Against the backdrop of a global energy landscape that is evolving at an unprecedented rate, and driven by the urgent need to transition to secure and sustainable sources of power, the role of nuclear power in the energy mix and on the pathway to net-zero has seen a resurgence.

This trend is evident in the volume of policy, regulatory and financial initiatives in nations with a traditionally favourable stance toward nuclear energy, such as the US and UK, with the former’s Inflation Reduction Act (IRA) creating new incentives for nuclear generation through production and investment tax credits, and the latter’s establishment of Great British Nuclear (GBN). Similarly, even conventionally cautious nations such as Japan and South Korea are re-evaluating their previous policies, and some even reversing their plans to phase out nuclear energy.

Therefore, nuclear could assume a pivotal role in the energy transition. This significance is amplified when considering the inherent benefits of small and advanced reactors, which can provide power in remote areas and locations where the grid infrastructure is less developed or robust. They are designed to deliver not only baseload low-carbon energy but on-demand load following.

They are also projected to achieve nth-of-a-kind (NOAK) learning efficiencies earlier in a programme and development lifecycle due to their modular construction and factory build approach, and shorter build times. Small and advanced reactors also have the potential to utilise existing nuclear sites, and to co-locate with other technologies.

Nuclear could play a crucial role in the industrial sector, currently heavily reliant on fossil fuels.

Relative to renewables and storage portfolios – and outside of the baseload vs. intermittent characteristic – the above advantages are particularly noticeable at high levels of renewable penetration. Increased levels of renewable penetration will lead to a decreasing contribution of intermittent resources to system reliability, as the timing of electricity shortfalls will shift to other periods of the day and year where intermittent can't contribute. Therefore, in markets with high renewable penetration, nuclear could both complement and compete in the energy portfolios.

Nuclear could also play a crucial role in the industrial sector, which is currently heavily reliant on fossil fuels due to their low-cost and ability to generate high temperatures—attributes that renewable sources lack.

Advanced nuclear has the potential to facilitate industrial decarbonisation by providing clean, low-cost, high-temperature power, which is crucial for various chemical processes. The primary challenge, however, lies in validating and achieving the commercialisation and deployment phase of this technology. Whilst the levelised cost of electricity (LCOE) of wind and solar is attractive today, the imperative consideration remains the use case – and need – for small and advanced reactors technologies in hard-to-abate industries. Industries heavily reliant on high heat levels cannot solely rely on renewables sources for their operations.

Therefore, comparing the costs of wind, solar and nuclear does not capture the nuances of each technology: it is not as binary as often purported. Nuclear needs to be contrasted against other low-carbon technologies at the start of their cost reductions pathways. Examining the economic advantages of nuclear energy also needs to include its flexibility characteristics and ancillary services.

From a customer perspective, capturing the full ‘energy system thinking’ is vital to determine if a first-of-a-kind mover risk, and the price sensitivity that comes with it, is palatable – and, therefore, which technology and energy generation source will best enable climate change targets to be met.

Meera Kotak is associate principal at Charles River Associates

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