J.Pollock Blog

The opportunity cost of not using nuclear energy for climate mitigation

Published Feb. 3, 2022
By Alex Gilbert Permission granted by Oklo

The following is a contributed article by Alex Gilbert, a project manager at the Nuclear Innovation Alliance, where he oversees work on regulatory modernization, federal policy and commercialization.

The biggest obstacle to addressing climate change is that it requires a sustained whole-of-society effort, yet we are still fighting about its seriousness and urgency. The second biggest obstacle is that those of us who see climate change as an existential threat are fighting over whether to take a technology-inclusive approach or to rely solely on renewables. Those of us who advocate for a technology-inclusive approach think we need enormous growth in renewables. We just do not think renewables can do it all. Rather, we’ll need all of the available low- or no-carbon tools (and many new technologies that we have yet to develop) to do this work, not just one.

A recent U.N. report found that nuclear energy has the lowest lifecycle carbon emissions of any energy technology, underscoring its role as the largest source of carbon-free power in the U.S. and the second largest source globally. Yet some opponents of nuclear power are trying to argue that the “opportunity cost” of investing in nuclear power is too high, and that we should focus entirely on investment in renewable energy. This is a recipe for climate disaster. Focusing on renewable energy while ignoring all other low or zero carbon technologies is based on an incorrect understanding of decarbonization imperatives, system-level energy costs, and investment portfolio principles. Based on the best available facts and analysis, like MITSepulveda et. al., and Vibrant Clean Energy, a broad technology portfolio that includes both nuclear and renewable energy can create the most cost-effective carbon-free energy systems.

The core of a “renewables alone” argument is that because individual wind and solar power plants are now estimated to be cheaper on a generic levelized basis, any money spent on nuclear energy is wasted because it could have gone to renewables instead. Nuclear construction projects in the United States, like in Georgia and South Carolina, have indeed struggled with large upfront construction costs and cost overruns (even as plants abroad have been delivered at competitive costs). Since new nuclear energy and existing nuclear plants may struggle in competition with natural gas in absence of a carbon price, the proposed solution is to refocus any support for new or existing nuclear energy in favor of renewable energy.

There are three major flaws in this “renewables alone” argument.

First, the argument misses the clear bigger picture: the world is still dependent on carbon-emitting energy sources. Despite recent substantial growth in renewable energy, global carbon emissions continue to rise. It is urgent and imperative that we curb and reduce global carbon emissions as quickly as possible. In the power sector, numerous energy models and analyses show that nuclear and renewable energy are complementary in achieving deep decarbonization goals, especially as next generation nuclear energy can be flexible to balance renewable’s variability. While renewable energy can help satisfy large portions of our energy needs, eliminating carbon emissions from energy production without “firm” low carbon energy sources like nuclear power will be extremely costly.

Renewable energy should be a means to reducing emissions, not an end in itself. And in the power sector, such emissions must be calculated on a system-wide basis. With careful attention to system integration, renewable energy can play a major role in reducing emissions. However, in some cases, variable renewable energy can actually increase emissions due to system-wide operational inefficiencies at balancing fossil units. In the United States, closures of nuclear power plants in Vermont, New York and elsewhere have led to increased natural gas use and greenhouse gas emissions.

Recent analysis indicates that competition with natural gas has led to the closure of almost 10% of U.S. reactors in the last decade with another 20% only saved by state policy interventions. Keeping reactors online with state or federal policy has relatively limited costs, while ensuring that additional renewable energy can focus on displacing high-emitting energy sources. Indeed, key swing vote Senator Joe Manchin recently indicated that he is “big on nuclear,” expressing support for federal policy to support plants. Combining nuclear energy and renewable energy interests can thus lead to stronger political coalitions that deliver outcomes for all, just as recently occurred in Illinois.

Second, the “renewables alone” argument relies upon the wrong cost metric, using costs of power produced by individual plants instead of power system-level costs. The electric grid functions like a giant machine that must balance the power supplied by all the individual power plants with the demand from all electricity users across all hours of all days. Costs of energy for individual power plants are useful, but have severe limitations in analyzing real-world economic realities. Power costs for individual renewable energy plants do not account for transmission costs, a rising and largely unaddressed financial barrier, nor for the system balancing costs to deliver electricity supply as needed. Further, renewable energy and nuclear energy are not direct competitors in most energy markets or utility decision-making – they serve different purposes on the electric grid.The “renewables alone” arguments use the wrong metric for comparing different climate solutions; even though we want as much clean power as possible, the primary metric is not dollars per clean megawatt-hour for a particular power plant. Rather, it is dollars per ton of mitigated greenhouse gas emissions. By focusing narrowly on a comparison of costs per MWh between lower-emitting power plants, this argument misses that system-level outcomes are what determine greenhouse gas reductions. For example, if renewable energy were to be built in Germany while closing nuclear power plants, it would miss out on emissions reductions from replacing coal in Germany, or emissions reductions from redirecting renewable supply chains elsewhere. This system-level outcome should be our focus.

The total costs of energy systems are also just one important societal consideration for a future clean energy system. Other considerations include energy security, diversity, reliability, resilience, environmental justice, land use, materials, other lifecycle impacts and more. These are often system-level features, meaning that they are derived from the individual characteristics of technologies operating together. Research has shown again and again that diversification of energy resources, like a balance of renewables and nuclear energy, is the best way to maximize outcomes across all of these characteristics. Existing nuclear plants often have limited lifecycle costs involved, so keeping them online with policy support can have some of the lowest carbon mitigation costs. In an integrated energy system, limitations of nuclear energy are offset by the advantages of renewable energy just as limitations of renewable energy are offset by the advantages of nuclear energy. Together, they make our grid stronger.

Third, and finally, a “renewables alone” argument focused on the opportunity cost of investment in nuclear energy ignores investment portfolio principles for achieving long term success. We need to invest in a portfolio of promising solutions, because the climate is too important to bet on just one technology. 

Solar, wind and other renewables have made great strides in the power sector, but not other sectors. Next generation nuclear energy is uniquely suited to decarbonize other sectors that lack renewable alternatives. Nuclear energy is already providing heat in cogeneration and district heating around the world, roles it can expand upon. The firm generation nature of nuclear energy is well suited for powering hydrogen electrolysis facilities. Nuclear energy can be used for even more specific applications, like direct propulsion of maritime ships or production of clean fuels like ammonia to decarbonize global shipping. The unique attributes of next generation nuclear energy could help accelerate decarbonization in sectors where use of renewable energy alone would be technically inefficient or excessively costly.

The opportunity cost argument also makes a fundamental mistake regarding energy portfolios by asking the wrong question. If we asked what the cheapest technology was to decarbonize in 2001, no one would have said wind or solar, whose prices were way too high. With strong demand-pull policies and a competitive market, both industries were able to reduce costs to become global leaders in decarbonization. Planning a new energy system around the lowest marginal cost for new low-carbon generation technology today may not produce the lowest total cost energy system in the future or help us achieve our goal of decarbonization faster.

Building an AP1000 in the U.S. today could be cost prohibitive but utilities are not looking at building them, they are looking at building next generation reactors. When looking at reactors today we should ask: how cheap do they need to be, how cheap can we make them, and how do we do it?

By drawing on lessons from solar and wind, including smaller and standardized projects, business model innovation and more, we can greatly reduce the cost of future reactors so that they can work together with renewables for cost-effective decarbonization. Specific techniques like modular construction, standardization, advanced manufacturing, artificial intelligence and more can enable rapid technological learning for nuclear energy. Investment today in these technologies can enable significant future technology gains and unlock a critical, firm and complementary low-carbon energy source that helps us more efficiently and rapidly meet our clean energy goals.

Ultimately, despite large and growing amounts of nuclear energy, solar, wind and hydro power, world primary energy supply remains stubbornly carbon-intensive, above 80%. If we are to rapidly decarbonize globally over the next three decades, we need renewables and nuclear energy working together to reduce emissions as fast as possible. Arguments trying to pit nuclear energy and renewable energy against each other ignore the political opportunities of a strong and comprehensive clean energy coalition. Markets and economics will play a central role in determining the exact energy mixes of the future. However, considering the existential stakes of climate change, advocates, innovators and governments should work together to promote all clean energy sources and reduce their costs to incentivize rapid decarbonization.