- Regardless of the outcome of upcoming climate talks in Paris, countries will work to reduce greenhouse gas emissions to some degree in the coming decades. Nuclear power will play a growing role in those efforts, although most new nuclear power capacity will initially be concentrated in only a few countries.
- Despite political support for nuclear power and the expected 2016 startup of the first new reactor in two decades, high capital costs, climbing operating costs, persistent low natural gas prices, unfavorable electricity markets and aging infrastructure will limit the expansion of traditional nuclear power in the United States.
- The United States will remain a global leader in nuclear technology development and implementation around the world.
With international climate negotiations set to begin in Paris at the end of the month, it remains to be seen whether leaders and experts can come together to sign a binding agreement on reducing global emissions. Regardless of the talks' outcome, many countries are already working to reduce their emissions on a national level. From a geopolitical perspective, their efforts are less about potential environmental effects than they are about changes in the energy makeup of individual countries, and consequently, the cost of economic development.
Although much of the world's focus is on variable renewable energies like wind or solar power as a solution to the emissions problem, nuclear power can also play a role in reducing the total emissions created during electricity production. Nuclear energy provides a low-emission energy source that does not vary with the weather and is not subject to the volatility of hydrocarbon markets. However, nuclear power must overcome its own set of constraints and obstacles to compete with other energy sources. And although global capacity for nuclear power is likely to expand in the coming decades, the United States probably will not substantially increase its own capacity. Instead, it will serve as a technological developer that helps other countries ramp up their use of nuclear energy.
A History of U.S. Nuclear Power
The U.S. military programs that produced the atomic bombs dropped on Hiroshima and Nagasaki, ushering in the end of World War II, eventually led to commercial nuclear power ventures. The United States began using nuclear power for commercial electricity generation in 1957 when the Shippingport Nuclear Power Plant came online in Pennsylvania. The last new nuclear plant, Tennessee's Watts Bar 1, started operating in 1996. One hundred units continue to operate today, giving the United States the largest civilian nuclear energy program in the world. Nuclear power now accounts for roughly one-fifth of the nation's electricity supply. But the path leading to that point was not smooth, nor is nuclear power guaranteed to hold its position in the country's energy makeup in the future.
High capital costs and regulatory hurdles have kept nuclear power from reaching its potential in the United States. Even during the "golden age" of U.S. nuclear power, cost overruns were astronomical; the 75 reactors built between 1966 and 1977 saw cost overruns that averaged more than 200 percent. Concerns about nuclear energy rose after an accident occurred on Three Mile Island in 1979, and the regulatory process became even more rigorous in an effort to ensure safety. Other countries, including France, have incorporated higher percentages of nuclear power into their energy mix. But in the United States, huge capital costs and an increasingly complicated regulatory process, combined with high inflation rates and the Three Mile Island accident near the end of the 1970s, meant that next two decades saw few steps taken to increase the United States' capacity for nuclear power. The "death" of nuclear power was perhaps best illustrated in 1989, when a $5 billion, fully constructed plant that had never begun operating shut its doors.
Recent Policy Pushes
As the 21st century began, Washington renewed its support for nuclear power. Between 2001 and 2009, the U.S. Department of Energy's budget for research and development in nuclear power tripled. In 2002, government programs spent half a billion dollars to jump-start new construction efforts. The Energy Policy Act of 2005 included numerous financial incentives for nuclear power producers, including loan guarantees and cost sharing. In the early 2000s, a nuclear renaissance seemed possible. However, the economic crisis and boom in shale natural gas undid the progress that had been made.
Although funds continue to be appropriated for loans for new nuclear construction, they are not nearly enough to meet existing requests. There are five units under construction, but more are awaiting licensing, while others have withdrawn applications. The Nuclear Regulatory Commission issued an operational license in October — its first in nearly two decades — for the Watts Bar 2 reactor in Tennessee; when it comes online, it will become the first new unit to operate since the 1990s. Delays and cost overruns continue to plague plants under construction in Georgia and South Carolina, much like their predecessors.
The Costliness of Nuclear Energy
Capital costs for nuclear power plants remain extremely high. Estimates generally fall between $3,000 and $6,000 per kilowatt, although some estimates exceed $8,000 per kilowatt. By comparison, an advanced natural gas-fired plant has capital costs of approximately $1,000 per kilowatt. The high upfront costs increase the risk for investors, but that factor alone does not doom nuclear power. Nuclear power has always relied on low operating costs to make it economically competitive in the long run, but persistently low natural gas prices in the wake of the shale boom have made natural gas-fired plants more competitive.
Moreover, as nuclear plants age, they become more costly to maintain and operate. The operating and maintenance costs of nuclear plants have risen steadily over the past decade, closing the gap between nuclear (approximately 2.7 cents per kilowatt-hour) and natural gas (roughly 3.6 cents per kilowatt-hour). Nuclear power and natural gas remain among the cheapest sources of energy when it comes to the levelized cost of electricity, which takes into account initial capital costs, operating and maintenance costs, and variable fuel costs. The U.S. Energy Information Administration estimates that in the early 2020s, the levelized cost of electricity using the newest nuclear power generation technologies will average $95 per megawatt-hour, while the cost for natural gas will average between $72 and $75 per megawatt-hour, depending on the type of plant.
Although nuclear power and natural gas are not identical in the way they provide electricity (nuclear power plants are on constantly, whereas natural gas-fired power plants can be turned on and off as needed), they will continue to compete for their share of the market. The factors outlined above can make it more difficult for nuclear energy to compete, especially in the deregulated markets in the United States. In the past several years, a number of facilities have closed or announced their intention to close because of unfavorable economic conditions, and many more are facing a similar fate. For some plants that must compete with other power suppliers whose costs are falling, rising operation and maintenance costs make nuclear power too expensive to sell profitably. Under the Clean Power Plan, states can choose which method they use to reduce emissions. Even though the loss of existing nuclear capacity could hamper U.S. efforts to reach the emissions goals outlined by President Barack Obama's administration, it appears that economic realities are currently outweighing political initiative at the state level, at least where nuclear energy is concerned. Even with new plants on the horizon, improvements in the efficiency of existing plants and the extension of operating licenses, it is unlikely that nuclear power's share of the U.S. energy makeup will grow substantially.
Innovations in Nuclear Energy
Although traditional light-water reactors probably will not gain a bigger share of the U.S. market in the future, alternative technology — specifically small modular reactors, which have a capacity of less than 300 megawatts and whose major components can be produced in a factory and then sent to the point of use — could help maintain nuclear power's role in the U.S. energy makeup by the 2030s. However, these small reactors, at least initially, are facing many of the same obstacles as their larger predecessors. Currently, the capital costs for small modular reactors are high, but as modular manufacturing is optimized, those costs could eventually decrease significantly. There is also some level of flexibility in both financing and deploying these reactors because of the nature of the technology itself. It allows for smaller facilities to be economical, meaning that nuclear power could be used by a larger array of consumers, including rural areas where demand would not be high enough for a traditional plant or areas that could not afford the upfront costs of a larger facility.
Although Westinghouse announced the suspension of its small modular reactor program in 2014, it remains a part of the company's agenda. In October, Westinghouse proposed a partnership in the United Kingdom to continue developing the technology. NuScale Power, with the financial backing of the U.S. Department of Energy, is also moving forward with its small modular reactor program. The first deployment is expected in Idaho around 2025.
Small modular reactors will still have to compete with natural gas and renewables to meet domestic electricity demand as coal-powered electricity production is slowly retired. Energy storage technology is expected to improve alongside small modular reactor development, which will partially counter nuclear power's advantage as a baseline power source that does not vary with the weather. However, in a political environment that places an economic cost on emissions (even though this is not a given) and as technology improves enough to bring costs down, small modular reactors and other next-generation models could enable nuclear power to maintain its position in the market, even as the older traditional plants retire.
Nuclear power in the United States will likely remain relatively stable, but global capacity is poised to expand in the years ahead, especially after 2020. More countries are contemplating the use of nuclear power than ever before, and there is a small section of the global community that can provide the necessary technology. The United States remains among the world's leaders in nuclear technology, and it can use its capabilities, reputation for safety and operational consistency to continue capitalizing on its technology. Westinghouse, General Electric and other companies seeking to install nuclear power technology on an international scale will not find themselves lacking competition. And it will likely be difficult to compete with the favorable financing provided by countries such as Russia, especially if Moscow continues to give government support to nuclear power exporters.
China is expected to see the largest growth in kilowatts of new capacity and will account for the majority of the total global increase. Beijing has already adapted Western nuclear power technology and has become mostly self-sufficient. However, much like the oil and natural gas industry, some level of cooperation with Western firms will probably continue, leaving a door open for U.S.-based nuclear companies. (This is illustrated by the deal signed between Westinghouse and China's State Nuclear Power Technology Corp. in 2014.) U.S. nuclear power producers will continue to compete in the market over the next two decades, but they will likely have more success once small modular reactor technology matures and a new set of potential consumers emerges amid rising global demand for electricity.