Nuclear Energy—Can We Afford to Ignore It?

By Caleb D. Hough, KBH Energy Center Graduate Fellow

Many view nuclear energy as the luxury car of the energy sector, but it is actually more like the reliable pickup: durable, efficient, and surprisingly affordable.

Cost is, of course, a critical metric for evaluating an energy source’s place within the energy mix. The primary measure of an energy source’s “cost” is levelized cost of electricity (“LCOE”),[1] which represents the total capital and operational expenditure required to build and maintain an energy source over the course of its lifespan and is usually expressed as dollars per megawatt-hours ($/MWh). LCOE captures not only fixed costs, such as upfront capital investment and predictable operating expenses, but also variable costs, such as maintenance, fuel, and financing.[2]

Nuclear energy has an LCOE that sits around $80.00/MWh, which is roughly double that of onshore wind and solar.[3] Taken at face value, this number suggests that nuclear is not economically competitive with renewable alternatives, and opponents often cite it as justification for opposing new development. But LCOE is a first order metric—it does not tell the whole story. Once other factors are considered, nuclear energy’s cost looks more competitive.

First, LCOE fails to capture capacity factor, which is a measure of how consistently a power plant produces electricity. Nuclear energy routinely operates at a 76–95% capacity factor, the highest of any energy source.[4] For comparison, solar and wind typically operate around 17–50% and 16–39% capacity factor, respectively.[5] You can count on nuclear energy to always provide power, much like you can count on your trusty pickup to start when you turn the key. This makes nuclear energy inherently more valuable than variable generation on a grid that needs to match supply and demand in real time. An energy source you can count on is worth more than one you cannot, and that premium does not show up in a standard LCOE comparison.

Capacity factor also has a direct bearing on land use. A low-capacity-factor energy source is problematic because it means you need more infrastructure to match a higher-capacity-factor energy source. For wind, that means building 800 wind turbines to match the output of a single nuclear reactor.[6] Solar is no better: you would need 8.5 million solar panels.[7] Those additional facilities aren’t free. They require more land, more transmission lines, more maintenance, and more materials. These are real costs that, again, do not appear in an LCOE comparison. Sure, a sedan may be cheaper than a pickup, but you need multiple sedans to carry the same load as one pickup.

Another significant factor of nuclear energy’s LCOE is capital costs, which account for approximately 60% of its total.[8] Many of those capital costs result from regulations. The direct regulatory burden is significant: Nuclear operators bear roughly $60 million in regulatory fees annually, and licensing alone can take an average of 80 months.[9] These fees and delays compound one another: A longer licensing timeline means a longer period before any revenue is generated, which increases the total cost of development.

Financing costs tell a similar story. Because nuclear projects have long lead times and operational lifecycles that span several decades, nuclear energy faces policy risk. A future administration could, for example, decide to subsidize competing energy sources, increase regulations, or even phase out nuclear energy entirely.[10] That policy risk is real, and capital markets charge for it accordingly by adding a risk premium that has nothing to do with whether nuclear energy is economically efficient. Therefore, like a dealership inflating the sticker price with lot fees, a meaningful share of nuclear energy’s LCOE reflects the cost of navigating the regulatory environment, rather than the true cost of building and running a plant.

Importantly, nuclear power plants are typically licensed for 40 years, reflecting the lifespan of their individual components.[11] But those components can be replaced, extending the lifespan by 10 to 20 years.[12] When a nuclear plant gains that additional 10 to 20 years to operate, its LCOE drops to a range of $30.00–$60.00/MWh, making it directly competitive with onshore wind and solar.[13] The capital costs have already been paid, so additional decades of generation are comparatively cheap. The cheaper vehicle on the lot may need replacing much sooner than the pricier one.

The final, and perhaps most consequential, factors absent from any LCOE figure are environmental and public health externalities. Nuclear energy produces less CO₂ per unit of electricity over its lifespan than any other energy source, including wind and solar.[14] If those emissions costs were otherwise internalized, the economic case for competing sources would weaken. The public health perspective is also striking. Nuclear energy has one of the lowest death rates per unit of energy produced of any source, beaten only by solar.[15] The environmental and health costs are real and substantial, yet they are not accounted for in an LCOE comparison. A cheaper energy source, like a cheaper vehicle that skips the emission test, may look like the better deal. But skipping the test does not eliminate the emissions.

Ultimately, LCOE is a useful starting point, but it is only that. In isolation, it paints nuclear energy as an expensive outlier in the energy landscape much like a sticker price does for a pickup truck in a dealership lot. For nuclear energy, reliability, availability, land use, regulatory distortion, and environmental and public health externalities never make it onto the sticker. And when you add these factors to the discussion, which one actually costs less?

[1] Levelized Costs of New Generation Resources in the Annual Energy Outlook 2022, pg. 1.

[2] Levelized Costs of New Generation Resources in the Annual Energy Outlook 2022, pg. 3.

[3] Levelized Costs of New Generation Resources in the Annual Energy Outlook 2022, pg. 9.

[4] FERC 2023 Common Metrics Report, pg. 15.

[5] FERC 2023 Common Metrics Report, pg. 15.

[6] How many wind turbines would it take to equal the energy output of one typical nuclear reactor?, pg. 3.

[7] How many wind turbines would it take to equal the energy output of one typical nuclear reactor?, pg. 4.

[8] Economic of Nuclear Power, pg. 3

[9] Regulation Hurts Economic of Nuclear Power, pg. 1–2.

[10] Nuclear Power in a Clean Energy System, pg. 22.

[11] IAEA Data Animation: Nuclear Power Plant Life Extensions Enable Clean Energy Transition, pg. 3.

[12] IAEA Data Animation: Nuclear Power Plant Life Extensions Enable Clean Energy Transition, pg. 3.

[13] Nuclear Power in a Clean Energy System, pg. 28; IAEA Data Animation: Nuclear Power Plant Life Extensions Enable Clean Energy Transition, pg. 3–4.

[14] Carbon Neutrality in the UNECE Region, pg. 49–50.

[15] Death Rate Chart

Caleb Hough is a J.D. candidate at The University of Texas School of Law and a Graduate Fellow at the KBH Energy Center, with a strong focus on energy, transactional law, and emerging technologies. He currently serves as a Summer Associate at Kastner Gravelle LLP and has held multiple leadership roles with The Texas Journal of Oil, Gas, and Energy Law, including Symposium Director. Caleb brings a unique blend of legal and financial expertise, holding a BBA in Finance with a fintech certificate from TCU, where he graduated with a 4.00 GPA. His experience across energy law, technology, and business positions him at the intersection of policy, markets, and innovation shaping the future of energy.