same location or at different sites. In those circumstances, a broader HGA framework could reduce the need for repeated negotiations and provide greater consistency across project implementation arrangements.

Financing and Foreign Investment Considerations

Foreign investment and access to international financing are likely to become central for SMR deployment in Türkiye.

Future financing structures are expected to involve combinations of sponsor equity, ECA-backed financing, DFI participation, multilateral financing and commercial lending. However, from the perspective of international lenders, financing capability alone is rarely sufficient. Financing institutions typically evaluate the broader project environment, including sovereign support mechanisms, enforceability of project arrangements and stability of the applicable legal framework.

This consideration becomes particularly relevant for nuclear projects. SMR projects are expected to involve significant upfront investments together with long operational periods and extended capital recovery timelines. IFIs generally seek a greater level of predictability regarding future revenues and project implementation assumptions before committing substantial capital to projects of this nature. Accordingly, long-term PPAs are expected to be one of the most significant components of future SMR projects in Türkiye. Without a mechanism capable of supporting stable revenue streams, such as State-supported purchase commitments or arrangements ensuring offtake of electricity generated by the project (i.e. the PPAs), attracting large-scale international financing for projects involving substantial capital expenditures may prove challenging.

The Turkish market already provides useful examples of revenue support mechanisms in the energy sector. Renewable energy projects in Türkiye have historically benefited from support arrangements under the Renewable Energy Resources Support Mechanism (“YEKDEM”), which introduced guaranteed purchase structures and fixed-price support mechanisms for electricity generated from eligible renewable energy resources for specified periods. These mechanisms contributed to improved revenue visibility and enhanced financing predictability for investors and lenders. International experience also demonstrates comparable approaches in the nuclear sector.

In addition to the revenue support mechanisms, bankability analysis also focuses on risks arising during development and construction periods. Construction risks, delays and cost overruns remain separate considerations that frequently require allocation through broader project structures and contractual protections. Türkiye's experience in large-scale PPP projects, provides useful institutional experience regarding management of restructuring processes and preservation of financing structures during implementation stages.

Recent trends in nuclear financing also demonstrate increasing participation by sovereign-backed institutions and export financing agencies. Institutions such as U.S. EXIM, DFC and other ECAs increasingly evaluate projects not only from a commercial perspective but also in light of broader governmental support structures and political risk considerations as well as pinpointing safety measures. Revenue visibility, enforceability of governmental commitments and stability of the overall legal regime may therefore become material considerations during financing processes.

This is where an integrated IGA-HGA structure (i) with standardized PPA commitments and direct agreements as an appendix to the respective HGA or (ii) separately supported by project-level PPA arrangements may become particularly important. Such arrangements would improve the financing profile and bankability of projects by creating a clearer allocation of risks and responsibilities and by providing a greater level of certainty regarding implementation assumptions underlying project financing structures.

Conclusion

SMR deployment presents opportunities extending beyond deployment of a new energy technology. For jurisdictions seeking to attract large-scale investment into strategic energy infrastructure, the structure supporting implementation of projects may become as important as the underlying technology itself.

Türkiye's experience with PPP structures and sovereign-supported infrastructure projects can provide a useful starting point in this respect. Large-scale PPP projects are already familiarized in the Turkish market with sophisticated project finance arrangements involving foreign lenders and long-term contractual frameworks. Similarly, prior experience with IGA-based structures in strategic energy projects provides a foundation for considering comparable approaches for future SMR projects.

Rather than creating an entirely new system, a future SMR framework in Türkiye could potentially build on existing institutional experience and established project finance practices. A layered structure combining PPP principles with sovereign-level IGA arrangements and project-level HGAs could contribute to legal certainty, address bankability concerns, support financing processes and strengthen investor confidence. At the same time, long-term PPAs and revenue support mechanisms may become one of the principal elements supporting revenue visibility and facilitating access to international financing.

As competition for SMR deployment accelerates globally, jurisdictions capable of providing not only technical opportunities but also credible legal and financing frameworks will ultimately be better positioned to pre-emptively attract strategic investment and long-term international financing.

Why Sustainability-Linked Loans Matter

Following the Paris Agreement and the UN Sustainable Development Goals, sustainable finance has become an increasingly prominent part of corporate funding strategy. Climate transition cannot be financed by public budgets alone, and private capital is increasingly expected to support low-carbon and socially responsible investment. This financing challenge is particularly visible in capital-intensive climate transition technologies such as small modular reactors (“SMRs”). Nuclear projects have traditionally been difficult to finance due to their scale, capital intensity, long construction lead times, technical complexity and risk allocation. In this context, sustainability-linked loans (“SLLs”) could be one of the attractive corporate financing tools because they allow borrowers to access sustainability-linked funding without being required to allocate the loan proceeds to a specific green project.

This flexibility, however, also gives rise to the primary legal and practical concern. If the sustainability component of a loan is framed only in broad environmental, social and governance (“ESG”) terms, the SLL label may create reputational value without producing a measurable sustainability outcome. The central issue for this article is therefore not only what SLLs are, but also how sustainability commitments under an SLL can be made sufficiently precise to be measured, verified, and reflected in the economic terms of the loan.

How SLLs Work: Linking Sustainability Performance to Loan Terms

2.1. The Performance-Based Nature of SLLs

SLLs are structured as corporate financing arrangements in which the proceeds may be used for the borrower’s general corporate purposes. Their distinguishing feature is not the allocation of proceeds to a specific green or social project, but the link between the borrower’s sustainability performance and the financial or structural characteristics of the loan. This feature separates SLLs from use-of-proceeds products such as green loans and green bonds. In those instruments, the sustainability element is primarily connected to the purpose for which the financing is used. In an SLL, by contrast, the sustainability element is connected to the borrower’s performance against pre-agreed sustainability objectives during the life of the loan.

The principal market reference for SLLs is the Sustainability-Linked Loan Principles (“SLLP”), first published in 2019 by the Loan Market Association (“LMA”), the Asia Pacific Loan Market Association (“APLMA”), and the Loan Syndications and Trading Association (“LSTA”). The SLLP defines SLLs as loan instruments and/or contingent facilities whose financial and/or structural characteristics may vary depending on whether the borrower achieves ambitious, material and quantifiable predetermined sustainability performance objectives. This feature distinguishes SLLs from ordinary credit facilities. It indicates that a loan does not become sustainability-linked merely because the facility agreement contains general ESG language or because the borrower has adopted a sustainability strategy. The sustainability element must be translated into specific performance objectives, measured by reference to agreed indicators and reflected in the contractual terms of the financing.

2.2. The Five Core Components of an SLL

The SLLP identifies five core components of SLLs: selection of key performance indicators (“KPIs”), calibration of sustainability performance targets (“SPTs”), loan characteristics, reporting, and verification. These components form the contractual framework of an SLL. These five core components work together: KPIs determine what will be measured; SPTs determine the level of improvement required; loan characteristics determine the consequence of meeting or missing the targets; reporting supplies the information; and verification tests the reliability of that information.

• Selection of KPIs – Defining What Will Be Measured

KPIs determine what aspect of the borrower’s sustainability performance will be measured. They should be clearly defined, measurable, material to the borrower’s business and consistent with its broader sustainability strategy. Typical KPIs may relate to greenhouse gas emissions, renewable energy consumption, energy efficiency, gender diversity, employee safety, waste reduction, water use or supply-chain standards.

General ESG ratings may be useful as a background reference; however, they should not replace specific, measurable and verifiable KPIs. An ESG rating usually reflects an overall assessment of a company’s sustainability profile, whereas an SLL requires performance indicators that can be tested against agreed targets during the life of the loan.

• Calibration of SPTs – Setting the Level of Required Performance

SPTs determine the level of performance or improvement that the borrower undertakes to achieve by reference to the selected KPIs. The distinction between KPIs and SPTs is important: the KPI identifies the metric, while the SPT sets the target. SPTs should be ambitious and should not merely reflect a business-as-usual trajectory or targets that the borrower is already expected to meet.

• Loan Characteristics – Connecting Performance to Contractual Consequences

The loan characteristics determine the contractual consequences of achieving or failing to achieve the relevant SPTs. The most common consequence is a margin adjustment mechanism, under which the applicable margin may decrease if the borrower meets the agreed SPTs and increase if it fails to do so. The SLLP, however, refers more broadly to financial and/or structural characteristics, leaving room for other clearly documented consequences.

• Reporting – Supplying the Information Needed to Test Performance

Reporting obligations provide the information necessary to assess the borrower’s performance against the agreed KPIs and SPTs. The facility agreement should therefore specify the information to be delivered, the relevant reporting period, the delivery deadline and the applicable calculation methodology.

• Verification – Testing the Reliability of Sustainability Information

Verification may be carried out by an auditor, sustainability assurance provider, environmental consultant or other qualified independent reviewer. The facility agreement should specify when verification is required, who may provide it and what consequences follow if verification is not delivered or identifies an inconsistency.

How SLLs Differ from Green Loans and Green Bonds

SLLs can be better understood when compared with green bonds (“GB”) and green loans (“GL”). Although all three instruments fall within the broader sustainable finance framework, they are based on different mechanisms.

GBs and GLs are generally use-of-proceeds instruments. Their sustainability feature is linked to the allocation of funds to eligible green projects, such as renewable energy, pollution prevention, energy efficiency or other environmentally beneficial projects.

SLLs, by contrast, are performance-based instruments. The loan proceeds may generally be used for the borrower’s general corporate purposes. The sustainability feature is not tied to a specific project, but to the borrower’s performance against agreed KPIs and SPTs.

The distinction may be summarized as follows:

Drafting the Sustainability Link: KPIs, SPTs and Remedies

The strength of an SLL lies in the drafting of its sustainability-linked provisions. A well-drafted facility agreement should not rely on a general statement that the borrower intends to be more sustainable. It should identify the relevant KPIs, baselines, SPTs, measurement periods, calculation methodology, reporting dates, verifier and contractual consequences of performance or non-performance.

A useful way to assess the quality of KPIs and SPTs is to consider materiality, ambition and credibility. KPIs must be material to the borrower’s business and sustainability strategy, while SPTs should represent material improvements beyond a “business-as-usual” trajectory and be supported by clear scope, predefined timelines and credible benchmarking. Also, ESG ratings should not be used directly as KPIs.

In an SMR-related financing context, this means that the sustainability-linked feature should not rely on a general statement that nuclear energy is low-carbon. If an SLL is used in an SMR development project, the KPIs should be tied to measurable aspects of the borrower’s climate transition strategy. For instance, these KPIs may include (i) reduction in the carbon intensity of electricity generation, (ii) increase in firm low-carbon generation capacity, (iii) replacement of fossil-fuel generation, (iv) emissions reductions, (v) water-use efficiency, (vi) safety-related milestones, (vii) waste-management milestones or (viii) supply-chain sustainability standards.

Vague SPTs create legal uncertainty. If a target is expressed in broad language, it may be difficult to determine what the borrower is actually required to achieve. This weakens both the credibility of the SLL label and the operation of the contractual mechanism. The same concern applies to reporting and verification. A failure to report, inaccurate data, manipulation of the calculation methodology or refusal to provide verification may amount to a failure of contractual compliance and information reliability.

The pricing mechanism is the most visible contractual feature of an SLL. In a simple one-way structure, the borrower receives a margin reduction if it satisfies the agreed criteria. In a two-way structure, the borrower may also face a margin increase if performance declines or targets are missed. Depending on the transaction, the pricing change may be linked to an overall ESG rating, to separate KPI results, or to an all-or-nothing test under which all targets must be met before the pricing benefit applies.

However, pricing should not be the only drafting concern. The facility agreement should also address the consequences of failure to deliver sustainability information, failure to provide verification, misleading information, changes to the borrower’s business that affect the relevance of KPIs or SPTs, and any declassification mechanism.

The contractual nature of SLLs is also reflected in the LMA’s draft provisions for SLLs. Although these provisions are expressly non-binding and intended only as a starting point for case-specific negotiation, they show the types of clauses that may be needed to make the sustainability link operational. These include definitions of KPIs, SPTs, baselines, calculation methodology, sustainability information, sustainability compliance certificates, verification reports and sustainability margin adjustment mechanisms. The draft provisions therefore support the view that the credibility of an SLL depends less on the label itself and more on whether the facility agreement contains a workable mechanism for measuring, reporting, verifying and applying the consequences of sustainability performance.

Reporting and Verification: Managing Greenwashing Risk

SLLs are often criticized for weak transparency and greenwashing risks, particularly where the sustainability-linked features of the loan are not supported by reliable data, measurable targets and independent verification.

Reporting and verification are therefore central to the operation of an SLL. The borrower must provide data showing whether the relevant SPTs have been achieved, and the lenders must be able to rely on that data before applying any margin adjustment or other contractual consequence. If reporting is incomplete, inaccurate or is not supported by verification, the sustainability-linked mechanism becomes vulnerable both to contractual uncertainty and to greenwashing criticism.

Greenwashing may have consequences for several transaction parties. A borrower may face contractual consequences if it misrepresents sustainability performance or breaches reporting undertakings. A lender may face reputational or regulatory scrutiny if it markets a facility as sustainability-linked. External reviewers may also be criticized if their assessment appears superficial or insufficiently independent.

For this reason, the facility agreement should specify the reporting timetable, calculation methodology, form of sustainability information, verification requirements and consequences of failure to report or verify. These provisions are not merely procedural. They are the evidentiary safeguards that support the enforceability and credibility of the sustainability-linked structure.

Conclusion

SLLs have become an important financing tool within the broader development of sustainable finance. Their main advantage lies in their flexibility. Unlike GLs or GBs, SLLs do not require the proceeds to be allocated to a specific green project. Instead, they link the borrower’s financing terms to its performance against agreed sustainability targets. The same analysis applies to SMR-related financing. For SLL purposes, the main issue is not whether SMRs are presented as low-carbon technology, but whether the borrower’s SMR-related strategy is reflected in material KPIs, ambitious SPTs, reliable reporting, independent verification and clearly documented loan consequences.

This makes SLLs attractive for companies seeking to align their funding strategy with sustainability objectives while retaining flexibility over the use the loan proceeds for general corporate purposes. However, that same flexibility also creates legal and credibility risks. If the relevant KPIs are immaterial, the SPTs are weak or the reporting and verification process is insufficient, the SLL label may create reputational value without producing a measurable sustainability outcome. For this reason, the credibility of an SLL depends largely on the quality of its contractual structure. A well-structured SLL should therefore translate broad sustainability commitments into clear contractual provisions, including defined KPIs, ambitious and measurable SPTs, reporting obligations, verification requirements and financial or structural consequences.

The AI Revolution

Artificial intelligence (“AI”) has rapidly become one of the most electricity-intensive technologies of our time. The global race to develop more powerful AI models, build hyperscale data centers, and expand AI-enabled cloud infrastructure is reshaping electricity demand forecasts around the world.

While previous waves of digitalization increased productivity, they did not trigger a comparable surge in energy consumption. Generative AI, however, occupies a different position. It is no coincidence that it has sometimes been described as a “power-hungry beast” due to its extraordinary computational requirements. Today’s advanced AI systems require enormous computing capacity for both training and inference, creating unprecedented demand for reliable, uninterrupted, and long-term electricity supply.

The Search for Reliable Low-Carbon Power

According to the International Energy Agency (“IEA”), the world is entering a new “Age of Electricity”, driven by digitalization, electric mobility, data centers, and AI applications. When viewed alongside companies’ energy security concerns and emission-reduction objectives, this transformation in electricity demand has contributed to the highest level of global interest in nuclear energy seen in recent years.

According to IEA projections, global electricity consumption from data centers is expected to nearly double by 2030, reaching approximately 945 TWh annually. This figure exceeds Japan’s current annual electricity consumption, and AI is expected to be the primary driver of this increase. IEA data further indicates that electricity consumption at AI-focused facilities increased by approximately 50% in 2025 alone. This development demonstrates that data centers are no longer merely a technology-sector issue, but have become a central component of energy planning. The IEA has also noted that new demand arising from AI and data centers is prompting many countries to reassess their long-term electricity infrastructure investments.

The scale of this demand may appear exaggerated, yet it accurately reflects reality. A single large-scale AI data center may consume between 100 MW and 1 GW of electricity. This is broadly comparable to the electricity demand of a medium-sized city and provides a useful benchmark for understanding the magnitude of the challenge.

However, the key issue is not merely the volume of electricity consumed, but the need for uninterrupted supply. Even short power outages can disrupt costly operations and damage critical hardware. While renewable energy sources such as solar and wind form an important part of the solution, they cannot always provide the continuous and predictable electricity supply required by hyperscale AI facilities. As a result, they often need to be complemented by other reliable sources of power.

Countries are increasingly adopting policies and investment initiatives aimed at preserving or expanding existing nuclear generation capacity (Türkiye targeting around 5 GW of SMR capacity in the long term being one of them).

Governments, utilities, and technology companies are therefore confronting the same question: how can sufficient low-carbon electricity be supplied to support AI growth without destabilizing electricity grids or increasing emissions?

Small modular reactors (“SMRs”) are emerging as one of the most promising answers to this question, owing both to their sustainability advantages and their next-generation technological design.

From a Turkish perspective, the potential deployment of SMRs is also being discussed in the context of energy security and supply diversification. One of the key strategic considerations is the reduction of Türkiye’s dependence on imported energy sources and the strengthening of long-term energy resilience through a more diversified energy mix. In this context, SMRs are increasingly viewed not only as a low-carbon electricity solution, but also as a tool that may contribute to broader energy security objectives. As global competition around advanced nuclear technologies intensifies, international technology providers are also expected to play an active role in supporting the adoption of their respective SMR technologies in markets such as Türkiye.

Small Modular Reactors: A Potential Solution

SMRs are next-generation nuclear reactors designed to produce smaller amounts of electricity than conventional large-scale nuclear power plants. Each module typically has a capacity of up to 300 MW, corresponding to roughly one-third of the capacity of a traditional nuclear reactor unit.

Unlike conventional nuclear facilities, SMRs are intended to be manufactured in factories and assembled modularly on site. This approach is expected to shorten construction timelines, reduce financing risks, lower capital requirements, and mitigate the challenges associated with large upfront investments. It also provides flexibility, as multiple modules can be combined or additional modules can be added over time to meet growing energy demand.

SMRs can provide stable and relatively sustainable electricity twenty-four hours a day without carbon emissions during operation. This characteristic aligns closely with the needs of large-scale data centers, which require uninterrupted operations and predictable energy supply.

Another important advantage is that SMRs may be deployed closer to demand centers. Traditional nuclear power plants generally require large sites, lengthy permitting processes, and extensive transmission infrastructure. By contrast, SMRs are expected to offer greater geographic flexibility and scalability. This could allow future AI campuses to integrate dedicated nuclear generation capacity directly into their own energy infrastructure.

Why Technology Companies Are Turning to Nuclear Energy

As in many other industries, environmental commitments and sustainability objectives have become increasingly important for technology companies. Ambitious targets are being announced publicly, while AI infrastructure continues to expand rapidly. Major technology companies such as Microsoft, Google, Amazon, and Meta are simultaneously pursuing emissions-reduction commitments and aggressive AI growth strategies. Nuclear energy and SMRs are increasingly viewed as an important option for balancing these two objectives.

These companies are not only entering into long-term power purchase agreements, but are also establishing partnerships with advanced nuclear technology developers and clean energy companies, and in some cases investing directly in nuclear developers.

Microsoft’s agreement with Constellation Energy is among the most notable examples of this trend. In September 2024, Microsoft entered into a 20-year power purchase agreement with one of the largest nuclear energy producers in the United States in order to meet future electricity demand arising from its operations. The agreement is expected to support the restart of Three Mile Island Unit 1 in Pennsylvania, a reactor that was shut down in 2019 for economic reasons.

Similarly, Google’s 500 MW agreement with Kairos Power represents an important example of private-sector support for advanced nuclear technologies. The agreement has been described as the first corporate arrangement for the purchase of electricity from small modular reactors. Under the agreement, Kairos Power’s first SMR unit is expected to come online around 2030, with additional reactors scheduled to enter operation gradually through 2035.

Amazon has gone a step further by not only entering into long-term electricity supply arrangements but also directly supporting the development of SMR technologies through capital investment. The company participated as a lead investor in the financing round of advanced reactor developer X-energy and supported an advanced reactor project being developed in cooperation with Energy Northwest in Washington State. The project is expected to begin with approximately 320 MW of installed capacity across four reactors, with the potential to expand to 960 MW in later phases. Amazon has also announced its objective of supporting the development of more than 5 GW of new nuclear generation capacity across the United States by 2039 in cooperation with X-energy.

Meta has likewise launched a procurement process aimed at developing between 1 GW and 4 GW of new nuclear generation capacity to meet future electricity demand from its data centers. This level of capacity approaches the output of multiple conventional nuclear power plants and demonstrates the increasingly strategic role that nuclear energy is beginning to play in technology companies’ energy planning.

Oracle, for its part, has suggested that future AI data center demand may eventually exceed the capabilities of existing grid infrastructure and has discussed the possibility of developing hyperscale data center campuses supported by SMRs. Although these plans remain at an early stage, they are noteworthy because they demonstrate that the technology sector is increasingly planning digital infrastructure and energy infrastructure together.

This trend should not be viewed merely as a collection of isolated corporate decisions. The IEA has noted that data centers and major technology companies are creating a new and distinct demand segment for the nuclear energy sector. According to the agency, approximately 25 GW of SMR capacity is currently being planned, a significant portion of which is intended to supply electricity to data centers.

Key Considerations for the Commercialization and Deployment of SMRs

Although interest in SMR technologies is growing rapidly around the world, the sector still faces several important areas of development in the years ahead.

One of the most significant is commercialization. Numerous SMR designs are currently under development across different regions of the world, and pilot projects continue to advance. However, the number of projects that have entered commercial-scale operation remains limited. As a result, cost structures, construction timelines, and operational performance are expected to become clearer as additional projects are completed and brought online. Many stakeholders believe that serial manufacturing and modular construction techniques will gradually reduce costs and improve the competitiveness of SMRs over time.

In addition, supply chain capacity and the availability of skilled personnel will be critical to the successful scaling of next-generation nuclear projects. The IEA has noted that the simultaneous development of multiple nuclear projects could create bottlenecks in the production of certain equipment and the availability of specialized labor.

Regulatory frameworks will also play an important role in the broader deployment of SMRs. In many jurisdictions, including Türkiye, existing nuclear licensing regimes were originally designed around conventional large-scale reactors. As a result, regulatory authorities have been working to develop permitting and assessment processes specifically tailored to SMR technologies. Continued regulatory development and the maturation of permitting frameworks are likely to support faster deployment of these technologies.

In Türkiye, future regulatory initiatives may increasingly address AI infrastructure and advanced energy technologies together rather than through separate policy frameworks. Given the growing interdependence between large-scale AI investments, data center development and reliable low-carbon electricity supply, an integrated enabling framework supporting both digital infrastructure and next-generation energy projects may emerge as an important element of the country's long-term industrial and energy strategy.

Cybersecurity is likely to become another important area of focus as AI infrastructure and advanced nuclear technologies become increasingly interconnected. While the precise manner in which this issue will be addressed under Türkiye’s emerging regulatory framework remains uncertain, it may be increasingly difficult to view the cybersecurity risks associated with data centers and those associated with advanced nuclear facilities as entirely separate issues. As AI campuses, digital infrastructure and dedicated energy generation assets become more closely integrated, cybersecurity considerations may need to be addressed through a coordinated framework that takes into account the resilience and protection of both systems together. In this respect, the security of the digital infrastructure consuming electricity and the security of the infrastructure generating that electricity may increasingly be regarded as complementary components of the same strategic ecosystem. Public perception may also prove to be an important factor in the sector’s development. New-generation SMR designs incorporate enhanced safety standards, and many developers believe that these features will contribute to a shift in public perceptions of nuclear energy. At the same time, issues such as waste management, safety, and environmental impact will continue to require transparent and careful consideration in order to secure long-term public acceptance.

Although meaningful progress is already being made in these areas, stronger cooperation among public institutions, technology developers, energy companies, and investors will likely be one of the key factors accelerating the role of SMRs in the energy transition.

Looking Ahead: The Role of SMRs in the AI Economy

The future energy mix supporting AI infrastructure is unlikely to depend on any single technology. Renewable energy sources, natural gas, and nuclear power will all likely play a role in meeting rising electricity demand. Nevertheless, SMRs occupy a uniquely strategic position because they combine low-carbon electricity generation with the reliability characteristics increasingly required by large-scale AI systems.

The intersection of AI and energy infrastructure is likely to become one of the defining industrial transformations of the coming decade. AI is no longer merely a software story; it is also an energy infrastructure story. Companies and countries capable of securing abundant, reliable, and low-carbon electricity may gain a significant competitive advantage in the AI economy.

The scale at which SMR technologies will be deployed in the coming years remains to be seen. What is already clear, however, is that AI-driven electricity demand has ushered in a new era for the energy sector. Technologies once viewed through a longer-term lens are now increasingly being regarded as integral components of the reliable energy infrastructure required by the digital economy. At the center of this transformation, SMRs stand out as one of the technologies that may shape not only the future of nuclear energy, but also the energy architecture of the AI age.