An approach for Assessing the Investment Viability of Innovative Power Technologies in Sub-Saharan Africa: A Risk-Based Appraisal of Small Modular Reactors in Cameroon

Abstract

Sub-Saharan African power systems face persistent access and reliability constraints under high financing costs, making the viability of capital-intensive firm low-carbon generation highly dependent on de-risking. Small Modular Reactors (SMRs) are increasingly proposed for medium-sized grids, yet decision-relevant evidence remains limited because nuclear is rarely included in cross-country financing datasets and many assessments use stylized discount rates. This paper addresses these gaps through a two-stage financial modelling approach. First, a peer-reviewed cost-of-capital framework is extended to derive country-level costs of capital for nuclear and SMRs across Africa, yielding continent-wide averages of 14.5% (mature large nuclear) and 15.4% (FOAK SMRs). Second, these financing conditions are translated into project-finance outcomes for Cameroon using a FINPLAN cash-flow appraisal of a FOAK 420 MW SMR, benchmarked against firm hydropower anchored on the 420 MW Nachtigal project. At a reference tariff of 65 €/MWh and 15% discounting, the SMR is strongly unviable (project NPV −951 M€; IRR 7.1%; DSCR_min 0.59) and implies an affordability gap (LCOE=170 €/MWh). Sensitivities show SMR deployability requires either single-digit effective WACC (NPV > 0 only below 7%) or a much higher tariff (176 €/MWh at 15%), alongside major FOAK CAPEX reduction and strict schedule/IDC risk control. Hydropower remains near the affordability frontier, supporting hydro-led transition pathways in Cameroon.