Say the words “clean energy” and nuclear probably isn’t the first thing that comes to mind for most people.
But it’s the non-carbon-producing energy source that may be poised to gain the most traction right now, said Matt Stephani, president of Cavanal Hill Investment Management, Inc., which is an affiliate of BOK Financial®. Cavanal Hill has shares in uranium production companies and in a company that manufactures nuclear reactors for small-scale applications. “Wind-powered energy has proven costly, and solar energy is appropriate in some areas of the country but not in others. The biggest beneficiary in my mind is nuclear. In fact, I think we’re sitting in front of a nuclear renaissance for the first time that I can remember,” he said.
Right now, nuclear energy’s presence in the U.S. is relatively small, contributing only 18.9% of the total annual electricity generated in the U.S., as of the end of 2021, according to the U.S. Energy Information Administration (EIA).
However, support for more nuclear power plants in the U.S. is growing.
In 2020, only 37% of Democrat or Democrat-leaning Americans and 53% of Republican and Republican-leaning Americans supported more nuclear power plants generating electricity in the U.S., according to a Pew Research Center poll. Only three years later, in 2023, those figures were 50% and 67%, respectively.
“That's the highest level of support for nuclear I’ve ever seen,” Stephani said.
Potential headwinds still exist but may dissipate more over time
Still, even with a potential nuclear renaissance on the horizon, nuclear won’t supplant the globe’s reliance on fossil fuels, experts agreed. “Fossil fuels likely will remain a key energy source until clean energy sources are more reliably available and cost-effective,” Stephani noted.
One factor limiting nuclear energy’s growth is the initial infrastructure costs, said Dennis Kissler, senior vice president of trading for BOK Financial. Another issue is that nuclear power plants tend to take a long time to build, and construction costs can increase rapidly over the life of the project, according to the nonpartisan think tank, the Institute for Progress. A prime example of this is the addition of two reactors at the Vogtle plant in Georgia. After more than seven years of delays, the expansion is expected to cost a total of $35 billion—$20 billion more than what was originally forecasted.
Meanwhile, although the cost of operating a nuclear power plant has gone down over time, it remains more expensive than operating a fossil fuel steam-electric power plant. For example, in 2022, it cost 10.51 mills per kilowatt-hour to operate a nuclear plant, compared to 6.75 mills for a fossil steam plant and 7.68 mills for a hydroelectric plant, according to the EIA. A mill is equal to 1/1000 of a U.S. dollar.
Over time, maintaining the infrastructure also can be issue, Kissler said. As an example, he points to France, where 12 of the country’s 56 plants had to be shut down to repair cracked pipes in 2022. That represented 23% of the country’s nuclear power generation, so as a result, France—normally an energy exporter—had to import power from Germany.
Another issue is environmental waste. Although nuclear power plants do not emit air pollution, they do create radioactive wastes such as uranium mill tailings and used reactor fuel. “These materials can remain radioactive and dangerous to human health for thousands of years,” according to the EIA.
Biggest boost to nuclear may be time
But even with these downsides, the growth of nuclear power has its upsides, too, Kissler said.
For one, it’s a long-lasting and relatively cheap source of energy. “It's a big cost upfront, which could be done with a large bond issuance, but the power generation can go for years and years and years without causing problems,” he said. It’s also more profitable and much safer than it was 25 years ago, he added.
For instance, nuclear plants in the western world use what's known as a "defense-in-depth" approach that includes physical barriers between the radioactive reactor core and the environment, and multiple safety systems, each with backup and designed to accommodate human error, according to the World Nuclear Association.
Meanwhile, the biggest boost to support for nuclear power may be more time passing, as people under 40 tend to have fewer fears of nuclear power than those old enough to remember disasters such as Chernobyl and the more recent Fukushima nuclear accident in Japan, Kissler noted.
“Not wanting nuclear is more of a mindset than an economic sense,” he said. “With nuclear, there’s often the view that ‘I'd like to have the power. I think it's cost efficient—just don't put it anywhere near me.’”
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