Overview
In the face of ever-increasing electricity supply demands across the country, the future is looking very bright for the nuclear energy industry. We review below recent policy and market developments that can inform what lies ahead for the industry.
In 2023 almost 19% of U.S. electricity came from 94 reactors generating just under 100 GW of installed nuclear capacity, a magnitude generally unchanged from 40 years ago. Earlier this month the Biden administration called for 300 GW of U.S. nuclear energy capacity to be on the grid by 2050 and published a framework for achieving that ambitious target.[1] The framework outlines strategies for expanding U.S. nuclear energy to meet rising electricity demand by building large reactors, small modular reactors (SMRs), and microreactors; maximizing existing facilities; improving licensing; and strengthening supply chains and workforce development. As the Trump administration takes office it will promote its own perspectives on nuclear energy's future, but the favorable outlook for nuclear energy is expected to continue.
Recent Developments
Nuclear energy's outlook in the U.S. has been boosted recently by federal policies that include funding for new reactors in the Infrastructure Investment and Jobs Act of 2021 (IIJA), tax incentives for nuclear energy in the Inflation Reduction Act of 2022 (IRA), and support for advanced nuclear technology and research included in the CHIPS and Science Act of 2022. The ADVANCE Act of 2024 will modernize the Nuclear Regulatory Commission's licensing and regulation efforts to promote the timely deployment of new reactors.
Pro-nuclear policies come at just the right time: electricity will continue to be at a premium for the foreseeable future. The U.S. Energy Information Administration forecasts higher demand for electricity by 2050, driven in part by data centers and electrification of vehicles.[2] Interest in carbon-free electricity has grown, of which nuclear is currently the largest U.S. source. Some U.S. states have adopted climate action plans that discourage electricity from existing and new fossil-fueled plants, while favoring renewable and nuclear generation instead.[3] Nuclear can help supply increased electricity demand as a result of electrification of transportation and buildings. In addition, some large industrial customers, including operators of power-hungry data centers that require 24/7 reliable supplies of electricty, prefer carbon-free electricity supplies, as recent deals between data companies and nuclear energy providers illustrate.[4]
Looking Forward
Do these favorable policies and positive market demands mean nuclear energy will expand in the coming years? Developing nuclear reactors of any sort is an expensive, time-intensive effort with substantial risk. Recent attempts to build new large reactors in the U.S. faced cost overruns or were abandoned. President-elect Trump in his first term was generally supportive of nuclear energy, including signing the Nuclear Energy Modernization Act in 2019 to establish a technology-inclusive framework for new reactor license applications. His first administration also supported loan guarantees to finance construction of new large reactors in Georgia and funds to develop a new small reactor design in Idaho. The Georgia reactors are online today; the Idaho project was canceled in 2023.
The U.S. will have to generate more electricity from diverse sources in the coming years to meet expected demand. ICF International projects U.S. electricity demand to increase by 9% by 2028 and by 18% by 2033, with larger increases expected in some regions of the country.[5] Continued federal, regional, and state action, along with private sector efforts, will be required in order to meet that demand and for nuclear to be competitive.
During his campaign President-elect Trump pledged to greenlight new reactors.[6] However, he also raised concerns about how complex and expensive large reactor projects can be.[7] Further, he has criticized some clean energy elements of the IRA and the IIJA and threatened to reverse some or all of their provisions via executive action or by urging Congress to act. The GOP-led 119th Congress is likely to be generally supportive of nuclear energy interests, but the costs involved in ramping up new projects will be subject to an overall need to focus on fiscal accountability.
Many pro-nuclear provisions of the IIJA and IRA enjoy bipartisan support and are likely to remain generally intact. For example, the nuclear production tax credit (Section 45U) is favored to continue. At greater risk are provisions such as the 45V credits to support green hydrogen, which could be produced by nuclear-powered hydrolysis. To address the need for reliable fuel supplies, the IRA also supported the domestic supply chain for highly enriched uranium fuel needed for advanced reactors. That HALEU program at the Department of Energy should continue without major adjustments.
The NRC's role in the development of nuclear energy has drawn attention and criticism in the past. Its mission to license and regulate – not promote – has at times put the commission at odds with interests seeking to develop new facilities. The ADVANCE Act, signed into law this year, should accelerate the NRC's licensing of advanced reactor designs and provide greater certainty to entities seeking to build and operate nuclear facilities in the U.S. going forward. Market participants and Congress will be watching carefully to see how the ADVANCE Act is implemented.
Conclusion
Nuclear energy's continued and potentially increased contribution to the U.S. electricity supply will be driven by market demands, federal and state energy policies, and other factors. Venable's team of professionals will continue to monitor events and trends.
[1] https://www.whitehouse.gov/wp-content/uploads/2024/11/US-Nuclear-Energy-Deployment-Framework.pdf
[2] https://www.eia.gov/outlooks/aeo/narrative/index.php#TheElectricityMixinth
[3] https://www.ncsl.org/energy/greenhouse-gas-emissions-reduction-targets-and-market-based-policies
[4] See, e.g., https://www.constellationenergy.com/newsroom/2024/Constellation-to-Launch-Crane-Clean-Energy-Center-Restoring-Jobs-and-Carbon-Free-Power-to-The-Grid.html
[5] Power surge: Navigating US electricity demand growth. ICF https://www.icf.com/-/media/files/icf/reports/2024/utility-flagship-report-icf-2024.pdf?rev=902569d32aff4bbf8d43d0ab8a952ad3
[6] https://www.c-span.org/video/?537985-1/president-trump-speaks-potterville-michigan-economy
[7] https://www.presidency.ucsb.edu/documents/interview-the-joe-rogan-experience
