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Leonard Hyman & William Tilles

Leonard Hyman & William Tilles

Leonard S. Hyman is an economist and financial analyst specializing in the energy sector. He headed utility equity research at a major brokerage house and…

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Does Nuclear Power Have A Future?

Nuclear Power

The discussion today about nuclear energy is nothing short of tribal, two warring camps shouting slogans at each other. This so-called debate reminds us of a popular beer commercial from years ago where two men couldn’t decide what their preferred characteristic of Millers Light was, whether it “tastes great!” or was instead “less filling”.  Applying this beer ad approach to the construction of new nuclear power stations would involve two opposing teams. The pro-nuke squad, attempting to take the environmental high ground (a bold move), would shout out “zero-carbon”. In a previous iteration no longer appropriate, the rallying cry was - compelling from an economic perspective - “too cheap to meter”.

The anti-nuclear forces have broken into two opposing squads. The European team, very effective in shutting down nuclear capacity, going with the ever-popular “No more Chernobyls,” while cheeky, cost-conscious Americans (present company included) have been shouting “too expensive to matter”.

Like cowards in a bar fight, our views on this are distinctly conciliatory. We believe both sides make solid points. If we wanted 1,000 to 2,000 megawatts of zero-carbon, baseload electricity located in suitably remote locales, then nuclear energy still is one answer. A large nuclear power station performs similarly to one powered by coal or natural gas but with zero CO2 or other smokestack emissions. (We are ignoring the anti-nuclear CO2 life cycle arguments here which emphasize the high CO2 profile of uranium mining). At present, our electricity is produced in large factories far removed from load centers and connected to end users by a transmission network. In this sense, conventional nuclear power stations would slot nicely into the present spoke and hub configuration of our power grids.

The relentless pursuit of economies of scale is one defining characteristic of the contemporary electric utility business. Yet the present effort to build the latest generation of very large nuclear power plants has been a commercial failure on several continents simultaneously. No utility executive we can imagine would risk their career to propose new nukes on this scale at this time regardless of energy demand outlook.

Still, new nuclear has its “ low carbon” adherents. Considering costs, though, this can only mean advocating relatively smaller nuclear power stations. (As an aside, tiny nuclear power plants have long enjoyed success in powering satellites, submarines and other military vessels where refueling or access to oxygen is simply not an option.) If nuclear-sourced electricity is to have a rebirth then so-called small modular reactors (SMRs) will probably lead the way.

It is obviously premature to discuss the economics of SMR operation. But small modular reactors could eliminate the considerable construction expense and associated interminable delays inherent in the conventional nuclear project by building reactor components in a factory and then assembling the modular units on site. There is no shortage of respected advocates here including, among others, legendary Microsoft founder Bill Gates.

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In addition, the diminutive size of the SMR does confer one inherent advantage. If these units can be considered “safe” is there any reason why they can’t be located more closely to load centers? The ability to site electricity generation, especially in modest sizes and with greater operating flexibility, is potentially an enormous plus. This also fits nicely with our idea that the electric utility business will reverse a long trend of power generation as an increasing economy of scale business.

In terms of “safety” for nuclear power plants, let’s ask ourselves as dispassionately as possible what are the two bad-for-health things they can possibly do? They can blow up a la Fukushima or Chernobyl. They could “leak” potentially lethal radiation over population centers for protracted periods or some unattractive combination of the two. That’s why next-generation technologies will portray themselves as “passive”.

Passive here means two things. Ability to safely shut down the nuclear reactor without the assistance of electrical or mechanical power from either off-site or on-site generation like diesels at present plants. Nuclear plants generate an enormous amount of heat that must be removed by cooling water propelled by huge pumps or the reactor core begins to meltdown. These pumps are powered by electricity. A conventional nuclear power plant that produces electricity also uses a large amount of energy to sustain its key safety operations.

The other criterion for passivity is the ability to control and terminate the chain reaction safely without any human intervention. Imagine the fate of an electric vehicle whose owner neglected to recharge, it would simply and quietly glide to a halt. Ditto for passive reactors. Negative temperature coefficient reactors essentially have this feature. The nuclear chain reaction slows as reactor temperatures increase.

It is beyond the scope of this article to pick a favorite SMR technology. However, virtually all nations with substantial nuclear programs are engaged in SMR programs. Some are scaled-down versions of existing reactor designs while others are more radical. including the use of molten salts, gas, or liquid metal instead of water as a moderator.

The other radical proposal is that these reactors be built with a modest containment structure as opposed to the heavily concrete fortified structures employed currently. This also reduces costs considerably.


The SMR industry recognizes that there are financial and safety barriers to the construction of new nuclear power stations. Modular, offsite construction and scaled-down containment structures can help address the former. But we believe the next generation, passive safety features may prove just as important because they may permit the location of generation to be much closer to demand if the public becomes comfortable with the nuke next door.

By Leonard S. Hyman and William I. Tilles

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Leave a comment
  • Felix Keverich on May 02 2020 said:
    There is definitely a future for Russian and Chinese nuclear energy. For American not so much.
  • Ilya Grushevskiy on May 03 2020 said:
    Nuclear fission is getting very safe with Gen III and Gen IV tech - a molten salt reactor can't melt down because the salt can hold more thermal energy than the reactor can put out.. Passive tech isn't marketing, its engineering.

    Your article ignores Russian and Chinese nuclear work, and given that Rosatom is now a full blown monopoly, with 60%+ of the world market, really they and their tech should be discussed in detail.

    Fusion of course is still getting chump change for research from the world, as we don't have faith, we don't plan and build cathedrals anymore..

    Also, can someone discuss NETPower's Allam cycle please? Nice to know where they are at with 0 emission Nat gas!

Leave a comment

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