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Why America Pays More for Nuclear Power

A new study examines what other countries have done to keep costs down, and what could work in the future.

Steam rises from the cooling towers of the Electricite de France (EDF) nuclear power station at Nogent-Sur-Seine, France, November 13, 2015. (Reuters / Charles Platiau)

As countries scramble to grow their supply of clean energy, nuclear power poses a couple of problems. Radiation risks are unavoidable, of course, and the conventional wisdom says that, unlike other energy sources, nuclear is doomed to grow increasingly expensive over time.

In the U.S., costs have skyrocketed so high that hardly any new plants get built anymore. Because the U.S. created nuclear energy, maintains the largest fleet of reactors, and made its data publicly available when most countries didn’t, its experience plays a huge part in the expert analyses used to determine how much future nuclear power plants could cost.

“That would have made sense, except the U.S. was a huge outlier,” says Jessica Lovering, energy director at pro-nuclear environmental think tank The Breakthrough Institute.

In the past few years, though, new data has emerged from other nuclear countries (not including China or Russia), and it tells a very different story. Lovering and her colleagues examine this information in a new study, published online this month in the journal Energy Policy.

These findings are important for thinking about what proactive policies a country could use to keep nuclear in the mix when moving away from fossil fuel energy, says Jesse Jenkins, who is pursuing a Ph.D. at MIT on zero-carbon power systems. (He reviewed a draft of the study for the authors before publication, and also worked at Breakthrough from 2008 to 2012.)

“We don’t have to accept the idea that nuclear will always get more expensive—we have counterexamples to that rule,” Jenkins says. “It gives you some optimism that if we follow some of the best practices seen elsewhere, we could see nuclear get cheaper.”

That offers some reason to hope, but there are also factors that have been in motion for decades. “In the U.S., plants built today are more expensive than in South Korea,” Lovering points out. “There are policies or industry decisions that could make it cheaper, but a lot of it is historical things that we can’t change.”

With that in mind, the study has some key takeaways about how to lower the costs of building nuclear power plants for countries that see it as a low-carbon answer to their energy needs.

Get your regulations squared away

The historical record for American nuclear costs shows a definite spike around one event in particular: the 1979 meltdown at Three Mile Island. That crisis spurred a wave of new safety regulations, as it should have. Those changes, though, had a big impact on construction costs: Reactors already being built to one set of specifications had to be halted and finished according to new protocols. The effects are visible in this graph from the study:

Both cost and construction duration rose for reactors in progress during the Three Mile Island meltdown compared to those completed before that event. (Lovering, Yip, and Nordhaus)

Nobody’s saying countries should ditch their safety protocols because they make nuclear construction more expensive. What this history indicates, though, is it’s costlier to build under uncertain or changing regulatory conditions.

The good news for all the other countries is that the U.S. has refined the safety standards pretty well over the last half-century. More recent adopters, like China, have been using the Nuclear Regulatory Commission’s codes as a guide instead of spending years honing and updating regulations of their own. The U.S. suffered from first-mover disadvantage, but that effect is unlikely to be repeated.

Streamline the industry

American culture relishes competition in the marketplace. In nuclear energy, though, new costs arise from having a decentralized system with many players. France built out its reactor fleet with a centralized, government-owned utility, and kept cost increases much lower than the U.S. South Korea took the same approach and has actually seen its nuclear costs decline. Vertical integration reduces costs by centralizing institutional knowledge and eliminating the need to reinvent the wheel for each new project.

The U.S., on the other hand, has dozens of nuclear-powered utilities, and each had to learn the ropes in order to set up their own reactors.

“If you’re a utility and you have a single nuclear reactor, it’s much harder for you to know how to run it cost effectively and know how to build it cost effectively,” Lovering says. “You’re going to have to hire a team to build it, rather than have your nuclear team build 20 of them.”

There’s no way for the U.S. to turn back the clock and completely overhaul the relationship between the government and power utilities; that would also have implications far beyond the nuclear sector. But new countries exploring nuclear power, like the UAE, Turkey, Thailand, Vietnam, and Jordan, could learn from this history and avoid the pitfalls of the U.S. approach.

Centralize design and building

A great way to drive up costs is for firms to treat each nuclear plant as a large, unique infrastructure project, like an incredibly expensive concrete snowflake.

There’s a promising alternative in the works: small, modular reactors. The idea is to mass-produce reactors in a factory with rigorous safety standards. They could then be shipped to the building site and installed with regular construction equipment, saving money at each step along the way. (The concept is still under development, so it’ll likely take a decade or more to make its debut.)

The authors also noticed it’s cheaper to build more reactors at one site than the same number at different sites. This is for the same reason it’s cheaper to build utility-scale solar than rooftop solar: there’s a certain cost to getting your workforce set up at a site and putting everything into motion; the more output you receive from those startup costs, the lower your unit cost will be.

Most American reactors were built solo or in a pair. Other countries followed the grouping principle more enthusiastically and saw cheaper costs: Canada built in multiples of two, France and South Korea clumped four to six, and China is rolling with six to eight per site. Of course, you need a lot of growth in demand to justify eight 1,000-megawatt reactors side by side; the U.S. market can’t support something like that. Smaller reactors, though, would allow for the economics of scale at lower levels of capacity.

A comparison of costs internationally shows marked variations in the trends. (Lovering, Yip, and Nordhaus)

Now what?

At the end of the day, nuclear reactors have gotten more expensive over time in most of their biggest markets. Critics of nuclear energy could take that as the bottom line from this report. Meanwhile, solar and wind energy have been plunging in price, making them seem like a slam dunk for many advocates of clean energy. At the same time, cheap natural gas has been squeezing the nuclear market share from the dirty end of the spectrum.

The greenhouse gas emissions from natural gas make it undesirable for long-term use. And as wind and solar become more popular, they’re still limited by the fact that they can’t generate power around the clock, so you need ways to keep the grid powered when they’re not performing. Meanwhile, well-run nuclear plants have the lowest down-time of any power source.

Nuclear won’t make sense everywhere. It is, however, one of the largest sources of low-carbon energy currently operating worldwide. When governments weigh the costs and benefits, they should learn from the American example but recognize that it’s something of an anomaly. The rest of the world has lessons to share, too.

About the Author

  • Julian Spector
    Julian Spector is a former editorial fellow at CityLab, where he covers climate change, energy, and clean tech.