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Five points on nuclear power plant economics in the US.
https://twitter.com/ezraklein/status/1384707199172177926
https://twitter.com/ezraklein/status/1384707199172177926
1. Megaproject cost increases. Nuclear power plants are massive industrial projects that have seen costs rise in the US over time in much the same way bridges and railway systems have.
It's even worse for nuclear plants for a couple reasons. One is a principal-agent problem with nuclear power plant construction: utilities own the plants but don't build them.
So while poor industry performance (non-standard designs, negative learning in the construction process) was a key factor as @gilbeaq gets into here, it's also true that there isn't really a "nuclear industry" as such. https://twitter.com/gilbeaq/status/1384884027316912128
This 2016 @J_Lovering @arthurhcyip @TedNordhaus paper remains essential reading on nuclear power plant construction cost trends in the US and around the world https://www.sciencedirect.com/science/article/pii/S0301421516300106
2. Liberalization. As power markets around the US were deregulated, it became harder to finance construction of large lightwater reactor plants. Higher cost of capital and an inability to use ratebase recovery for construction changed the economics of nuclear in most of the US.
That's why the only large reactors we've tried to build in the US have been in the Southeast, where power markets are still largely vertically integrated and things like ratebase recovery are possible.
But even those projects have languished under cost overruns and delays. As @TedNordhaus wrote in 2017, the prospects of building large light-water reactors in the deregulated power markets of the US are basically nil. https://thebreakthrough.org/articles/the-end-of-the-nuclear-industry-as-we-know-it
3. Policy. Since at least PURPA and the original renewable portfolio standards, policies have selected for various attributes in power generation technologies, often for environmental justifications. Nuclear plants have not been able to benefit from these types of policies.
Nuclear power plants are some of the safest industrial facilities not just in the energy sector but in any sector. They manage their own waste and produce zero-carbon electricity 24/7. We could value those things in power market design and policy, but we mostly don't.
4. Regulation! I agree with the various other responses to @ezraklein's thread that regulation is not the sole or even main explanation for rising nuclear power plant construction costs. But it is a factor.
Nuclear plants face the most stringent environmental and safety regulations of any industry. In many cases there are good reasons for that. As a result, US nuclear plants produce functionally no pollution/emissions and manage all their own waste on site.
Of course these regulations have costs and sometimes those costs are well worth paying. Other times, regulations affect existing nuclear plants and plant construction in way that progressive complain about when it comes to transit/rail/transmission etc.
Case in point: Diablo Canyon, which faces restrictions by the California Coastal Commission on once-through cooling with ocean water that California's natural gas plants have received waivers for.
That's an (arbitrary and, IMO, dumb) regulatory decision that is arguably responsible for the scheduled unnecessary shutdown of California's last nuclear power plant.
Many planned nuclear plants didn't get built due to regulatory burdens like these, lower-than-expected growth in electricity demand, deregulation of electricity markets, or some combination of the above.
5. Advanced nuclear designs. SMRs, microreactors, and other advanced reactor designs are designed to overcome or neutralize many of the obstacles that have made nuclear construction expensive and stalled nuclear deployment in recent decades.
Smaller reactor designs with different fuels and fuel cycles can require fewer redundant safety systems and require different regulatory regimes. A series of reforms to NRC licensing procedures have been proposed over the last decade.
Smaller designs could also more easily achieve economies of multiples and reactor/component/construction learning that will hopefully make NOAK costs considerably lower than FOAK costs.
See this @TheBTI @RSI @ClearPathAction report on policy/technology innovation that could make for a competitive and robust nuclear industry in the coming years and decades. https://thebreakthrough.org/articles/planting-the-seeds-of-a-distributed-nuclear-revolution
Also check out @ThirdWayEnergy's website on advanced nuclear energy. @JackieKempfer @JackieTothDC @jsfreed https://www.advancednuclearenergy.org/product/how-advanced-nuclear-got-on-the-map
Anyway. Construction of large conventional nuclear plants has gone better in India, Korea and, more recently, China and the UAE. But for all these reasons, it's been challenging in the best of circumstances in the United States.
A new generation of startups and advanced nuclear designs has the potential to spark a new wave of nuclear deployment in the coming decades.
It is, I think, every climate hawk's responsibility to support innovation and deployment of these new technologies.
fin/
It is, I think, every climate hawk's responsibility to support innovation and deployment of these new technologies.
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