Nuclear - Think Green Asset Management

Nuclear Energy

Learn what nuclear energy is, how it’s used today, and what opportunities it offers for the future.

What is nuclear energy?

Nuclear energy describes the process by which the energy inside an atom that holds its nucleus together is transformed into electricity. This energy is harvested by a machine called a nuclear reactor that splits the atom apart to create a nuclear reaction, which produces heat used to generate electricity.

How does nuclear energy work?

Nuclear reactors create nuclear fission, which is a process that uses neutrons to split apart uranium or plutonium atoms. The atom’s mass is converted into energy in the form of heat. This heat is used to turn water into steam that powers a turbine and generates electricity. The steam is then condensed in cooling towers, where it becomes water again before being sent back into the reactor. The first commercial nuclear power station began operation in the 1950s.

What is the state of nuclear energy today?

Nuclear energy is the world’s second-largest source of low-carbon power (29% of the total in 2018), providing about 10% of the world’s electricity from about 440 power reactors. Thirteen countries in 2020 produced at least one-quarter of their electricity from nuclear, with France leading the pack by generating around three-quarters of its electricity from nuclear energy.

In the U.S., nuclear energy offers value on many fronts. Concerning climate change, the existing plants generate more than half of the carbon-free electricity in the country and have avoided over 16 billion metric tons of carbon emissions since 1995. The industry-wide capacity factor is 93%, meaning nuclear plants provide carbon-free electricity that is reliable and complementary to wind, solar, and grid storage. This ability to complement variable sources of generation will become increasingly valuable as the grid transitions to low carbon technologies, like wind and solar.

Economically, the nuclear industry adds $60 billion to U.S. gross domestic product and pays $2.2 billion in state and local taxes. Nuclear plants are the highest-paying energy generation source by far. And the nuclear energy sector as a whole provides nearly 100,000 high-quality, long-term jobs across the country at more than twice the national median wage.

What is the future of nuclear energy?

According to current trends and policy targets, nuclear capacity in 2040 will amount to 582 GW—well below the level of 730 GW required in the Net Zero Emissions by 2050 Scenario. This gap widens even further after 2040, which requires continued operation of the existing nuclear fleet and a near-doubling of the annual rate of capacity additions. While some of this additional nuclear capacity will not come online until the late 2030s, policy decisions are required now to put nuclear back on track.

The average yearly new nuclear capacity of 20 GW is required between 2020 and 2050 to meet Net Zero goals. This rate of construction is comparable with the pre-Fukushima period when, in 2010, construction began on 17 GW of nuclear capacity. Although 59 GW of new nuclear capacity was under construction at the end of 2020, the rate at which new projects are completed remains nearly half that required under the Net Zero Scenario, with the gap widening even further after 2035.

All hope is not lost, however…

In the IEA’s World Energy Outlook 2020, there is an ambitious ‘Sustainable Development Scenario’, which outlines a plan for decarbonization. In this scenario, electricity generation from nuclear increases by almost 55% by 2040 to 4320 TWh, and capacity grows to 599 GWe.

The World Nuclear Association has put forward an even more ambitious scenario called the Harmony Program. This plan proposes an additional 1000 GWe of new nuclear capacity by 2050, providing 25% of electricity then (about 10,000 TWh) from 1250 GWe of capacity (after allowing for retirements). This would require adding 25 GWe per year from 2021, escalating to 33 GWe per year, which is not much different from the 31 GWe added in 1984, or the overall record of 201 GWe in the 1980s. Providing one-quarter of the world’s electricity through nuclear would substantially reduce carbon dioxide emissions and improve air quality.

What are the advantages and challenges of nuclear energy?

Nuclear energy is a clean energy source, providing an economically sound, greener alternative to fossil fuel burning. However, as with any energy source, there are advantages and challenges to its use. We’ve rounded up some of the pros and cons for you below:

Advantages

Clean energy

Nuclear energy is the largest provider of clean energy in the United States today, generating almost 800 billion kilowatt-hours of electricity each year and producing over half of the nation’s emissions-free electricity. This avoids more than 470 million metric tons of carbon each year, which is the equivalent of taking 100 million cars off the road!

Nuclear energy may also help to decarbonize other energy-intensive sectors, like transportation, which is the largest carbon emitter, through the use of thermal energy

Reliable

Nuclear energy is the most reliable energy source on the grid today, operating at full power more than 92% of the time (as cited in 2019). Nuclear power plants run 24/7 and are designed to operate over long periods, refueling only every 1.5-2 years.

Creates jobs

Each year, the nuclear industry employs nearly half a million Americans and contributes billions of dollars to local economies through federal and state tax revenue—culminating in $60 billion to the U.S. gross domestic product.

Supports national security

A thriving nuclear industry is crucial to U.S. national security and diplomacy, helping to forge international relationships and ensure the peaceful use of nuclear technologies around the world.

Challenges

High operating costs and risk

Risk is a significant cost component of operating a nuclear power plant. As base-load power suppliers, nuclear power plants do not respond to market signals in the same way that peaking power plants do. Nuclear power plants may incur losses based on market price volatility that does not affect other energy generating technologies. The immense amount of power that nuclear plants produce also amplifies the potential losses due to changes in electricity market prices. This type of risk is known as market risk, which is the risk borne by nuclear power plant operators due to volatility in electricity market prices.

Despite the cost reductions experienced by the nuclear fleet, plants have been forced to close prematurely. Twelve reactors in ten states have ceased operations before schedule, resulting in the loss of 78.1 million megawatt-hours of clean electricity annually. The majority of reactors prematurely shut down in the last decade did so at least in part due to market pressures, including the suppression of wholesale power market prices by sustained low natural gas prices as well as the increased penetration of renewable energy and market designs that do not properly value the firm, carbon-free electricity that nuclear plants provide to the grid.

Public awareness

Many citizens perceive nuclear energy to be dangerous and unstable due to three global nuclear accidents, its false association with nuclear weapons, and how it is portrayed on popular television shows and films. Educational outreach is required to gain more widespread public support.

Transportation, storage, and disposal of nuclear waste

Nuclear plants produce radioactive waste that must be properly disposed of. This waste includes spent fuel that is highly radioactive. The DOE is “responsible for the eventual disposal and associated transport of all commercial used fuel, which is currently securely stored at 76 reactor or storage sites in 34 states. For the foreseeable future, this fuel can safely remain at these facilities until a permanent disposal solution is determined by Congress.”