Can Nuclear Power Be Saved?
Whither nuclear power? That question has become more important as energy policies evolve to emphasize emissions-free “green” energy and an increased electrification of the U.S. economy. Some environmentalists consider nuclear power to be crucial to reducing carbon emissions; others continue to vehemently oppose nuclear power and believe that our energy must come solely from renewable sources. The public, encouraged into hysteria by dramatizations of nuclear-plant accidents such as the film The China Syndrome and HBO’s Chernobyl, is split.
Meanwhile, the nuclear-power industry itself is in a parlous state for a variety of tangled reasons. In a recent Manhattan Institute report, I broke them down into four categories: (i) decades of construction cost overruns and plant delays because of poor designs, lack of manufacturing expertise, and changing regulations; (ii) political squabbling over spent-nuclear-fuel disposal; (iii) energy policies, including renewable-energy subsidies and mandates, that have distorted electric-power markets and made it harder for nuclear plants to compete; and (iv) lower natural-gas prices and more efficient gas-fired generators. In the past few years, threatened plant closures have led state policymakers to award subsidies to eleven existing plants. More such subsidies are likely forthcoming, if for no other reason than some nuclear-plant owners wanting their share of the subsidy pie. “Nice plant you got there,” they seem to be saying to local economic stakeholders. “Be a shame if something happened to it.”
Nevertheless, nuclear power provides valuable benefits. It is highly reliable and emissions-free. It provides generation diversity, which can reduce the adverse effects of fuel-price shocks. It does not require backup and storage, unlike wind- and solar-power generation. And new designs for nuclear plants promise lower costs and improved safety.
Then again, the nuclear industry has long promised lower costs — and failed to deliver. When actual construction begins, costs always seem to balloon, owing to a combination of poor manufacturing and changing safety regulations. SCANA Corporation’s partially built and now abandoned Santee Cooper nuclear plant, which led to that company’s purchase by Dominion Energy, and Southern Company’s delayed Vogtle plant, are just the latest examples.
So what should be done? In part, the answer depends on the future direction of U.S. energy policy. If the country adopts the unicorn and pixie-dust fantasies of the Green New Deal or other policies that mandate decarbonization, the U.S. appetite for energy — especially electricity — will continue to increase. Given current technology and prospects for future innovations, the only realistic way of meeting that demand is nuclear power. As my Manhattan Institute colleague Mark Mills has aptly explained, expecting to meet the needs of an electrified economy solely with wind, solar, and battery storage is “magical thinking.”
That means the next hurdle is making the nuclear-power industry viable — a technological and political challenge. First, there is cost. Small modular reactors (SMRs), 50 megawatt (MW) in size, promise lower costs thanks to standard designs and modular construction. The most advanced design is by NuScale Corporation, which will provide a complete “nuclear plant in a box” (albeit a 76-by-15-foot, 700-ton box). The first NuScale SMRs are slated to be installed at the Idaho National Laboratory and operational by 2026. Small modular units, if successful, will be small enough to be installed as electricity demand increases, while avoiding the whale-like financial commitments of the current crop of 1,000 MW reactors.
Second, and perhaps most importantly, is permanent storage and disposal of spent fuel. For nuclear power to remain a viable energy technology, this issue must be addressed. In fact, 14 states, including many with nuclear plants currently operating or retired, have prohibitions or restrictions on construction of new plants until a permanent repository for high-level waste has been identified.
Nuclear-waste disposal is not a technological issue, as some critics contend. Rather, it is a political one. Spent nuclear fuel, which remains radioactive for thousands of years, can be disposed of safely. Finland has taken the lead on the issue and is constructing a permanent underground depository. The project has been supported by the government and, most importantly, by the local community. And for good reason. The science supports the safety of their approach. Spent fuel can be safely stored deep underground in stable rock formations, such as the granite bedrock in which the Finnish site is being constructed.
France, which relies on nuclear power for three-fourths of its electricity, has yet to develop a permanent underground depository, owing to opposition to siting such a facility. However, unlike the U.S., France reprocesses spent nuclear fuel, which creates additional usable fuel, and puts the remaining nuclear waste in temporary storage facilities.
Work on the only federally proposed U.S. permanent waste depository, at Yucca Mountain, Nevada, which began after congressional authorization in 1987, was stopped by the Obama administration and remains opposed by Nevada’s senators and Democratic congressional leaders. Although the Trump administration has proposed to restart the Yucca Mountain project, the bitter opposition is unlikely to abate, rendering prospects for its completion dim.
It seems that the only way the U.S. is likely to solve this political issue is to follow Finland’s approach, of identifying suitable locations and then discussing the prospective repository with the local populace, who may view it as a booster for their economy. For example, the Waste Isolation Pilot Project (WIPP), which stores mid-level nuclear waste and is located just south of Carlsbad, N.M., is strongly supported by the local community because of its economic benefits.
Third, if we must subsidize the current crop of nuclear plants, then those subsidies ought to be as efficient as possible. To begin with, subsidies for wind and solar power ought to be eliminated. Those subsidies help drive down wholesale (but not retail) electricity prices and make it more difficult for existing nuclear plants, along with all other unsubsidized generation, to compete. Subsidizing nuclear plants to overcome the market distortions caused by wind and solar subsidies is a recipe for failed wholesale electric markets.
Instead, nuclear subsidies should be tied directly to wholesale power prices. (The technical term is called a “contract-for-differences.”) If wholesale electricity prices increase, subsidies are automatically reduced, and vice versa. Additionally, subsidies should require nuclear-plant owners to have “skin in the game,” by imposing requirements that those plants increase their operating efficiency over time. Moreover, before other nuclear plants are subsidized, they should be subject to a comprehensive cost-benefit analysis that affirmatively answers the key question: “Can this plant be saved?” We ought not to toss ratepayer and taxpayer dollars at plants that have little or no prospect of improved performance or economic viability.
What about broad-based carbon taxes and carbon “border tax adjustments,” such as those called for under the Climate Action Rebate Act of 2019, introduced last month by Senators Coons (D., N.J.) and Feinstein (D., Calif.)? Although, in theory, broad-based carbon taxes would be the most economically efficient approach to saving nuclear plants, it is not so in practice. The carbon taxes envisioned by the Coons-Feinstein legislation would likely wreck the U.S. economy, encourage international economic retaliation, and have little or no measurable effect on the climate. (Developing countries, after all, are unlikely to abate carbon use, and their carbon footprint affects global net emissions just as much as ours does.)
As electricity becomes ever more important to the U.S. economy, with many politicians demanding electrification to combat climate change, nuclear power should take center stage because it is both clean and reliable. Wind and solar generation will not be able to meet the increased demand of electrification, because the land and battery storage requirements are unrealistic and technologically infeasible.
Nuclear-plant subsidies, carefully crafted, are the best answer to ensure that the nuclear industry survives and evolves to finally meet expectations, after decades of broken promises.
