Economics

Building an Economically Competitive Industry

Nuclear energy has provided the backbone of U.S. clean energy for decades. The next generation of advanced nuclear power can continue to provide economic, clean, reliable power while addressing key challenges.

Existing nuclear provides low marginal cost, baseload power. With low fuel and O&M costs, nuclear plants are typically among the first and cheapest resources dispatched in wholesale and rate-regulated electricity markets. Accordingly, nuclear reactors typically operate as much as possible, with fleet-wide capacity factors well above 90%.

By displacing higher marginal cost baseload, intermediate, and peaking fossil resources, nuclear plants reduce wholesale electricity prices in almost all hours in which they operate. Even with recent retirement announcements of some nuclear units, the U.S. Energy Information Administration projects nuclear will play a key role in US clean energy generation through mid-century.

However, high capital cost, delays, and cost overruns in constructing new conventional nuclear power plants have limited the growth of the sector. Recent analyses have identified project management challenges and construction complexity as key factors driving these overruns. These challenges inhibit the competitiveness of domestic nuclear industries in foreign export markets.

Advanced reactors can reduce the cost of new nuclear builds by addressing the high upfront investment and cost overrun challenges through several innovations:

Small and modular options: Advanced nuclear technologies come in many different sizes. Smaller units have lower upfront investment and can be suited for some markets where large units are not a good option. Some modular approaches enable the addition of power capacity in stages, and also enable power production (and thus revenue generation) from initial modules before all modules are installed.
Factory fabrication: New delivery models prioritize factory fabrication and delivery over on-site construction, reducing vulnerability to delays and improving consistency of output. These approaches include modular construction, smaller units, and marine delivery.
Inherent safety: Advanced technologies use passive components that rely increasingly on fundamental laws of physics rather than heavily engineered systems with active pumping and mechanics. These designs reduce complexity, maintenance requirements, and redundancy costs.

As with the existing nuclear fleet, once built, advanced reactors are projected to have lower marginal costs than most fossil power plants, particularly if avoided emissions are valued. They can thus displace higher-priced fossil fuels, lowering both emissions and energy prices.

New Products, Services, and Applications

Advanced reactor designs can also bring new value to the market compared to the existing conventional fleet:

By designing for flexible operation and energy storage to provide dispatchable balancing power for electric systems with high variable renewable energy input
Through innovative operational procedures and access to greater financing sources due to smaller sizes
By producing and selling coproducts, such as industrial process heat, desalinated water, or hydrogen, advanced nuclear can participate in multiple markets

Further, advanced nuclear technologies can expand and democratize access to nuclear energy. Traditionally, the large scale of nuclear reactors made them available only for large power consumers. Smaller reactors offer power consumers a scalable solution to meet future energy needs, including cooperatives, municipal utilities, and industrial users.

Microreactors and SMRs can make clean distributed power available for rural towns and villages, small islands, and remote mining operations. With high shipping costs and limited renewable alternatives, such communities and activities otherwise typically require expensive and dirty diesel generators. Advanced reactors offer a clean-energy, cost-saving solution that improves energy reliability for these remote areas.

Although next generation nuclear reactors can be competitive on a project level, they can also address a system need for low-cost, clean power. The electric grid provides energy services through a diverse set of energy technologies. Studies have found that decarbonized systems are significantly more affordable with flexible base technologies, like advanced nuclear.

Long-Term Economic Benefits

Beyond the energy-sector benefits, nuclear energy supports the broader economy. Building and operating new nuclear plants benefits communities by supporting local, high-paying jobs in construction and engineering. Exporting nuclear technologies, commodities, and expertise brings in revenue while supporting stronger trade relationships. Domestic reactors and nuclear exports support supply chain companies and employees. Technological innovation from advanced nuclear research is driving breakthroughs in science, medicine, and other applied sectors.