US Nuclear Energy Outlook

Hamza Aljamaan
March 15, 2014

Submitted as coursework for PH241, Stanford University, Winter 2014


Fig. 1: US Electricity Generation by Fuel in billion kilowatt-hours 2011,2025, and 2040. [1] (Courtesy of the EIA)

The United States is considered to be the largest producer of nuclear energy in the world. In 2011, the power generated from this fuel is equivalent to 104 gigawatts (GW) which accounts for 19% of the total electricity generation by fuel type in the US. [1] The other sources include natural gas, coal, oil and other liquids, and renewables. France, which has the second largest nuclear capacity, relies on nuclear energy to generate 80% of its electricity. A lot of countries are looking into diversifying their energy mix by investing in nuclear energy. Nuclear energy offers several advantages which include among others: [2]

  1. Minimal green house gas emission in comparison to other fuel types such as coal.

  2. Good safety record in comparison to coal mining and fossil fuel accidents.

  3. No price volatility like natural gas.

Despite these advantages, a lot of challenges are currently facing nuclear energy development. Nuclear energy forecasts in the US are in fact not promising. Although the operating costs for nuclear power plants are low, the current market conditions are not in favor for further nuclear energy development. In fact, a total of 3 percent increase in capacity was allocated for nuclear energy through 2040. This is due to several challenges facing nuclear energy. The major challenges along several others include: nuclear economics, safety, nuclear waste, and threat of proliferation. In terms of nuclear economics, the complexity of nuclear power plant construction require much higher costs and time to complete in comparison to other sources contributing to electrical generation. This translates to capital costs before interest of $5426 per kilowatt in comparison to $2883, $3718, and $5138 for coal, coal-gasification and coal with carbon sequestration, respectively. For nuclear energy to be profitable, electric power needs to be sold at 12 cents per kilowatt hour compared to a profitable price between 5-9 cents per kilowatt hour for natural gas power plants. One way, however, to overcome the economics of nuclear is by providing carbon tax or credit. This would be a major advantage for nuclear energy since it is the only source of zero- carbon electricity. Although nuclear power plants have a good safety record in comparison to other industrial operations, nuclear accidents pose greater potential risk. The recent Fukushima incident caused a major political impact with Japan abandoning all nuclear plants and the US reviewing all its nuclear safety regulations. After Fukushima, public fear rose regarding nuclear waste disposal. Billions of dollars were spent to store nuclear waste underground in a geological formation. No progress, however, have been made to build an underground storage facility. [2,3]

Shale Gas Boom Implications

The shale gas revolution is a game changer in the future energy outlook of the US. This is shown in Fig 1. where the contribution of natural gas to electricity generation in the US is increasing significantly with time. Although shale gas was considered an uneconomical option for development, it currently accounts for most of the gas resource estimate in the United States. In fact, shale gas production is expected to account for half of the gas production in the US with an increase from 34% in 2011 to 50% by 2040. The tight nature of these shale rocks, with flow capacities in the nanodarcy scale, encouraged technological advancements to allow for exploitation at economical costs.[1]

Fig. 2: Nuclear capacity additions of five cases (2011-40). [1] (Courtesy of the EIA)

The introduction of hydraulic fracturing along with horizontal drilling enabled shale gas extraction at low costs. In comparison to coal, natural gas represents a clean source of energy with low green house gas emissions. Technological advancement in shale gas exploitation caused a major draw back in nuclear energy. In fact, the latest forecasts by the energy information administration suggest a decrease in nuclear energy contribution to electricity generation from 19% to 17% by 2040. The AEO2013 report suggest a capacity increase of 19 GW in nuclear through 2040 which includes 11 GW from newly constructed plants. This is compared to an increase of 215 GW and 104 GW in natural gas and renewables, respectively. [1]

A study by the EIA was carried out to asses different future scenarios and analyze the sensitivity of future nuclear energy capacities to changes in natural gas prices. Figure 2 shows the required additional capacities from each scenario in GW to meet the growing demand in electricity consumption. Five scenarios were analyzed among each other. This includes the following: high natural gas price case, low natural gas price case, reference case, low nuclear case, and high nuclear case. In all these scenarios, the development of nuclear energy is still not significant in comparison to natural gas. This is because of the current market conditions where nuclear power plant construction costs are high and natural gas prices are relatively cheap. If the prices of natural gas, however, are higher by 26% than the reference case in 2040, additional nuclear plants will have to be built to deliver an extra 26 GW to meet the growing demand for electricity. Alternatively, no additional nuclear plants will be built if natural gas prices are lower by 39% than the reference case in 2040. The high nuclear case assumes that all plants will renew their license and operate to 2040. This results in a planned capacity addition that is twice the reference case as shown in Fig.2. The low nuclear case represents the scenario where nuclear plants retire due to the expiration of their operating licenses. The Nuclear Regulatory Commission (NRC) typically license nuclear power plants for 40 years. Afterwards, the license can be renewed for an additional 20 years. The renewal decision, however, is controlled by the ability of the owners to meet the new NRC regulations and also depends on the economical feasibility behind such decision. In particular, the low nuclear case scenario includes a loss of 45.4 GW of nuclear capacity and a 44% decrease in capacity in comparison to the reference case. This loss is expected to be made up by increased natural gas production through the exploitation of unconventional reservoir coming primarily from gas shales. [1]

© Hamza Aljamaan. The author grants permission to copy, distribute and display this work in unaltered form, with attribution to the author, for noncommercial purposes only. All other rights, including commercial rights, are reserved to the author.


[1] "Annual Energy Outlook 2013," U.S. Energy Information Administration, DOE/EIA-0383(2013), April 2013.

[2] K. Johnson, "What's Holding Back Nuclear Energy," Wall Street Journal, 11 Nov 13.

[3] M. Philips, "The U.S. Nuclear Power Industry's Dim Future," Bloomberg Businessweek, 18 July 13.