The Economics of Nuclear Power

Nuclear Power Fails Initial Economic Tests

Nuclear energy has the potential to return to the forefront as an acceptable solution to the environmental challenges posed by pulverized coal and natural gas combined cycle plants. To do so, it must surpass the performance characteristics of forms of renewable energy and gain public acceptance. Some of the actions will be necessary to improve its economic viability include:

• Even with an assumed 85 percent capacity factor, a 40-year economic life for a nuclear plant, and plausible improvements in nuclear cost factors, electricity produced from new nuclear power plants is not competitive with that produced by coal or natural gas-fueled CCGT plants with low or moderate gas prices.
• A primary factor driving the high costs of nuclear power are the high initial capital investment costs. CCGT plants have lower capital costs but have higher fuel costs. Coal plants lie in between these options in both fuel and capital costs.
• Nuclear becomes competitive in comparison to other technologies only if the social cost of carbon emissions is calculated and applied (i.e. carbon tax or “cap and trade”). However, the political fallout in incorporating these measures would be substantial.

 Carbon-Free Nuclear Power Shifts the Argument

Nuclear power offers a carbon-free solution to wide-scale power production. Despite regulatory uncertainties around the rebirth of nuclear power and the reluctance of investors to  bear the risk of high capital-intensive investments for this new generation of nuclear plants, there is no viable alternative to maintaining the nuclear energy option for our national energy portfolio.

Government Changes for New Nuclear Power

The following U.S. Government actions are recommended to accelerate the implementation of nuclear power:

• The federal government should share in the initial cost for establishing the site of these plants as well as the costs of the Nuclear Regulatory Commission (NRC) certification of the new plant designs.
• The NRC should modify the licensing process to allow for the combining of construction and operating licenses.
• The EPA should recognize nuclear power as carbon-free and include nuclear plants as a qualified option to meeting any federal or state mandated renewable energy portfolio mix.
• Congress should subsidize (e.g. production tax credit) the first-moving electric utilities to embark on designing and building commercial nuclear plants. 

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