The U.S. Nuclear Industry’s Struggle

Written by Dr. Matthew Wielicki on February 3, 2024. Posted in Current News

The development of nuclear power has been the subject of intense debate and scrutiny over the years, particularly in terms of costs, regulatory frameworks, and its role in ‘solving the climate crisis’.

Climate alarmists have long shunned this carbon-free energy source and developed an enormous regulatory landscape to prohibit its implementation. Here, I critically analyze the evolution of the cost of building and operating nuclear power plants from the 1950s to the present day, focusing on the United States in comparison with its counterparts.

In the 1950s, nuclear power was in its infancy. The United States led the world in this field with the commissioning of the Shippingport Atomic Power Station in 1957.

The cost of building nuclear power plants during this era was relatively low due to less stringent regulatory frameworks. The Atomic Energy Act of 1954 in the U.S. marked the beginning of commercial nuclear power, with the government providing substantial support and subsidies for construction.

For example, the estimated cost per kilowatt (kW) for the construction of the Oyster Creek Nuclear Power Plant, based on a construction cost of $600 million and a plant output of 620 MW, is approximately $0.97 per kW. Adjusted for inflation of 3.9% since 1969, that’s $8 per kW in 2024 dollars.

However, this golden age of construction was short-lived. As reactor designs grew more complex and safety regulations exploded in the wake of over-blown incidents like Three Mile Island, the cost curve went parabolic in the USA. By the 1990s, plants like Vogtle and Zimmer were coming online at a staggering $1-2,000 per kW, a 1-2000X increase in just a few decades, essentially ending new construction.

Current projections for new installations suggest a staggering cost of up to $20,000 per kW, reflecting the enormous costs of construction and environmental regulations. This figure paints a grim picture of nuclear energy in the USA, but it’s crucial to remember it’s a specific case facing unique difficulties.

While the US nuclear industry has stumbled, Japan and Korea charted a different course. Recognizing the strategic and economic value of nuclear power, both nations undertook ambitious national programs fueled by government support and streamlined regulatory frameworks. Standardization of reactor designs, modular construction techniques, and a culture of continuous improvement significantly reduced construction times and costs. In Japan, Kashiwazaki-Kariwa, the world’s largest nuclear power plant, was built for a fraction of the cost of its US counterparts.

Furthermore, economic pressures exacerbated by federal regulations make operating nuclear energy power plants economically unviable. Recently, to address this problem the Biden administration has proposed a $1.5 billion loan to a closed Michigan power plant to restart it.

Palisades Nuclear Power Plant, a pressurized water reactor built in 1971, required significant upgrades to comply with the latest safety standards set by the Nuclear Regulatory Commission (NRC). These upgrades encompassed aspects like seismic enhancements, fire protection systems, and reactor containment improvements. The estimated cost of these upgrades ran into hundreds of millions of dollars, adding to the already existing financial strain on the plant.

The process of renewing Palisades’ operating license, due to expire in 2022, was expected to be long and arduous. The NRC’s stringent review procedures, coupled with potential public hearings and legal challenges, could have stretched the process for years, creating significant uncertainty for investors and hindering operational planning.

The combined effect of these regulatory factors created a climate of uncertainty and financial pressure for Palisades. The high cost of upgrades, the lengthy licensing process, and the evolving regulatory landscape made maintaining profitability increasingly difficult. While not the sole reason for closure, the regulatory burden undoubtedly played a significant role in tipping the scales against Palisades’ continued operation.

While nuclear energy stands as a beacon of low-carbon, high-output potential, its implementation has been hamstrung by an ever-expanding system of regulations aimed at unfounded safety and environmental concerns. The stark contrast in cost trajectories between the U.S. and its counterparts underscores the profound impact of these regulatory landscapes on new plant construction. This excessive regulatory burden not only undermines the economic viability of nuclear energy but also, and maybe more importantly to climate alarmists, hampers our progress toward a low-carbon future.

Source: Substack

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