“It’s simple economics. Nuclear has become obsolete,” writes Haley Zeremba, a journalist for Energy Central.
“Decades of roadblocks and rising prices are standing in the way” of a viable nuclear industry, Business Insider adds.
But just how simple are the economics? It is true that nuclear power comes with enormous up-front costs, and a new nuclear plant takes years to build. Even while the market is hungry for carbon-free sources of electricity, nuclear lags far behind the competition. This is due in large part to overbearing regulators who choke off the nuclear industry.
Right now nuclear energy is the most expensive type of energy, costing about $5,500 on the low end and around $8,100 on the high end. Natural gas, by comparison, costs around $1,200 per kilowatt. Nuclear power plants are notoriously capital-heavy investments and can cost from $14 billion to $30 billion from start to finish. To license, build, and connect a plant to the grid can take anywhere from 10 to 20 years under the current system.
The problem isn’t with nuclear power itself but with America’s approach to the nuclear industry. The IAEA (International Atomic Energy Agency) finds that in France and Germany the average time to build a reactor is around six and a half years, and in Japan it’s slightly above five years. According to the World Nuclear Association, after 1977 and up until 2013, there were no new nuclear plants beginning construction in the United States.
The body responsible for regulating nuclear energy in the United States is the Nuclear Regulatory Commission. This commission regulates nuclear power through a licensing system. The prospective nuclear operator needs to get the design approved, receive site and safety approval, allow constant construction oversight, pass a final safety inspection, and receive an operating license to begin commercial activity. Each step of this process can take multiple years and adds considerable costs to a project. As of 2023, according to the Department of Energy, completing the regulatory requirements and obtaining a license can cost as much as $1.5 billion.
According to Jack Devanney in his book, “Why Nuclear Power Has Been a Flop,”nuclear power would be much cheaper than other forms of electricity if it were “efficiently regulated.” But the Nuclear Regulatory Commission has a strong incentive to regulate the industry with as little efficiency as possible.
Regulators are motivated by incentives. They want to justify their positions and keep their jobs. They get no credit if a plant runs smoothly but bear the responsibility if a plant has a problem. The regulator is thus incentivized to approve almost nothing.
The Nuclear Regulatory Commission is required to charge applicants large fees to “recover approximately 90% of its annual budget from the companies and people that we provide services to (e.g., applicants for NRC licenses, NRC licensees, etc)”. The most attractive option for the commission is to keep the application process going for as long as humanly possible in order to recover as much money as possible before the applicant gets a final operating license.
It wasn’t always like this. The Atomic Energy Commission, the NRC’s predecessor, had the dual responsibility of both regulating and promoting nuclear energy. The commission had an incentive to grow the nuclear industry, not just to regulate it. The AEC was replaced by the NRC in 1974.
Since the current commission began operations, the time it takes to build a nuclear plant has doubled. Under the Atomic Energy Commission, a plant could be completed and operational in about five to ten years. After the NRC’s founding, the average time jumped to around 10-20 years to get a plant operational. Construction costs were around $1,000 to $3,000 per kilowatt of capacity (adjusted for inflation) under the Atomic Energy Commission. The Nuclear Regulatory Commission has brought the average cost up to between $5,500 and 8,100 per kilowatt of capacity.
The Nuclear Regulatory Commission acts as a roadblock for nuclear energy rather than as an effective regulator of an important industry. The NRC should either commit once again to promoting this carbon-free form of reliable energy or change its name to the “Nuclear Prevention Commission.”
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