Nuclear energy may be a decarbonization solution, but it’s an expensive problem to solve.
Financing the energy transition has always been a priority within the conversations happening around the annual Climate Week event in New York City. The spending will have to top the trillions of dollars…and euros and francs and yen and rupees and yuan… to build out a new generation of clean power infrastructure.
During the latest Climate Week NYC kicking off Monday, more than a dozen of the world’s most prestigious and well-capitalized banks pointed clearly at nuclear energy as a must-have component of net zero emissions targets.
Nations which endorsed last year’s Declaration to Triple Nuclear Energy were joined Monday by 14 major and global financial institutions. The goal of the declaration is to triple nuclear power generation capacity—currently estimated at 391 GW globally—by 2050.
The group of financial institutions joining in the declaration include Abu Dhabi Commercial Bank, Ares Management, Bank of America, Barclays, BNP Paribas, Brookfield, Citi, Credit Agricole CIB, Goldman Sachs, Guggenheim Securities LLC, Morgan Stanley, Rothschild & Co., Segra Capital Management, and Societe Generale.
Nuclear power plants are currently among the world’s biggest generators of carbon-free energy and the only emissions-free resource with both high capacity factor and baseload-capable electricity output.
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Prospects for a Small, Modular and Reactive Future
Conventional nuclear plants, which often have close to 1 GW in capacity per unit, currently account for 19% of total U.S. utility-scale electricity, as well as more than half of the nation’s carbon-free power. Many proponents see conventional nuclear, and small modular reactors, as key to meeting future demand from data centers and electrification.
"Our collective mission is clear: nuclear energy is clean energy, and if we are to ensure a livable planet, build secure, sustainable supply chains for clean energy and bolster prosperity around the world, we need to make sure that nuclear energy does its part," said John Podesta, Senior Advisor to the President for International Climate Policy, in a statement. "I know we can make it happen—as long as we work together."
Billions and billions of reasons not to build nuclear
The financial burden of building so much new nuclear generation is a vast concern to both those who believe in the technology and opponents who may think it’s both cost-prohibitive and less safe than renewables. The recent 1-GW+ Vogtle expansion in George cost more than $32 billion and took a decade to complete.
"The only riddle left to solve is the financial side, the financial costs," said Robert Golob, Prime Minister of Slovenia. "Financial markets need to adapt and develop new financial instruments in order for nuclear energy to become competitive with other CO2-free energy sources."
The private sector, particularly tech giants, are surely beginning to embrace the potential future of nuclear power generation expansion. Microsoft’s 20-year power purchase agreement will help Constellation Energy restart the closed Three Mile Island Unit 1 by 2028, while Oracle and Amazon Web Services are closing in on carbon-free connections to nuclear energy facilities.
The International Energy Agency has estimated, based on several reports, that new nuclear power plants might cost an average of close to $70 per MWh output, compared with $30 to $60 per MWh for wind and solar.
Capacity factors in positively for nuclear
Reliability and lifespan, however, are clearly in nuclear’ s favor. The capacity factor—or the amount of time a plant can generate maximum power—is 92% for the American nuclear power plant fleet, according to the U.S. Department of Energy. This capacity factor is higher than geothermal and natural gas-fired plants, and more than double that of hydro, wind and solar, according to the DOE.
Nuclear power construction suffered a lull in recent decades in the wake of the Three Mile Island Unit 2 partial meltdown and the deadly Chernobyl and Fukushima mishaps. Lately, though, developing economies such as China and India are investing in the reliability and sustainability of nuclear power plants, which can operate 60 years and longer.
"It is time to take concrete action towards the necessary expansion of nuclear energy, said Ebba Busch," Minister for Energy, Business and Industry and Deputy Prime Minister of Sweden, in a statement accompanying the Climate Week NYC bank declaration. "The Swedish government is exploring a proposed financing model which includes government-backed loans, contracts-for-difference and risk-sharing mechanisms. The aim of the proposal is to significantly improve the conditions for nuclear newbuild in Sweden and with it, a more sustainable future."
Nuclear is One of Many Paths to Net Zero for the C&I Energy Transition
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