While about a third of the population that needed to be evacuated due to the Chernobyl disaster had to displaced because of the Fukushima ordeal, it still meant more than 100,000 had to abandon their homes and towns, give up their livelihoods and way of life. The scale helps demonstrate the impact these massive nuclear accidents have had. The spread of radiation into the atmosphere, which can linger on for decades, is perhaps the biggest threat that elicits such severe pushbacks against the technology. Fukushima again revived the debate on whether a technology with such far-reaching consequences on humanity in the case of an accident, however rare, should be promoted.

This overall picture sets the perfect backdrop for the recent closure of Germany’s last three nuclear reactors, which has sparked, or rather, intensified the debate on nuclear power in global energy markets. For decades, nuclear power has played a crucial role in the energy mix, with Europe receiving most of the attention in recent years – and rightly so. Both Sweden and France are prime examples of the power of nuclear, with their fast-tracked approach in building out nuclear reactors to offset dependence on fossil fuels to decarbonize their economies. This path forward is a stark contrast to Germany’s decisions that have been backed on strong policy commitments to prioritize the riddance of the country’s nuclear power source altogether. Considering Europe’s varying outlook on nuclear as the backdrop, this issue of REview looks to explore the future of nuclear in the US. What can the US learn from other countries on its own path to decarbonization? And given that nuclear generation is one of the cleanest, concentrated energy options out there with a small footprint – why has it not been considered the key to solving security and long-term energy transition targets?

To answer these questions requires a lookback at nuclear energy in the US and its evolving obstacles over time (including reputation). Nuclear power was on the rise beginning in the early 1960s when new reactors were popping up all over the country. Within a span of just over three decades, new reactors increased from just one in 1957 to 112 by 1990 – when nuclear power came to make up nearly 20% of the total share of US electricity generation – and continues to do so to this day. The country was on track toward an extensive buildout of the energy source, a huge step toward expediting decarbonization, but the tide turned subsequently. It began getting likened to warfare, which in addition to the shocking accidents around the world worsened its already blighted views. The narrative over the past several decades has shifted from the technology being considered a renaissance, capable of supplying clean, fast, inexpensive and safe energy to one that is dangerous, and hence perhaps unacceptable.

Even with these strong views, nuclear power capacity continued to be added to the US grid, but implementation slowed at a staggering rate. The backlash emerged in the US after the Three Mile Island accident and protests by anti-nuclear campaigns were successful, leading to a number of existing facilities across the US being forced to shut down before their designed lifetimes. Construction permits issued for reactors leveled after the 1979 and while nuclear power generation continued to rise for another decade on previously approved projects being built and an increased capacity factor, expanding from around 65% to over 90% utilization. Still, nuclear power generation peaked in the early 1990s and has been coming down ever since. Furthermore, the lack of both public and political support for nuclear in recent decades has led to a greater emphasis on gas and renewables for decarbonization efforts.

This trend alone showcases the significance of political and public sentiment knock-on effects, as nuclear energy and its technology has only improved over this time. A key change was the price tag and buildout timing. Costs associated with uranium, a necessary element required for nuclear power, have been steadily on the rise as reserves for the rare earth mineral are in decline and new sources are just that – rare. As such, the cost to build out nuclear presents a significant hurdle in comparison to past decades where facilities could be built at a fraction of the cost. The other bottleneck centers around construction timing. Nuclear power safety regulations have become more stringent, requiring more routine shutdowns and lowered utilization that led to higher maintenance costs and lower profit margins. 

The combination of high cost, build out timing and maintenance have pushed nuclear into a backseat role for long-term energy transition targets, inhibiting the energy source from continuing to expand in the US. Though nuclear will still play an important role in the energy transition, its upside potential for growth pales in comparison to other sources like that of wind and solar. It’s safe to say nuclear missed its chance in the US and cannot be considered competitive when compared to faster and more cost-effective options in the energy arena today.

The case against nuclear is further exacerbated when comparing the levelized cost of electricity (LCOE) of nuclear versus solar or wind. Traditionally, the LCOE of nuclear plants average $90/MWh but can be as high as $140/MWh, while the LCOE of solar and onshore wind farms is below $50/MWh. Not only is solar and wind safeguarded from public perception, but these renewable sources also play nicely with developer’s balance sheets.

From a power generation point of view, renewable energy is especially efficient at replacing flexible power sources, meaning solar PV and wind can replace power sources like gas during peak generation. Nuclear, on the other hand, should be considered a clean, efficient, and most importantly, reliable source of baseload generation. Though nuclear power struggles with flexibility, it is still well positioned to overtake the needs of power grids as coal is phased out.

Renewable buildout will not be able to replace the role of nuclear in a power grid, despite having a lower LCOE. We observe this in California, where the California Independent System Operator (CAISO) is currently served by 10% renewable energy and 7.6% nuclear. Despite being one of the leading regions globally for renewable energy and having several hourly periods where renewables met all demand, California regulators have made the decision to prolong it’s only remaining nuclear plant, Diablo Canyon, for at least another 5 to 10 years to provide a consistent baseload as the power market transitions to more solar, wind and storage.

One could argue that nuclear technology is advancing and could present an upside scenario in which countries can add more nuclear into their energy mix. Specifically, small modular reactors (SMRs) have become increasingly attractive in recent years, with France’s proposal to scale up nuclear quickly and at a lower cost. China is taking steps to do the same, quickly building SMRs as they are faster, smaller and easier to roll out. However, though this technology can help boost capacity, commercial projects are still in development. But the question remains as to how much capacity SMRs can really provide. Given their size (usually 300 Mwh equivalent or less per unit), large-scale nuclear reactors (1 GW of power per plant on average in the US) would still be needed to structurally displace other energy sources in the long term. The same applies to the US. SMRs will play just a small part in meeting energy demand needs, but the country would need to see larger facilities developed to offset growth in renewables.

In the US, there is a large degree of variation in share of nuclear contribution when considering the energy mix by state. While most states will reduce nuclear usage in the power sector over the next two decades, there are just six state-level outlooks that show growth in nuclear in the long run. Ironically, the state with the largest nuclear power growth potential is Pennsylvania, where the Three Mile Island nuclear accident occurred. Pennsylvania is set to more than triple its nuclear usage, increasing from nearly 10 GW to over 33 GW, now through 2050. Why would Pennsylvania invest in nuclear after having experienced an accident first-hand? The state, falling within the challenging terrain of the Appalachian Basin, will need nuclear power generation to help offset limited potential for solar and wind capacity, largely due to the difficulty and costliness in buildout of these sources within the region. Other sources of energy like gas and nuclear will be required to meet demand in the state, and to help offset limited renewables upside. Pennsylvania’s power mix in 2022 consisted of 60% gas and 20% nuclear, and we expect the state will shift to 36% gas and 56% nuclear by 2050. Pennsylvania is a prime example of regional implications that will affect the long-term outlook for both non-fossil and fossil-fuel-based energy sources and that the importance of nuclear energy varies with scale. Regardless of total nuclear energy declining within the US over the longer term, it is clear that some states will still heavily rely on the energy source and further investment in nuclear is necessary.

Nuclear energy is a clean, safe and reliable source to achieve decarbonization goals and falls in line with the likes of wind and solar. It unfortunately, cannot compete economically with other sources and still lacks a great deal of political support – both of which are necessary for its growth potential and why Rystad Energy’s views on nuclear in the US are bearish. On a global scale, nuclear power is forecast to grow 60% now through 2050, largely driven by increasing capacity in Asia, but pales in comparison to other energy sources like solar and wind. While there will still be some nuclear in the long term, we cannot expect a bright future without improved technologies that could significantly scale up generation capacities quickly and cost effectively.

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Authors: 

Emily McClain 

Vice President, Gas Markets Research
emily.mcclain@rystadenergy.com

Carlos Torres-Diaz 
Senior Vice President, Renewables and Power Markets Research
carlos.torres@rystadenergy.com

Geoffrey Hebertson
Senior Analyst, Renewables and Power Markets Research
geoffrey.hebertson@rystadenergy.com

Manash Goswami

Vice President, Analytics
manash.goswami@rystadenergy.com

(The data and forecasts contained in this column are Rystad Energy’s and the opinions are of the authors.)