When President Trump stood before Congress in February 2026, he delivered a stark message to America’s technology leaders: “You have an obligation to provide for your own power needs.” His call to action on behind-the-meter nuclear power for data centers wasn’t mere rhetoric. It was a recognition that the energy demands of artificial intelligence and modern computing require a fundamental shift in how we power our economy. Meanwhile, NASA and the Department of Energy announced their commitment to deploy a nuclear fission reactor on the lunar surface by 2030, signaling America’s serious intent to lead in next-generation nuclear technology.

These announcements capture a crucial moment for American energy policy. Yet, they mask a deeper challenge that the nuclear industry has not fully confronted: the economics of nuclear power, including Small Modular Reactors (SMRs), remain tenuous.

SMRs are undoubtedly a promising development. Their smaller size enables factory construction, modularity, and potential deployment in locations unsuitable for large reactors. The industry has done genuinely impressive work shrinking proven technologies into more flexible packages. But there’s a critical distinction between innovation in form and innovation in economics.

Today’s SMR narrative rests on a bet that scaling will work: take proven reactor designs, make them smaller, and assume that manufacturing at scale will eventually close the cost gap with larger plants. Unfortunately, this is not guaranteed. The physics of smaller reactors fundamentally differs from that of larger ones. Smaller systems have higher surface-area-to-volume ratios, meaning proportionally higher heat losses, more complex engineering challenges per unit output, and less ability to leverage the economies of scale that made large reactors attractive in the first place.

While these SMRs will be critical in the near term, the real path forward isn’t to hope that volume manufacturing solves our cost problems; it’s to redesign reactors from the ground up to be cheaper by physics and engineering, not cheaper at volume. This will entail rethinking materials, coolant systems, passive safety mechanisms, and operational requirements. It means pursuing designs in which the inherent characteristics of the system itself drive down costs, where a smaller reactor is genuinely cheaper to operate and maintain, not just smaller.

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Still, industry innovation alone won’t get us there. Policymakers have an equally important role to play, not through subsidies or cost-overrun insurance, but by confronting the regulatory frameworks that have made building new nuclear plants so prohibitively expensive in the first place. The NRC’s licensing timelines stretch for years, adding enormous carrying costs before a single watt is generated. The ALARA principle, or “as low as reasonably achievable,” has, in practice, evolved into an ever-tightening standard that demands diminishing safety returns at exponentially increasing cost. Layer on duplicative environmental reviews, outdated siting restrictions, and a regulatory culture that treats any new design with deep institutional skepticism, and even the most elegantly engineered reactor faces a cost structure inflated before construction begins. If we’re serious about reactors that are cheaper by design, we need a regulatory environment that doesn’t penalize innovation by default.

Why does this distinction matter? Because without it, we risk repeating the same cycle that has plagued nuclear energy for decades: betting on cost reductions that never materialize. The next wave of nuclear innovation must focus on reactors designed to be cheaper. When that happens, economies of scale amplify an already advantageous cost structure, rather than desperately patching fundamentally uneconomical designs.

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Energy security reinforces this urgency. This month, Iran closed the Strait of Hormuz, disrupting 20 percent of global oil supply and sending energy prices toward $100 per barrel. America cannot afford to rely indefinitely on volatile foreign energy markets. Nuclear power, including well-designed SMRs and next-generation systems, offers a path to genuine energy independence. But only if the economics work.

President Trump’s vision of data centers powered by nuclear energy is compelling. But it can only succeed if we build reactors that are not just smaller, but smarter. The technology exists. The talent exists. What’s needed now is the commitment to pursue nuclear innovation that puts economics first, not as an afterthought.

America’s energy future depends on it.

Alina Voss is on the founding team of NX Atomics, a next-generation nuclear energy company based in Indiana.

The views and opinions expressed are those of the author’s and do not necessarily reflect the official policy or position of C3.