Nuclear's Tenuous Role in the Energy Transition

Nuclear energy remains one of the largest sources of low-carbon-emitting energy generation in the United States, with 92 operating reactors providing just under 20 percent of electricity generation. However, over the last decade, 13 nuclear facilities in the United States have been shuttered largely for economic reasons, and new nuclear projects are practically non-existent.  What does the industry’s faltering status mean for its long-term role in the energy transition, and should ratepayers fork out extra to keep nuclear as a viable future option? 

What happened to the Nuclear Renaissance?

In the early 21st century, with recognition of the threat of global warming as well as new reactor technology, there was talk of a “nuclear renaissance”—an expansion of nuclear power. However, due to factors such as inexpensive natural gas, increasing competition from renewables, the 2011 Fukushima disaster, and spiraling new nuclear construction costs, the renaissance has not occurred as predicted. In its 2023 Annual Energy Outlook report, the U.S. Energy Information Agency projects that nuclear will decline to 10–15 percent of electricity generation by 2050 as plants are retired at a faster rate than new ones are built. 

The Biden administration has made moves that could reverse the decline. The Civil Nuclear Credit Program (CNC) program , part of the funding authorized by the Bipartisan Infrastructure Law, provides $6 billion to support financially distressed existing nuclear capacity. And the Inflation Reduction Act provides tax incentives for the development of advanced nuclear reactor facilities. Policymakers are facing decisions about supporting both the existing nuclear capacity and investing in new facilities that have implications for the energy future. Some modest investments in the near term to (a) keep existing plants operating and (b) keep the option of new nuclear technologies available for the longer term might be wise. However, prudent economic analysis is required to ensure this funding is used in the most effective way possible so the public and ratepayers aren’t paying more than they should.  

For example, existing nuclear operators are demanding subsidies to keep their units online, and those demands merit careful scrutiny of how much and for how long ratepayers should pay. Synapse’s 2021 report Exelon Illinois Nuclear Fleet Audit examined the economics of Illinois’ Dresden and Byron plants that Exelon (now Constellation) threatened to prematurely retire due to economic hardship. In the context of the economics of the two plants, Synapse found that short-term subsidies could help preserve jobs and help keep the state of Illinois on track to meet its clean energy goals. Rising natural gas prices in 2022 helped the profitability of the nuclear plants, and Synapse’s price forecasts, which were the ones adopted in the resulting Illinois Climate and Equitable Jobs Act (CEJA) legislation, are saving ratepayers significant money in comparison with the subsidies originally requested.

For new nuclear capacity, examples from recent decades show a more alarming outcome. The main example is Georgia Power’s Vogtle Units 3 and 4 project —the first new nuclear units built in the United States in three decades. The project has faced large cost overruns and delays of over 7 years, with the total cost more than doubling to $30 billion from the $14 billion originally predicted. Synapse’s 2011 report, Big Risks, Better Alternatives provided a $33.4 billion mid-case capital cost estimate that ended up much closer to reality that the original cost figure. Georgia ratepayers already shoulder the burden of these overruns and they still don’t have a fully functional plant.

The risk of cost overruns may be even larger for the construction of new advanced reactor designs, many of which also require substantial modifications to fuel enrichment and waste management activities. The National Academy of Sciences discusses the challenges involved with advanced reactor designs in a recent report.

Nuclear’s Uncertain Future

Even without overruns, the time it takes to get reactors from new nuclear facilities online in the United States is best measured in decades. The time scales at which the United States needs decarbonized energy capacity to reach Net Zero 2050 goals mean that expansions of nuclear energy capacity with new reactor designs probably won’t play a significant factor in achieving them. 

This doesn’t mean that expanding nuclear capacity will be a bad idea in the long term. For example, a study by researchers from Harvard University argues that new nuclear capacity could be an economically viable proposition decades into the future, as the energy transition enters a more advanced stage. In this stage, load increases from electrification, high penetration of intermittent renewable capacity, and other factors could cause nuclear to be a useful tool in the toolbox. Whatever the future holds, it seems likely that nuclear will play a more niche role in decarbonization efforts moving forward than the central one “nuclear renaissance” proponents had sought.