Nuclear power has seen a surge of interest in recent months, primarily driven by the escalating energy demands of data centers and strategic partnerships, such as the agreement between Talen Energy and Amazon Web Services. Data centers are drawn to the low-levelized cost of energy and reduced carbon emissions associated with nuclear power.
However, despite this renewed enthusiasm, several obstacles continue to hinder the timely adoption of nuclear technology. In addition to regulatory hurdles, supply chain constraints are also playing a critical role in delaying the realization of nuclear power’s full potential.
AlphaSense Expert Insights boasts an extensive range of firsthand perspectives on trending topics from experts across the energy and industrials industry. These premium insights can be found in our expert transcript library and enable leaders to identify implications for the energy sector at a deeper level.
This blog leverages these expert perspectives to explore the specific regulatory and supply chain issues that may prevent nuclear adoption from meeting optimistic projections.
Supply Chain Challenges for Nuclear Energy
The security of nuclear power plants is contingent upon a reliable fuel supply, and given the limited number of fuel suppliers, diversifying sources and reducing reliance on imports is paramount.
The Department of Energy (DOE) is expected to play a critical role in achieving these objectives, as recent policy developments in the United States may alleviate concerns regarding supply chain constraints. The National Defense Authorization Act will empower the DOE to promote the domestic production of low-enriched uranium for existing reactors.
One report suggests that the Accelerating Deployment of Versatile, Advanced Nuclear for Clean Energy (ADVANCE) Act is anticipated to stimulate the development of small modular reactors.
The 2024 U.S. National Defense Authorization Act, for example, directs the DOE to emphasize making low-enriched uranium in the U.S. for existing reactors. It also pushes for faster development of U.S.-produced high-assay low-enriched uranium that is required for advanced reactor fuels, reaffirming a long-standing U.S. government commitment to advancing the nuclear energy sector.
There is bipartisan support for the Accelerating Deployment of Versatile, Advanced Nuclear for Clean Energy (ADVANCE) Act, which would accelerate the development of advanced reactor technologies such as SMR.”
– FTI Consulting | Report
Additionally, another report explains that Organisation for Economic Co-operation and Development (OECD) countries are experiencing significant delays and challenges in supply:
After completing fewer than 20 new reactor projects during the last 20 years, OECD countries have their work cut out to make their nuclear supply chains more robust and dependable. Recent projects have suffered delays, high rework rates, and high prices due partly to the limited number of qualified suppliers. Investments in suppliers and their capabilities will be essential and may require proactive private-public funding initiatives.”
– Bain & Company | Report
Estimated Levelized Cost of Energy (LCOE) of clean energy resources, according to Oklo.
One expert believes that the nuclear supply chain of uranium mining and other processes is limited, given the low number of nuclear power plant completions over the last decade.
The biggest single point of failure with the nuclear plant operation is the security of supply for your fuel. Only a handful of suppliers are even making nuclear fuel rods. You want to get as close to the U.S. shore as possible. You want to try to have multiple sources of that supply chain process to the extent that you can.”
– Former Director, NRG | Expert Transcript
With limited suppliers and delays in new projects, U.S. policy initiatives, like the ADVANCE Act, offer a unique opportunity to bolster domestic fuel production and advance reactor technology. However, sustained investment and innovation will be critical to overcome these obstacles in nuclear supply.
Regulatory Challenges for Nuclear Adoption
The regulatory process has historically constituted a substantial portion of the construction timeline for nuclear power plants. Given the novel nature of emerging nuclear technologies, such as small modular reactors (SMRs), regulatory review periods are often extended.
One expert anticipates challenges in the regulatory space to be the biggest hurdle over the next one to five years:
On the more advanced reactor side, I think there are challenges ahead in the regulatory space. For its entire history, the Nuclear Regulatory Commission has gotten good at regulating large light-water reactors. It is not so much in their expertise to regulate a molten salt reactor or trace of fuel, which is still fairly novel for them, and that presents its own set of challenges in getting your design through the regulatory space.”
– Chief Engineer, BWX Technologies | Expert Transcript
Industry experts anticipate novel reactor designs like SMRs to encounter protracted regulatory approval processes. However, companies like Oklo and other SMR producers, including NuScale, assert that their standardized licensing strategies will expedite the licensing timeline by up to 50%. Oklo further posits that SMRs will mitigate the execution risks associated with large-scale projects.
Comparison of typical nuclear timeline versus Oklo licensing strategy, according to Oklo.
Moreover, the introduction of SMR technology and other nuclear innovations could extend, rather than shorten, the regulatory review period. While the Nuclear Regulatory Commission (NRC) has extensive experience with traditional light-water reactors, the novel features incorporated in newer designs may require more in-depth analysis.
Existing nuclear regulations were established over three decades ago, necessitating the development of a more streamlined and contemporary regulatory framework that better serves the needs of the industry.
Most nuclear energy regulations were designed decades ago and have received minimal updates. The most effective governments will simplify regulatory frameworks, look for process innovations (e.g., a “start small, scale fast” approach to new nuclear plants), and work with other governments to harmonize regulations across borders.”
– Bain & Company | Report
The future of nuclear energy hinges on adapting regulatory frameworks to accommodate emerging technologies like small modular reactors, as these novel designs continue to challenge traditional processes.
Impact of Tax Credit Incentives on Nuclear Adoption
Utility providers are concerned about the clarity and consistency of government incentives across multiple presidential administrations, as nuclear plants have lengthy construction timelines. As construction for nuclear plants can often span a decade, utilities companies seek assurances that government incentives will remain in place throughout the entire duration of construction.
According to experts, numerous utilities are contemplating nuclear investments; however, a decisive catalyst, such as federal regulation or tax credits, is necessary to initiate construction.
If the development of some of these newer advanced class or small modular reactor technologies become more viable in the marketplace, that’s where I could see Alabama, Mississippi Power becoming interested in that, but again, they would probably need something to activate that decision whether it’s federal regulation or some significant tax credits.”
– Former Managing Director, Duke | Expert Transcript
While many utilities providers have leveraged existing government support, albeit with concerns about continuity across administrations, others are waiting for additional government incentives before committing to nuclear projects.
As long as you’ve got that production tax credit for nuclear and Congress doesn’t repeal it, I think Constellation is in good shape, but I would look at that as a risk issue with Constellation because in my opinion, policies and politics can change with the next administration and Congress may decide not to renew that production tax credit.”
– Former Director, NRG | Expert Transcript
The outlook for nuclear investment relies heavily on stable and long-term government incentives, as utilities remain hesitant to commit to decade-long projects without assurance of consistent support. Federal regulation or significant tax credits could be the decisive factor that propels utilities providers toward adopting advanced nuclear technologies, but political uncertainty poses a major risk to this progress.
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Director of Research, Energy & Industrials
Xavier serves as the Director of Research, Energy and Industrials at AlphaSense. Before joining AlphaSense, Xavier worked as an equity portfolio manager at various firms including Goldman Sachs, and Gugenheim. Xavier has equity market experience in London as well as New York. Xavier received an MBA from the Wharton School and a BA from Tulane University.
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