Nuclear power and the energy transition

Addressing climate change will require an energy system transformation so enormous that we cannot afford to say “no” to any technology that reduces CO2 emissions. It is often claimed that nuclear energy is not essential for decarbonisation, as renewables, particularly solar and wind, are “faster” and “cheaper” than nuclear. However, this ignores a key principle in energy system design: the cheapest or fastest way to decarbonise the next megawatt-hour of electricity is not necessarily the best next step on the path to net-zero.

Supposing that wind or solar generating capacity can be built quicker than a nuclear power plant (NPP) does not necessarily mean that the grid can be fully decarbonised faster if we exclude nuclear. In fact, history suggests otherwise. France and Sweden’s nuclear buildouts permitted decarbonisation at a much faster rate and to a far greater extent than in the renewable revolutions of Germany or California.

Transition and uncertainty

Some studies have suggested that variable types of renewable energy could supply a net-zero grid on their own— and at a lower cost than those featuring nuclear. Such scenarios, however, carry often-unacknowledged uncertainty and have not been demonstrated anywhere in the world. They generally depend on risky enabling technologies such as long-term grid-scale energy storage, the widespread adoption of hydrogen as an energy carrier, or combined cycle natural gas turbines (CCGT) with carbon capture and storage (CCS).

The recent report of the UK Government Committee on Climate Change, for example, relies heavily on the assumption that CCS is available for enabling a renewables-dominated energy system. However, it has yet to be demonstrated that CCS can perform at the level required to bear out this assumption. In addition to the uncertainty of achieving the required carbon capture efficiency of close to 100%, more empirical evidence is required to be confident that carbon sequestration will not fail. Obtaining conclusive outcomes from the relevant geological science needs time which we do not have, given the urgency of combating climate change. Imperfect CCS and other residual emissions must be offset by carbon-negative processes such as direct air capture of carbon dioxide, but these are likely to be extremely expensive.

Nuclear energy, on the other hand, has no technological uncertainty associated with any aspect of its life cycle. It is ready to be deployed at the necessary rate to curb carbon emissions, as the world moves towards major electrification of heating, transport, and industrial processes. Nuclear could also provide heat directly to industrial processes, a capability not generally found in renewable sources. The more nuclear is included in future energy scenarios, the less we are forced to rely on uncertain new technologies.

The question of costs – and how to reduce them

Regarding cost, it is again vital to think in terms of system design rather than marginal costs. Studies, like the Nuclear Energy Agency’s system costs analysis (2019), have shown that in a renewables-dominated grid – including firm low carbon sources, such as nuclear or hydro – reduces overall costs even if the firm sources are much more expensive than renewables on a per-unit-energy basis.

It’s currently indisputable that building nuclear power plants is an expensive endeavour. Some recent projects have become notorious for their cost overruns—although this is quite common to all mega-projects. Nuclear technology is mature and well-optimised, while currently available reactor designs are much more efficient in every respect compared to those built a few decades ago. Yet, they are more expensive than ever. Why?

Progressively more stringent safety requirements have led to increasingly complex reactor designs. An improvement of several orders of magnitude in the safety of modern reactors – which goes beyond regulatory requirements – necessarily escalated the costs. To counter this, plants were made bigger, seeking economies of scale. However, the size and unfavourable construction management of some recent projects has led to a high capital cost, making large nuclear plants practically impossible to finance. It is not that nuclear projects are vastly riskier than other infrastructure investments; the main issue is that a single, undiversified investment of tens of billions of dollars cannot sit comfortably on the balance sheet of even the world’s largest utilities. Government intervention is therefore a necessity.

Simply reducing the size of the upfront investment can therefore improve financing prospects. This is one goal of the recent pursuit of smaller designs. In addition, modular construction practices, moving activities from construction sites to factories, and producing large numbers of standardised modules would reduce the costs of labour, improve quality control, and maximise learning effects. Small modular reactors have a greater availability of suitable sites, as well as greater flexibility in grid connections and access to cooling water. Project management is also easier with smaller projects, avoiding the seemingly inevitable overruns associated with mega-projects.

Another avenue for cost reduction is through reducing financing costs. Around half of the cost of a typical large nuclear project is the cost of financing. Governments around the world routinely finance large national infrastructure projects. Affordable, predictable, low-carbon energy sources can be considered as essential infrastructure, enabling economic growth and prosperity, making government investment in such a “public good” justifiable. Financing nuclear projects at government borrowing rates immediately makes even current large designs economically competitive, while the risk burden between government and contractor can be more evenly distributed through cooperative approaches.

The nuclear option

Nuclear power is expensive, but it does not have to be. Opportunities for cost reductions are real and can be achieved through consistent, ideally internationally coordinated, energy policies. It is a vital tool for enabling a net-zero carbon future. Consistent long-term energy policy with a firm commitment to nuclear new builds also promotes substantial cost savings through learning, observed empirically in many countries, including France, South Korea, China and Russia.

No energy source is perfect, but nuclear is the most ethically responsible form of energy generation. It takes care of all externalities associated with its operation – from uranium mining, through operation, to used fuel disposal. This cannot be said of any other energy source. It relies on a virtually inexhaustible fuel resource, if recycled in advanced reactors or by using uranium extracted from seawater, making the resource base large enough to power humanity for many millennia. It is objectively safer than any other form of electricity generation, causing the smallest number of fatalities per unit energy produced. And because of its high energy density, it has the smallest footprint.

All this makes nuclear the least intrusive to the environment, leaving more land available for a wide range of human activities or to remain as wilderness. Given the substantial reductions in emissions required to keep the global temperature increase below 1.5 degrees Celsius, as laid out in the Paris Agreement, such a versatile energy source cannot be ruled out.

The article was co-authored by Nathaniel Read and Paul Cosgrove.