⚛ Why (lots) more nuclear power might make economic sense

A new Department of Energy report offers some encouraging financial math

Another day, another bit of good news regarding the potential restart of an American nuclear reactor. The latest: Palisades nuclear plant in Michigan has secured a $1.5 billion loan to restart operations, potentially becoming the first US reactor to do so. Owner Holtec International aims for a Q4 2025 restart, pending NRC approval. (The funds will cover inspections, testing, and equipment replacement.) 

So what we’re seeing here is a slow, forward shift in the nuclear industry after years of plant closures, driven by growing demand for carbon-free energy. Palisades' restart plan has inspired similar efforts, like Constellation Energy's decision to reactivate a Three Mile Island reactor by 2028 and sell its entire output to Microsoft for powering AI data centers.

But will the revival move beyond restarting old plants? A new Department of Energy report, “Pathways to Commercial Liftoff: Advanced Nuclear,” makes a compelling case for the atom’s role in powering tomorrow's Up Wing world, suggesting that US nuclear capacity could triple from about 100 GW in 2024 to 300 GW by 2050. And why do we need more nuclear power? Primarily because it provides power generation that is both low-carbon and consistently available — essential factors for the deep decarbonization of the electrical grid. An AI investment boom has only helped solidify the pro-nuclear case:

… a widespread surge in electricity demand after decades of stasis has increased the need for and interest in nuclear.Much of this load growth is being driven by artificial intelligence and data centers with a particular need for carbon-free 24/7 generation concentrated in a limited footprint. This provides a set of customers who are willing and able to support investment in new nuclear generation assets.

So here’s the broad steelman case for more nuclear, according to the DOE:

• Nuclear power plants make electricity without creating carbon pollution.

• They can run all the time, which works well with solar and wind power that only work sometimes.

• Nuclear plants don't need much land, and they don't require as many new power lines as spread-out energy sources like wind farms.

• Nuclear power creates good jobs that pay well and can boost local economies.

• It can help communities fairly switch from old, polluting power plants to clean energy.

• Besides making electricity, nuclear plants can do other useful things. They can adjust their power output to help keep the electricity grid stable. 

• They can also produce very hot temperatures, which factories need for making things like steel or chemicals. This helps cut pollution in industries beyond just electricity.

A key economic point stressed in the report is that looking at the “levelized cost of energy” — a metric that measures the average cost of generating electricity over a power plant's lifetime — is misleading when it comes to nuclear (italics by me): “Levelized cost of electricity does not capture the full benefits of nuclear as a clean firm resource. These include the value of an 80-year operating asset, the value of firm generation to provide power during key periods of grid need or when other variable resources are not generating, and the value.”

That said, nuclear could potentially reach a LCOE of $60/MWh through a combination of technological advancements and supportive public policy. This cost reduction would apply to new advanced reactor designs, including both large reactors (around 1000 MW) and small modular reactors (50-350 MW). The path to $60/MWh involves standardizing reactor designs, improving construction practices to reduce capital costs, shortening build times by nearly half to six years, and leveraging policies like investment tax credits from the 2022 Inflation Reduction Act. 

Achieving this LCOE price point is seen as crucial as it would make nuclear highly competitive with other clean firm power sources such as geothermal and long-duration storage-paired renewables. (See above chart.) At $60/MWh, then, nuclear could play a significant role in decarbonizing the electricity grid while providing reliable baseload power.

Possible proof of concept: The Vogtle nuclear power plant in Georgia where two new reactors were recently built and then went online, marking the first new nuclear construction in the US in over 30 years. Despite facing significant cost overruns and delays, the project's completion demonstrates the feasibility of new nuclear builds in the US, according to the report:

• Learning effects. The report indicates that Vogtle Unit 4 was approximately 30 percent more efficient and 20 percent cheaper to construct than Unit 3, demonstrating significant learning even within a single project.

• Design completion. Vogtle began construction with an incomplete design, leading to numerous changes and delays. Future projects with completed designs should avoid these issues.

• Supply chain maturity. Vogtle established a supply chain that future projects can leverage, potentially reducing costs.

• Workforce experience. Vogtle trained over 30,000 workers, creating a pool of experienced labor for future projects.

• Licensing efficiency. Vogtle's experience with the NRC should streamline future licensing efforts.

• Elimination of first-of-a-kind costs. The report estimates that about $2,900/kW of Vogtle's costs were true first-of-a-kind expenses that won't recur.

• Avoiding Vogtle-specific inefficiencies. An additional $3,800/kW of Vogtle's costs were due to project-specific issues that can be avoided in future builds.

Interesting interregnum: The DOE findings are very much in sync with a 2020 MIT study that highlights how the nuclear industry's high construction costs often stem from last-minute design changes due to evolving safety regulations and site-specific conditions. The Sequoyah Nuclear Plant near Chattanooga, Tennessee, exemplifies this issue. Beginning construction in 1968 with a $336 million budget, by 1974 costs had doubled to $675 million, with an additional $317 million projected for design changes, higher interest, and delays. The GAO reported 23 instances where structures or components had to be rebuilt or added due to required changes, illustrating the costly impact of design modifications during construction.

The report projects that the next AP1000 nuclear reactor design builds could potentially achieve overnight capital costs of around $8,300/kW, down from about $15,000/kW for Vogtle Units 3 and 4. (This significant reduction, combined with shorter construction times, improved financing terms, and tax credits from the Inflation Reduction Act, forms the basis for the potential $60/MWh cost estimate.) Going forward, the report concludes, the nuclear industry must secure commitments for multiple standardized reactors, successfully deliver initial projects on time and budget, scale up workforce and supply chains, and implement cost-saving strategies:

It was policy decision to retreat from nuclear 50 years ago, and likewise it is within our power today to make a different policy decision and help ensure of future of abundant clean energy. And seems like there is good reason to do just that.

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