How Cheap Is Nuclear Energy?

Nuclear energy is the energy released from the nucleus of an atom through nuclear fission or fusion. In nuclear fission, atoms are split apart to release energy, while in nuclear fusion, atoms are combined together to release energy. Nuclear power plants use nuclear fission to generate electricity.

The cost of nuclear energy is an important factor to consider when evaluating it as an energy source. High costs can make nuclear less economically competitive compared to other sources like natural gas, wind, or solar. However, nuclear offers unique advantages like reliability, scale, and low emissions that may justify higher costs. Understanding the full costs of nuclear energy compared to alternatives is key for policymakers and utilities deciding on energy investments.

Table of Contents

Nuclear Power Plant Construction Costs

Constructing a new nuclear power plant is very capital-intensive. According to Nuclear Power Plant Construction Costs, cost estimates from 2002-2007 for new nuclear plant construction ranged from $2 billion – $4 billion per 1000 MWe unit. The majority of these costs come from the construction of the nuclear island, which houses the reactor and supporting cooling systems.

Some key factors that contribute to the high construction costs include:

Safety requirements – Nuclear plants require robust containment structures and multiple redundant safety systems.

Long construction time – It can take 5-7 years to build a new nuclear plant.
Specialized labor – Nuclear construction requires highly skilled technicians and engineers.
Supply chain constraints – Many large customized components with limited suppliers.

While nuclear plants are expensive to build, once operational they can generate large amounts of power from a relatively small physical footprint. Proper construction project management and regulatory efficiency can help reduce costs and construction times.

Nuclear Fuel Costs

The raw uranium contributes a small percentage to the overall electricity generating costs for nuclear power plants. According to the World Nuclear Association, the cost of the uranium fuel is around 0.5 to 1 US cents per kWh of electricity generated https://world-nuclear.org/information-library/economic-aspects/economics-of-nuclear-power.aspx. This means for a typical 1000 MWe nuclear reactor operating with a 90% capacity factor, the annual fuel costs are approximately $8 million to $16 million depending on the global uranium prices.

The uranium fuel pellets need to go through a complex process known as fuel fabrication to produce the fuel rods that go inside the nuclear reactor core. This involves converting uranium oxide into a ceramic material and sealing it inside metal fuel rods. The fuel fabrication costs can range from 1-3 US cents per kWh according to the World Nuclear Association. So for a large nuclear plant, the annual fuel fabrication costs may be $10 million to $30 million.

In total, the fuel costs including uranium and processing contribute about 15-20% of the total generating costs for nuclear power. This is far lower than the fuel costs for fossil fuel power plants which can be upwards of 70-80% of the levelized cost.

Operating and Maintenance Costs

Operating and maintaining a nuclear power plant requires significant staffing and infrastructure costs. According to the U.S. Energy Information Administration, the average annual operating expenses for nuclear power plants in 2020 was $35.05 per kW of generating capacity, compared to $24.85 for fossil steam plants and $9.03 for hydroelectric plants. This includes costs for plant staffing, maintenance, repairs, fuel handling, waste management, and other operating expenses.

Nuclear plants require continuous staffing by highly trained personnel to operate the reactors, monitor plant systems, conduct maintenance and testing, provide security, and manage spent fuel. Plant staff typically work in rotating shift schedules to provide 24/7 coverage. Larger nuclear plants can employ 500-1000 workers, with annual labor costs over $100 million. Costs for maintenance and repairs average around $0.01-0.02 per kWh generated.

Fuel handling expenses include costs for purchasing nuclear fuel assemblies, as well as loading and unloading reactor cores. Utilities typically replace 1/3 of the fuel rods every 12-18 months. Transporting, storing and guarding nuclear materials also incurs costs. Waste disposal is another operating cost, with on-site storage of spent fuel requiring robust systems and security.

According to the World Nuclear Association, total operating and maintenance costs for nuclear plants range from $20-$33 per MWh of electricity generated, making up 55-70% of the levelized cost. Reducing O&M costs is an important factor in lowering nuclear power prices in the future.

Sources:

https://www.eia.gov/electricity/annual/html/epa_08_04.html

https://world-nuclear.org/information-library/economic-aspects/economics-of-nuclear-power.aspx

Waste Disposal Costs

Nuclear waste disposal represents a significant long-term cost factor for nuclear power. Spent nuclear fuel remains highly radioactive even after use, containing fission products that can decay for hundreds of thousands of years (source). This spent fuel must be safely stored, monitored and transported to a permanent disposal site. As of 2021, U.S. nuclear power plants had generated around 88,000 metric tons of spent fuel, with 2,000-2,400 additional tons added each year (source).

Long-term monitoring and storage of nuclear waste involves substantial costs. The projected total cost of cleanup after the Manhattan Project is over $300 billion, more than the original cost of the nuclear weapons program (source). The U.S. government charges nuclear plant operators around $0.001 per kWh generated for waste disposal, amounting to over $750 million per year (source). However, there is still no permanent disposal site for commercial spent fuel, meaning storage and monitoring costs will continue accumulating for the indefinite future.

Decommissioning Costs

Decommissioning a nuclear power plant involves safely dismantling and removing radioactive components and materials after the plant permanently ceases operation. These costs can range from $300-$500 million per reactor.

According to the U.S. Nuclear Regulatory Commission, decommissioning costs make up around 9-15% of the total costs of electricity generated by a nuclear power plant over its lifetime. This includes planning throughout operations, decontamination, dismantling , waste disposal, and long-term site monitoring.

There are two main decommissioning strategies – DECON which involves relatively rapid dismantling and removal of radioactive components soon after shutdown, or SAFSTOR which involves a period of safe storage to allow radioactivity to decay before dismantling. SAFSTOR can reduce radiation exposure risks for workers but requires ongoing site maintenance and security.

A key factor in decommissioning costs is the management and disposal of radioactive waste. Low and intermediate level radioactive waste makes up 90% of all radioactive waste and is disposed of in near surface facilities. The remaining high level waste must be safely stored long-term in deep underground repositories.

Government Subsidies and Incentives

Governments provide various subsidies and incentives to support nuclear power and reduce costs. These include tax breaks like production and investment tax credits in the Inflation Reduction Act, loan guarantees to reduce financing costs, and liability caps to limit accident liability. According to the GAO, these subsidies reduce the cost of nuclear-generated electricity for utilities and consumers. Tax breaks and incentives make it cheaper for companies to build and operate nuclear plants. Loan guarantees lower borrowing costs. Liability caps reduce insurance premiums that get passed onto consumers. Together these subsidies heavily support nuclear power’s economic competitiveness.

Cost Comparisons

When comparing the levelized cost of energy (LCOE), nuclear is generally more expensive than coal, natural gas, and renewables like solar and wind. According to the 2020 LCOE analysis by Lazard, the estimated cost of nuclear was $129-198 per MWh, compared to $26-54 for onshore wind, $29-42 for utility-scale solar, $44-68 for coal, and $44-73 for natural gas combined cycle.1
However, cost comparisons can vary widely based on assumptions about discount rates, plant lifespan, capacity factors, fuel costs, and regional factors. Nuclear power becomes more cost competitive if carbon pricing is accounted for when comparing to fossil fuels. There is also the potential for the cost of nuclear power to decrease further with next generation reactor designs and modular construction techniques.

Future Cost Reduction Potential

There is promise that nuclear power costs can be reduced in the future through new technologies like small modular reactors (SMRs) and improved reactor designs.

SMRs are smaller than traditional nuclear reactors, generally under 300 megawatts. Their compact size allows much of the plant to be fabricated in a factory and shipped to the site, reducing on-site construction costs. Their smaller reactors also allow for a scaled approach where you can add additional modules as demand increases. According to the World Nuclear Association, SMRs have the potential to be 10-15% cheaper than large conventional reactors.

Several companies are also working on advanced reactor designs that are simpler, safer, and more efficient than traditional reactors. Designs like molten salt reactors, high-temperature gas-cooled reactors, and sodium-cooled fast reactors have the potential to reduce costs through higher operating temperatures, efficiency, modularity, and the use of passive safety systems.

According to a Department of Energy report, advanced SMRs could reduce overnight capital costs to $5,000 per kilowatt or less due to their simpler, modular design as well as the economies of mass production. This could make nuclear power cost-competitive with natural gas and renewable energy in the future.

Conclusion

The overall costs of nuclear power are highly dependent on many economic factors, including the upfront construction and financing costs, fuel prices, operating and waste disposal expenses, and government regulations. While historic estimates put nuclear as one of the most expensive energy sources, the industry has seen significant innovations to lower future costs.

The overnight construction costs of new nuclear reactors have declined but remain high at an estimated $6500 per kW of capacity. However, financing costs can double the total capital costs of a new nuclear plant. Operation and maintenance costs are relatively low at $0.02 per kWh but waste management and eventual decommissioning add to the expenses.

Uranium fuel prices have dropped dramatically in recent decades. Combined with improved efficiency, nuclear energy competes with fossil fuels as one of the cheapest energy sources per MWh generated. Government credits and liability caps also incentivize new nuclear plant construction.

Looking forward, small modular reactors and next-generation designs like molten salt reactors promise enhanced safety and reduced costs. With greater standardization and shorter construction times, nuclear has the potential to become one of the most cost-effective and reliable baseload clean energy sources.