America’s electricity landscape is rapidly shifting. As Wall Street Journal economics commentator Greg Ip writes in a great new piece, “Economic Growth Now Depends on Electricity, Not Oil”:
Americans have long equated energy security with oil. The country wanted as much as possible because of the havoc an interruption to supply — from wars, disasters and political convulsions — can cause. In coming years, though, energy security will mean electricity. Power demand, stagnant for decades, is now growing rapidly, for data centers to run artificial intelligence and other digital services and, in time, transportation and buildings. An economy dependent on electricity will be different from one dependent on oil. It will require mammoth investment in generation, distribution and transmission. It will challenge regulators and political leaders, as the supply and price of electricity become as politically potent as that of gasoline.
This growing appetite for reliable, around-the-clock clean power has helped thrust nuclear energy back into the national conversation after decades of declining fortunes. Yet this nuclear resurgence faces formidable obstacles that will determine whether it becomes a pillar of America’s energy future or merely a footnote.
Those barriers are neatly outlined in a new analysis by consultancy ICF. Two that really pop out for me: First, the country’s historical penchant for bespoke reactor designs—yielding dozens of variants nationwide—has denied it the cost efficiencies that standardization brings. Small modular reactors potentially offer some key advantages: factory mass-production, utilization of decommissioned coal-plant transmission infrastructure, and lower project costs attracting a broader investor base. But for costs to fall, America must select a design and commit to it: “In short, for nuclear costs to decline in the United States, the nuclear industry needs to pick a design and stick to it.”
Second, government incentives also remain crucial. The Investment Tax Credit makes many nuclear projects financially viable, while the Production Tax Credit is especially beneficial for nuclear re-starts. But the ITC’s scheduled phase-out around 2040 creates tension with nuclear’s characteristically cautious development timeline. Without these incentives, most SMR projects will fail to attract sufficient investment. Again, from the report:
President Trump has expressed support for nuclear power; he recently signed an executive order aimed at reducing the regulatory burden on various forms of power generation, including nuclear. If such support remains strong in the coming decades, the ITC could be extended to ensure new nuclear plants remain eligible.
The report also notes:
- The Georgia Vogtle nuclear project failed to inspire new orders and SMR deployment faced a big setback when the Carbon Free Power Project collapsed in 2023: “The timing of the next nuclear plant also matters because buyers are looking for solutions today. The lack of readily available nuclear options will lead them to seek out alternatives, like Combined Cycle Gas Turbines (CCGTs), with Carbon Capture and Storage (CCS) optionality. The more alternatives get built, the faster they will move down their own cost curves.”
- America’s limited uranium processing capacity and unresolved waste storage issues remain concerns: “The U.S. government is supporting efforts to expand the domestic supply chain, but these efforts will take time to bear fruit.”
- Public opinion is improving, with 56 percent of Americans supporting nuclear energy in 2024, up from 43 percent in 2016.
For a nation built on oil, America’s energy destiny now runs on volts. As nuclear power awaits its second act, government and industry must make smart choices—although not necessarily all the ones outlined in the report or be a 21st-Century sideshow. The electric meter of opportunity continues to run.
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