Fueled by artificial intelligence, cloud service providers, and ambitious new climate regulations, U.S. demand for carbon-free electricity is on the rise. In response, analysts and lawmakers are taking a fresh look at a controversial energy source: nuclear power.
Two new reactors in Georgia are the first in consecutive years in the U.S. since 1990. In June, Congress overwhelmingly passed the ADVANCE Act, a bipartisan bill that boosts the number of reactors coming on line. Late last year, tech giants Google, Amazon, and Microsoft all pledged to invest in small reactors to help meet their future energy needs.
In this edited conversation with the Gazette, Daniel Poneman, a senior fellow at the Belfer Center, discusses the growing momentum behind nuclear power plants. Poneman served as deputy secretary of energy and chief operating officer at the U.S. Department of Energy from 2009 to 2014.
Is nuclear power making a comeback?
I believe the answer is yes, because we have new factors present and they’re all converging to add momentum to nuclear. For a long time, a lot of people have been worried about climate change and reducing carbon emissions. The only source of clean power that’s been proven to work — day or night, season in, season out, in any geographic location, and successfully operating at large scale — that’s nuclear. It’s just shy of 20 percent of our total electricity production and nearly half of our carbon-free electricity.
On top of that is this vertiginous increase in electricity demand that’s driven by 1) the AI revolution and 2) the effort to decarbonize not only power generation, which is about one-quarter of total emissions, but also transportation and industrial processes. If you have electric vehicles and you get the power for the vehicles from coal plants, you haven’t solved the emissions problem.
The last factor is the hyper scalers, which have the wherewithal and frankly the balance sheets to support these very substantial investments in nuclear. So, you have all of those market-driven factors and strong recognition by the government of the importance of nuclear. I don’t think there’s any issue that has broader or deeper bipartisan support than this one. All of these things are converging to add new momentum to American nuclear energy.
Historically, opposition to nuclear power has been linked to safety and environmental concerns, and on the business side, to high costs and low profits. What’s different — is today’s nuclear power safer, cleaner, more cost-effective?
In terms of security, when people were concerned after 9/11, changes were undertaken. And obviously, a lot of lessons were drawn after Fukushima. There has been a continuous set of improvements over the years.
When you ask what’s different: There is a whole new generation called advanced reactors. One of the problems over the years is that large reactors got larger and larger, and each one became a bespoke project. There were too many change orders within a single reactor project, and that just kills you on budget.
One thing is to go to factory-built, small reactors that can be standardized, punched out like a cookie cutter, the same design over and over. The more of these things you punch out, the cheaper it gets, and the more practice you have installing them, the cheaper it gets. If you do things like that, you can improve on safety and budget.
“I don’t think there’s any issue that has broader or deeper bipartisan support than this one.”
The Biden administration late last year announced several new U.S. nuclear benchmarks at the United Nations Climate Change Conference. Are those goals realistic?
They’re ambitious, but I think they’re necessary if we’re going to reach our targets. At the Belfer Center, I’m working on a project on how to get 200 gigawatts of new nuclear built in the United States by 2050. A bunch of things have to happen right for that to be achievable. But I have great confidence that when there’s something that’s truly important, and people in the United States put their minds to it, we can do great things. But it’s going to take smart government policies. We’re going to have to have lean and effective regulations. We’ve got to figure out a way to spread the cost and risk sufficiently, so you induce people to act sooner rather than later.
Government loan guarantees that reduce the cost of capital can both defray first-mover risks and also give confidence to the private sector to co-invest. If we concentrate our efforts, we have a chance to restore U.S. global leadership.
What factors will determine whether those goals are reached or derailed?
Government is going to have to be there in terms of smart tax policy, in terms of providing things like cost-overrun insurance. The government also can be an important source of demand, especially for small and micro reactors that have potential applications such as supporting micro grids for things that can’t afford to go dark — military bases, things of that character. If there’s a cyber threat from an enemy or from some natural event, I would recommend the government buy a bunch of these small reactors to help them get over that first-of-a-kind challenge that is so hard to overcome for private entrepreneurs who can’t wait decades for an adequate return on investment. Private capital can then take the confidence that comes from having strong co-investment and commitments from the federal side.
You’re going to have to have the engineering, procurement, and construction contractors who got rusty over the last few decades get back into the game and execute well. And we’re going to have to have the talent pool grow and training programs at the university level, but also in the trades and organized labor. Many thousands and, ultimately, hundreds of thousands of jobs are needed.
You’re going to need well-trained people in the supply chain manufacturing these very precise components and parts. It’s going to take a group effort. And to maintain the social license to do this, we have to bring all of civil society along with us. So far, in recent years, you see a lot of very positive movement in that direction.
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