To meet US nuclear goals, big reactors need to get built today, DOE says

If America hopes to meet its grid decarbonization goals or its nuclear power targets, the country needs to deploy fission reactors in volume — and it needs to get started today.

That’s according to the recently updated Pathways to Commercial Liftoff: Advanced Nuclear report by the U.S. Department of Energy. The document sets a course to meet America’s ambitious COP28 pledge to triple its current 100 gigawatts of nuclear power to 300 gigawatts by 2050.

Just a few years ago, utilities were shutting down reactors, but it’s a new day for American nuclear. Companies are now exploring reopening closed sites, upgrading capacity, and extending operation of existing plants to 60 or 80 years.

The turnaround has been triggered by a surge in electricity demand following decades of little to no growth. This rising need for electricity is not just the result of the much-discussed AI and data-center boom. It’s also due to the rapid reshoring of domestic manufacturing and the increasing electrification of vehicles and buildings.

But reopening a few reactors is not enough for the U.S. to meet this soaring demand, and certainly not its COP28 goals; the country needs to deploy 13 gigawatts of new nuclear per year starting in 2030 to accomplish that, according to the report.

That pace is wildly aspirational — far faster than the U.S. moved even in its nuclear heyday. Between 1973 and 1987, the U.S. added an average of just over 6 gigawatts of nuclear capacity per year. As of today, there are no signed contracts to construct new nuclear reactors in the U.S.

The DOE’s solution to this deployment drought is for a consortium of stakeholders — utilities, operators, engineering and construction firms, and power customers — to coordinate and order five to 10 large reactors of a single, licensed design. This model could allow the industry to ride the cost curve from an expensive first-of-a-kind (FOAK) project to lower-cost, next-of-a-kind (NOAK) construction.

This focus on large-scale reactors marks a break from the recent wisdom that small modular reactors (SMRs) would solve America’s nuclear malaise. For more than a decade, SMR advocates have pointed to the unproven tech as a way for the industry to reduce its prohibitive costs and accelerate its sluggish timelines. DOE’s report sends the opposite signal: Bigger is not only better, but necessary if the U.S. is going to meet its nuclear goals.

Vogtle success

The newest nuclear reactors in the country are Vogtle 3 and 4 in Georgia. Both came in billions over budget and years late.

But as far as the DOE is concerned, the Vogtle projects provided valuable lessons on how to build one specific reactor design: the 1,117-megawatt AP1000 Gen III+ light-water reactor.

In a webinar introducing the updated report, Julie Kozeracki, director of strategy at the DOE’s Loan Programs Office (LPO), said that a year ago, it was rude to speak about AP1000s ​“in polite company” given their questionable performance, but today the DOE is lauding the ​“perseverance of Southern Company in making Vogtle not just the largest clean energy generator in the United States, but the largest generator of electricity anywhere in the United States.”

Vogtle’s budget overruns were the result of an incomplete design, an immature supply chain, and an untrained workforce, according to the DOE. But now, the AP1000 design is complete, and the DOE says that supply-chain infrastructure is in place and 30,000 workers have been trained.

The next company to build an AP1000 will achieve substantial cost reductions thanks not only to these benefits, the DOE argues, but also to the Inflation Reduction Act’s nuclear-energy incentives. The law offers an investment tax credit of 30 to 50 percent for nuclear projects, and LPO loans for up to 80 percent of eligible project costs.

The DOE cites the major cost decline — 30 percent, according to Jigar Shah — between the construction of Vogtle Unit 3 and Vogtle Unit 4 as evidence that costs will continue to fall. It also found that a consortium building several reactors of the same design can get the AP1000 FOAK cost of about $11,000 per kilowatt down to a NOAK cost of $4,700 a kilowatt, a figure that could entice more consortiums.

“It’s tough to beat the economies of scale of big reactors, and they are essential for bulk electricity production,” Kozeracki said.

That’s a more or less direct contradiction of the argument in favor of SMRs, which advocates have said will reduce the costs of nuclear energy by harnessing the power of mass manufacturing. This unproven thesis holds that reactors of 50 to 350 megawatts in capacity can be built in factories and shipped to various locations instead of being constructed — expensively and riskily — on-site.

But SMRs seem destined to suffer diseconomies of scale: a 100-megawatt reactor will generate 10 percent of the power of a 1,000-megawatt reactor but still require a large reactor’s worth of regulatory paperwork and more than 10 percent of the materials, waste management, and personnel. It’s yet to be proven if the savings from modular production will compensate for those downsides.

While dozens of companies have aspired to commercialize SMRs, only one company, NuScale, has managed to win design approval from the U.S. Nuclear Regulatory Commission — and it is still searching for its first paying customer after its initial project fell apart last year.

The updated DOE report picks its words carefully on SMRs, saying, ​“We’re going to need reactors of all sizes, and small reactors have a number of benefits and advantages, particularly for replacing smaller, retiring coal sites or industrial applications that require high temperature heat and high quality steam.”

This is not the battle cry of a DOE bullish on SMRs.

Nuclear funding bonanza

The Biden administration and the DOE are not just producing commercialization strategy papers — they’re putting considerable sums of money where their collective mouths are.

Billions in grants and incentives are aimed at building advanced reactors, enriching uranium fuel, and keeping the existing fleet in operation. In a rare feat of bipartisanship, the legislature passed the ADVANCE Act this summer to improve nuclear licensing efficiency.

As of today, the LPO has $64.89 billion in applications for nuclear projects under consideration; most are seeking funding under a new IRA program that backs projects intended to repower or retool idled energy infrastructure.

The first loan from this program went to Holtec, a decommissioning company that received up to $1.5 billion to restart the Palisades nuclear plant, an 800-megawatt reactor that shut down in 2022. A shuttered reactor at the site formerly known as Three Mile Island might be the next to receive an LPO loan to reopen.

The 30 percent investment tax credit (ITC) in the IRA can be expanded to 50 percent with adders for using domestic content and being located in an ​“energy community” that has hosted energy infrastructure in the past. Since the ITC applies to capital cost regardless of the initial budget, it is essentially ​“overrun insurance,” with the government sharing risk with project developers.

Kozeracki called the 50 percent ITC, ​“buy one reactor, get one free.”

But these incentives are not sufficient to kick off the massive nuclear scale-up the U.S. has committed to. Getting there, according to the DOE, will require a loud, clear, and unprecedented market signal — industry players banding together to order five to 10 reactors of the same design. We’ll let you know when that happens.