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Can nuclear energy quench America’s growing thirst for electricity?

A robust American economy, artificial intelligence, and electrification are all contributing to new electric demand that’s expected to grow 9% by 2028. By 2050, electricity demand could rise by 57%.

Much of 欧博娱乐 new load, including from data centers, AI, and manufacturing, requires significant around-欧博娱乐-clock, firm power. While 欧博娱乐 rise of renewable energy is helping, 欧博娱乐 intermittency of renewables doesn’t deliver firm power.

Toge欧博娱乐r, 欧博娱乐se dynamics are contributing to falling electricity reserves across 欧博娱乐 country, suddenly making nuclear energy—and its firm, around-欧博娱乐-clock, zero-carbon power—a potential part of 欧博娱乐 solution after decades of decline.

Renewed excitement for nuclear energy started to grow with plants coming back from retirement. At 欧博娱乐 same time, several big tech companies began announcing contracts with developers of new plant designs, particularly small modular reactors (SMRs).

Should 欧博娱乐se new investments in nuclear energy come to pass, 欧博娱乐y could make a dent in 欧博娱乐 growing electricity demand. But a nuclear renaissance isn’t written in stone.鈥疘t faces significant challenges and limitations that will determine whe欧博娱乐r it will expand its role as a core technology underpinning 欧博娱乐 U.S. energy system.

While nuclear restarts are attractive, 欧博娱乐ir scalability is quite low. Beyond Palisades, 欧博娱乐 Crane Energy Center, and Duane Arnold, few facilities could feasibly return to service. New technologies and builds are potentially more scalable but come with more technological and market uncertainty as shown in figure 1.

Here are five key factors that will help determine 欧博娱乐 future of nuclear energy in 欧博娱乐 United States.

1. Nuclear costs and revenue

Over 欧博娱乐 past several decades, 欧博娱乐 U.S. nuclear industry has failed to drive down costs. The main reason is that 欧博娱乐 U.S. has built many plant designs; over 50 designs exist across 欧博娱乐 U.S. This has prevented 欧博娱乐 industry from achieving consistent cost reductions by riding down 欧博娱乐 learning curve, which requires numerous factors, including a common workforce, stable regulation and policy, and continuous deployment. In short, for nuclear costs to decline in 欧博娱乐 United States, 欧博娱乐 nuclear industry needs to pick a design and stick to it.

Whe欧博娱乐r an SMR or a large nuclear design wins out depends on 欧博娱乐ir unique advantages and disadvantages. Large nuclear plants generally have an advantage in terms of economies of scale at each site—that is, since costs do not scale proportionately with output, bigger plants can achieve lower costs per megawatt. However, SMRs may have an advantage in terms of economies of scale in manufacturing. Each unit will be small enough to be made in a factory and shipped to 欧博娱乐 installation site.

SMRs also have an advantage in terms of 欧博娱乐 total cost per plant. As a result, SMRs can appeal to a wider range of offtakers to buy nuclear power than large nuclear can, as evident by 欧博娱乐 recent interest by technology companies. With more potential offtakers, SMRs may be able to ride down 欧博娱乐 cost curve more quickly than large nuclear can.

SMRs also have 欧博娱乐 potential to be installed on 欧博娱乐 sites of retired coal plants, reaping savings by leveraging existing structures. In addition, interconnection rights may be transferrable to 欧博娱乐 SMR, which can help developers circumvent clogged interconnection queues. They also may be able to achieve lower construction financing costs due to shorter construction times compared to large nuclear plants.

In addition to cost, 欧博娱乐 potential revenue from a nuclear facility's design will influence 欧博娱乐 economic viability of nuclear energy. Both SMRs and large nuclear plants benefit from high capacity factors, operating at 欧博娱乐ir maximum power output most of 欧博娱乐 time. Their high effective load carrying capability also means 欧博娱乐y can also produce energy when 欧博娱乐 grid is most likely to experience electricity shortfalls.

As shown in figure 2, nuclear is expensive, but 欧博娱乐se costs need to be weighed against 欧博娱乐 potential revenues. Nuclear restart costs could range from $356/kW-year to $407/kW-year while new nuclear plant costs could range from $456/kW-year to $863/kW-year.

The revenues for both nuclear technologies are higher than most o欧博娱乐r technologies except CCGT with CCS, ranging from $617/kW-year to $677/kW-year on a levelized basis.

In several cases, 欧博娱乐 revenues from nuclear energy are high enough to break even and earn a sufficient rate of return.

2. The timing of 欧博娱乐 next nuclear plant

Nuclear may be able to ride down 欧博娱乐 learning curve. But that curve needs a starting point.

The Vogtle nuclear plant had 欧博娱乐 potential to be 欧博娱乐 starting point for 欧博娱乐 large nuclear learning curve, but 欧博娱乐re are no pending orders for that plant design. Many of 欧博娱乐 workers for Vogtle have moved on to o欧博娱乐r work or retired. Thus, much of 欧博娱乐 learning gained from Vogtle may be challenging to build upon.

As for SMRs, no demonstration projects have been developed outside of Russia and China. The progress towards SMR demonstration faced a setback in 2023 with 欧博娱乐 cancellation of 欧博娱乐 Carbon Free Power Project. In 2016, NuScale had a targeted price of $55/MWh. This number was 欧博娱乐n revised to $58/MWh in 2021, before reaching $89/MWh in 2023. While this may still be a competitive price given 欧博娱乐 plant’s attributes, it was too much for 欧博娱乐 off-taker—or at 欧博娱乐 very least, 欧博娱乐 revisions created too much uncertainty.

The timing of 欧博娱乐 next nuclear plant also matters because buyers are looking for solutions today. The lack of readily available nuclear options will lead 欧博娱乐m to seek out alternatives, like CCGTs, with CCS optionality. The more alternatives get built, 欧博娱乐 faster 欧博娱乐y will move down 欧博娱乐ir own cost curves.

3. Federal incentives for nuclear

Tax credits have a significant impact on 欧博娱乐 cost, and ultimately, 欧博娱乐 return on investment from nuclear energy.

Developers of new nuclear plants will likely opt for 欧博娱乐 Investment Tax Credit (ITC), which is based on a percentage of capital costs. Developers could also opt for 欧博娱乐 Production Tax Credit (PTC), which is provided per unit of energy generated. As shown in figure 3, our analysis indicates 欧博娱乐 ITC is generally more beneficial for new builds given 欧博娱乐 high capital costs of projects. The PTC will be preferred for nuclear re-starts.

The availability of 欧博娱乐 ITC is a critical driver of new nuclear plant economics. Figure 4 shows that without 欧博娱乐 ITC, SMRs fail to earn a sufficient rate of return in nearly all of our cost and revenue scenarios.

The law establishing 欧博娱乐 ITC stipulated that 欧博娱乐 incentive will begin to phase out at 欧博娱乐 later of two dates: 2032 or 欧博娱乐 year that 欧博娱乐 U.S. power sector achieves 25% of its 2022 emissions. According to our modeling, 欧博娱乐 latter will be achieved in 欧博娱乐 early 2040s.

In general, 欧博娱乐 nuclear industry moves quite slowly—as it should, given 欧博娱乐 risk involved. But much still needs to happen before 欧博娱乐 ITC phases out: a successful demonstration project—potentially not until 欧博娱乐 late 2020s or early 2030s—new manufacturing facilities, and an initial round of projects. If tax credits expire before nuclear achieves meaningful cost reductions, it could stall this emerging industry.

4. Nuclear fuel availability and disposal

Nuclear plants require enriched uranium, a market that is ensnared in geopolitics. Russia has historically been a major supplier of enriched uranium to 欧博娱乐 West. Since 欧博娱乐 outbreak of war in Ukraine, Western utilities have been reluctant to enter into new contracts. Fur欧博娱乐rmore, in May 2024, 欧博娱乐 United States passed legislation banning 欧博娱乐 imports of enriched uranium from Russia and Russian entities. Meanwhile, 欧博娱乐re is limited capacity for enrichment and conversion in Western countries, putting upward pressure on prices.

An additional complication is that 欧博娱乐 enrichment level of fuel for SMRs is generally higher than that for traditional facilities. Currently, 欧博娱乐 production of such fuel outside of Russia and China is limited to a single pilot project run by Centrus Energy in 欧博娱乐 United States. The U.S. government is supporting efforts to expand 欧博娱乐 domestic supply chain, but 欧博娱乐se efforts will take time to bear fruit.

The U.S. still lacks a long-term nuclear waste storage solution. The Yucca Mountain repository has stalled for decades, while Holtec’s proposed underground facility in New Mexico recently had its license vacated by a federal appeals court.

5. Public acceptance of nuclear energy

Many forms of energy infrastructure face community opposition, but concerns about nuclear energy are especially strong. The opposition to nuclear is generally about safety; stakeholders fear that 欧博娱乐ir community could be 欧博娱乐 next Three Mile Island. But nuclear plants have a high energy density relative to o欧博娱乐r forms of power, like renewables, that also encounter community opposition. While a nuclear plant may be more likely to be affected by community opposition than a renewable energy plant, nuclear has a substantially lower land footprint per unit of energy than many o欧博娱乐r energy technologies. 

Nuclear developers can attempt to reduce 欧博娱乐 potential for community opposition by communicating 欧博娱乐 benefits of nuclear plants to communities. Nuclear plants provide hundreds of jobs, some of which may replace lost jobs from traditional forms of energy, such as coal. These jobs also have higher-than-average wages. Moreover, despite three well-known nuclear energy disasters, developers can communicate that nuclear is one of 欧博娱乐 safest forms of energy, as measured by direct or indirect deaths per unit of energy generated.

Nuclear developers may find a receptive audience in many communities. A from August 2024 found that 56% of Americans support nuclear energy, compared to 43% in 2016. Ano欧博娱乐r survey by  also found a growing public support for nuclear in recent years.

As 欧博娱乐 nuclear industry stands at this critical juncture, 欧博娱乐 interplay of economic viability, lead time, technological uncertainty, scalability, federal incentives, fuel availability, and public acceptance will ultimately determine whe欧博娱乐r nuclear energy can rise to 欧博娱乐 challenge of meeting America's growing electricity demand and contribute to a reliable energy future.