With the increasing demand for energy, nuclear power is emerging as a crucial element in the United States’ strategy to achieve carbon-free energy production. The US Energy Department (DOE) has set a target to triple the country’s nuclear capacity by 2050, aiming to add 200 gigawatts (GW) to support the nation’s net zero emissions objectives. Michael Goff, the acting assistant secretary of the DOE’s Office of Nuclear Energy, stresses the urgency of this expansion, emphasizing the need to commence deployment without delay.
Large-load consumers such as data centers and manufacturing facilities are fueling the growing need for carbon-free electricity, potentially steering utilities towards nuclear energy, as highlighted in a report by S&P Global. Matt Crozat from the Nuclear Energy Institute (NEI) observes a notable surge in utility interest, particularly among those with existing nuclear fleets. Constellation Energy Corporation, the largest nuclear power operator in the US, recently unveiled plans to explore the construction of new nuclear capacity at its reactor sites to cater to the escalating energy demands of its data center clients.
Despite the increasing interest in nuclear energy, the substantial initial investment risks associated with new nuclear projects remain a significant obstacle. Lynn Good, the CEO of Duke Energy Corp., underscores the necessity for federal incentives to mitigate these construction risks. Currently, federal support primarily comes in the form of post-construction tax credits, which are beneficial for operational plants. Good advocates for more robust support during the construction phase to strike a balance between the advantages and risks for consumers. The completion of two new reactors at Georgia’s Vogtle Nuclear Plant, adding over 2,000 megawatts (MW) to the grid, has instilled optimism in the industry.
Georgia Governor Brian Kemp and other officials argue that this project demonstrates the feasibility of new nuclear construction in the US. Energy Secretary Jennifer Granholm supports the expansion of the nuclear industry, suggesting that more reactors should be planned, while affirming the commitment to establishing a world-class nuclear sector in the United States. However, Southern Company, the entity overseeing the Vogtle expansion, currently has no immediate plans for further reactors. Georgia Public Service Commission member Tim Echols emphasizes the necessity for federal backstops against cost overruns before approving additional units.
He believes that existing incentives, including tax credits and loan guarantees, are inadequate, citing the bankruptcy of Vogtle’s contractor, Westinghouse, as a cause for industry concern. The DOE’s Goff acknowledges the challenge of further increasing incentives, noting the substantial support already provided under the 2022 Inflation Reduction Act (IRA). This legislation offers multiple credits for new nuclear projects, including options to layer or sell credits, along with additional credits aimed at promoting clean energy. These incentives have played a role in securing lifetime extensions for existing nuclear plants.
Existing nuclear plants are eligible for a production tax credit (PTC) of up to $15 per megawatt-hour (MWh). For new nuclear capacity, operators can opt for a PTC of $30/MWh or an investment tax credit (ITC) of 30%. This ITC can increase to as much as 50% if the projects utilize sufficient domestic content and are constructed in former coal plant communities. Constellation Energy intends to renew operating licenses for all 23 of its reactors, potentially leading to an additional 2.5 GW of nuclear capacity through uprates, according to NEI President Maria Korsnick.
The federal government is actively promoting nuclear energy through various initiatives, including public-private partnerships, cost-share projects, loan guarantees, licensing assistance, and research programs. The Biden-Harris administration has approved a $1.52 billion loan guarantee to restart an 800-MW nuclear plant in Michigan. The rising demand for electricity in data centers, driven by the surge in artificial intelligence (AI) applications, presents a lucrative opportunity for developers of small nuclear reactors (SMRs) and advanced battery technologies.
According to a report by Goldman Sachs, AI applications could increase data center power requirements by 160%, with certain AI queries demanding nearly ten times more electricity than typical Google searches. Clayton Scott, the chief commercial officer for NuScale Power, sees this trend as a perfect fit for their small-scale nuclear systems. Scott believes that their SMRs, each capable of generating 77 megawatts of carbon-free electricity, can offer a solution to meet the escalating energy demands.
However, the deployment of these reactors is pending regulatory approval and commercial operations. Microsoft, under the leadership of Bill Gates’ TerraPower, is also exploring SMRs to power AI data centers. Other startups, such as Oklo and Helion, are developing innovative nuclear technologies, including fission reactors and nuclear fusion. While the focus of the industry is largely on SMRs, none are currently available for utility-scale power generation. Industry experts anticipate several applications for advanced reactors to be submitted to the US Nuclear Regulatory Commission in the near future.
The recent cancellation of the first modular project in Idaho and the completion of the Vogtle reactors may shift financial risk assessments back towards larger reactors. Goff believes that there will continue to be demand for large-scale reactors. The completion of Vogtle’s reactors and the supportive policy environment indicate a growing acceptance of nuclear energy. As the need for carbon-free power continues to escalate, nuclear energy could play a vital role in the future of US energy, provided that policy adjustments and incentives keep pace with industry requirements.
