By McKay Shurtz

With the climate crisis coming to a head, many companies, countries, and investors are looking to transition towards green-friendly energy sources. The desire to transition has placed tremendous pressure on energy companies to change, as they are currently responsible for 25% of US emissions.¹ Of all the alternatives to fossil fuels, nuclear energy seems to be one of the most attractive options.

Nuclear, is not an intermittent source of energy, (meaning it can run close to 24/7) nuclear energy doesn’t require any fossil fuels to be burnt, and nuclear energy is one of the most developed sources of clean energy. Despite the many advantages that nuclear energy has, according to the most recent Department of Energy’s “Solar Futures Report,” the nuclear industry will soon be in decline and eventually obsolete.

Today, nuclear generates 20% of the energy in the US,² but the DOE report has a target of just 4–5% of energy demand being met by nuclear energy in 2050.³ At the same time that nuclear energy appears to be needed the most, it appears to be utilized the least. The decline is largely due to fiscal advantages that other sources of energy are projected to gain over the next 30 years, as well as public opinion of nuclear energy souring.

Overall Cost

When it comes to cost, levelized cost of energy is the metric predominantly used to compare energy cost from various sources. LCOE is calculated by dividing the total cost of a source of energy generation by the total amount of energy that it will generate. The result is a quantitative way to compare the cost of various sources of energy in price per kilowatt-hour. As Figure 1 shows, soon nuclear energy will be far less cost-effective than solar and onshore wind—its two largest renewable competitors.

While it needs to be noted that LCOE is not a perfect metric, that these numbers are projected for 2026 and that the figures are probably optimistic to say the least. The general idea that it conveys is still accurate. The days of solar and onshore wind being economically unviable sources of energy are long gone. As Figure 1 clearly shows, nuclear energy will soon cost almost twice as much to generate as onshore wind and solar energy. According to MIT’s report, “The Future of Nuclear Energy in a Carbon-Constrained World,” “The prospects for the expansion of nuclear energy remain decidedly dim in many parts of the world. The fundamental problem is cost.”⁴

Capital Cost

Another important metric that can be used to evaluate the viability of a source of energy is the initial capital cost. Initial capital cost simply means the amount of money that it will take to build the energy resource and get it operational. Initial capital cost is important because the larger the initial capital cost is, the fewer people and institutions can afford it. The large initial capital cost is one of the many reasons that a home may have solar panels or a small wind turbine, but never a nuclear reactor.

As demonstrated by Figure 2, the levelized capital cost for nuclear energy is far higher than solar or onshore wind by a ratio of roughly two to one. The difference in initial capital cost means that an investor seeking to generate energy must be willing to put up around twice the amount of money upfront in order to generate the same amount of energy as the other renewable sources. The massive disparity between the initial capital cost of nuclear and solar or onshore wind is a clear disadvantage, and it’s one that will only become more pronounced when time value of money gets factored in.

Time Value of Money

Time value of money is the principle that a dollar today is worth more than a dollar in the future. The time value of money principle holds true because a dollar today can be invested and thus will be worth more in the future. Time value of money is critical in understanding the future of energy because there is a large difference in the length of time that different types of energy take to be developed and become operational.

According to the Nuclear Energy Agency, it takes anywhere from 5–7 years to build a nuclear plant. The process of creating a nuclear plant is understandably filled with a wide variety of licensing and red tape that frequently leads to delays in the process. The many difficulties of creating a nuclear plant can be seen clearly by the construction of Tennessee Valley Authority’s Watts Bar Unit 2, the only U.S nuclear power plant to come online since 1996.

Construction on the TVA’s Watts Bar Unit 2 began in 1973 but was stopped in 1985 after problems were identified in TVA’s nuclear program and a predicted increase in energy demand did not occur. At this point, $1.7 billion had been put into the project. It wasn’t until 2007 that construction on the project began anew and, by 2007, new regulations had come into existence requiring the plant to be modified. The plant finally came along online in 2016, 20 years after construction on it began, and cost $4.5 billion.⁵

One dollar invested in the S&P 500 in 1973 would have yielded $5.44 in 2016. The $1.7 billion invested in 1996 would have been worth $9.25 billion in 2016 if it had been put it into an index fund instead of put toward building a nuclear plant.

The nuclear plant example can be compared to a typical solar farm that can have the construction done in anywhere from 6–10 months and be connected to the gird in anywhere from 2–12 months.⁶ When the time value of money calculations are added to the levelized cost of energy, they make investing in nuclear energy even less attractive.

The financial pitch for nuclear energy is a difficult one. After all, when there are has faster, cheaper, and nimbler competitors, what government or investor wants to put their money into something that isn’t top-of-the-line? If this wasn’t enough, there is also a large portion of the public that is vehemently opposed to nuclear energy for a wide variety of reasons.

Reactions to Accidents

While nuclear energy is much safer than many other sources of energy—especially coal and oil—in the court of public opinion, it is one of the deadliest. ⁷ This matters because in a democracy the people have control over the government and the government plays a more significant role in America’s energy future. Wherever a nuclear accident occurs, people no longer feel safe and will start to oppose nuclear energy, making it a less desirable investment.

This can be demonstrated by the Gallup poll on nuclear energy. Prior to the 2011 Fukushima reactor disaster, US public support for nuclear energy had been rising for a decade and was at close to 62% support. After the disaster, support for nuclear energy began to decrease and is down to 50% today.⁸ In an energy industry that is heavily regulated by the government, public support for nuclear energy is vital.

Intermittence

Advocates for nuclear energy are certain to mention that, unlike wind and solar energy, nuclear energy it is not an intermittent source of energy, meaning that the nuclear can run close to 24/7. It is a fact that there will be times in the day where the sun is not out or the wind is not blowing. Intermittence is simply one problem that nuclear energy does not have to face. While intermittence is certainly one place where nuclear energy has an advantage, its advantage is declining as the grid and battery life are both improving exponentially.

Intermittence is a concern that certainly is intuitive, but it is not a concern that stands up to strict scrutiny. Heribo Blanco and Andre Faaij in the “Renewable and Sustainable Energy Review,” demonstrate that, on average, a system that is run on 95% wind and solar will only be able to meet 1.5% of energy demands.⁹ Their study was written in 2018 and there is no doubt that there will be massive innovation in energy storage over the next 25 years. Some of the most promising ideas today seem to be pumped hydro, stacked block, and flow battery storage systems.¹⁰

The Future of Nuclear

While on the surface nuclear energy seems like a clear candidate to solve many of the problems that come with other energy sources, a closer examination shows that there are better sources of energy to solve the same problems in more cost-effective and practical ways. Today, nuclear energy is a source of energy that is more expensive, takes more time to build, and has more public opposition than its primary renewable competitors—wind and solar.

With these considerations in mind, it is no surprise that nuclear energy is expected to decline over the next 30 years. In the next 15 years, nuclear energy will be used largely as a temporary placeholder until better storage and grid capacity can be built. After that, improvements to the grid and energy storage will solve the intermittence problems with solar and wind, rendering nuclear obsolete.

 

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Notes:

1. “Sources of Green House Gas Emissions,” EPA, Environmental Protection Agency, https://www.epa.gov/ghgemissions/sources-greenhouse-gas-emissions.
2. Becca Jones-Albertus, “Solar Futures Study,” Department of Energy, https://www.energy.gov/sites/default/files/2021-09/Solar%20Futures%20Study.pdf.
3. “Frequently Asked Questions (Faqs)-U.S. Energy Information Administration (EIA),” U.S. Energy Information Administration (EIA), https://www.eia.gov/tools/faqs/faq.php?id=427&t=3.
4. “The Future of Nuclear Energy in a Carbon-Constrained World,” MIT, https://energy.mit.edu/wp-content/uploads/2018/09/The-Future-of-Nuclear-Energy-in-a-Carbon-Constrained-World-Executive-Summary.pdf.
5. MIT, “Future of Nuclear Energy.”
6. “How to Build a Solar Farm,” BlueWave Solar, https://bluewave.energy/bw-resources/how-to-build-a-solar-farm.
7. James Conca, “How Deadly Is Your Kilowatt? We Rank the Killer Energy Sources,” Forbes, Forbes Magazine, 28 Mar. 2017, https://www.forbes.com/sites/jamesconca/2012/06/10/energys-deathprint-a-price-always-paid/?sh=19535379709b.
8. RJ Reinhart, “40 Years after Three Mile Island, Americans Split on Nuclear Power.” com, Gallup, 20 Nov. 2021, https://news.gallup.com/poll/248048/years-three-mile-island-americans-split-nuclear-power.aspx.
9. Herib Blanco and Faaij André, “A Review at the Role of Storage in Energy Systems with a Focus on Power to Gas and Long-Term Storage,” Renewable and Sustainable Energy Reviews, Pergamon, 31 Aug. 2017, https://www.sciencedirect.com/science/article/pii/S1364032117311310.
10. Julian Spector, “The 5 Most Promising Long-Duration Storage Technologies Left Standing.” Greentech Media, Greentech Media, 1 Apr. 2020, https://www.greentechmedia.com/articles/read/most-promising-long-duration-storage-technologies-left-standing.