Texas nuclear may work by 2030, if capital costs fall, gas prices jump: experts

Nuclear generation capital investment can be economically competitive in Texas by 2030 if natural gas prices exceed 2.5 times current levels and if capital costs can be decreased to 84% of current levels, a researcher at The University of Texas at Austin said March 31.

Using the GenX grid modeling system, student researcher Rachael Seidel and faculty members Michael Webber, Joshua Rhodes and Derek Haas studied at what point, in terms of capital cost and natural gas cost, that nuclear generation would be viable at 16 locations across Texas. Seidel focused on the population centers of Dallas-Fort Worth, Houston and San Antonio.

"In Houston, specifically, as the capital expenditure of nuclear increases, we see that it deploys less and less and becomes less competitive versus something like natural gas," Seidel said during a UT Energy Week presentation in Austin.

Federal legislative impact

After applying discounts related to the 2022 Inflation Reduction Act tax credit, the capital expenditures would total about $3,184/kW of power, compared with $7,400/kW of upfront costs, Seidel said.

"So that, according to this 2030 data is the price that I think we need to hit for nuclear to be viable," Seidel said. The $3,184/kW equals about 84% of the most recent National Renewable Energy Lab estimate for nuclear generation capacity cost in 2025, Seidel said.

As context, S&P Global Market Intelligence estimates the overall combined capital costs of Georgia Power's Alvin W. Vogtle Nuclear plant, which had two new units totaling 2.2 GW of capacity come online in 2023 and 2024, at $4,523/kW for the plant's total of 4.5 GW capacity.

Eric Wieser, a UT engineering scientist associate, described his research on the economics of developing nuclear power in Texas, which is being done with faculty members Haas and Kevin Clarno, plus student researcher Rakib Momin.

"What I wanted to do was identify what we call the best bang-for-buck policies or policy changes," Wieser said. "An easy one off the top of my head was something as simple as the state of Texas giving a firm commitment that they will be building more reactors and they will be helping companies to build reactors in Texas. Something like this ... can cause a decrease in discount rates."

Furthermore, Seidel said if natural gas prices rose to about 2.5 times current levels by 2030, nuclear power would become much more competitive.

"This is interesting because we think that natural gas is going to get more expensive in the next few years, as competition increases for these really expensive turbines," Seidel said.

As context, the Platts M2MS Gas Forward Curve as of March 28 priced Houston Ship Channel gas at a day-weighted price of $3.129/MMBtu in 2030, versus Platts-assessed Houston Ship Channel spot gas averaging $1.872/MMBtu in 2024. Platts is part of Commodity Insights.

Industrial end use a factor

Greg Schulze, ExxonMobil's strategy and innovation adviser, said his company considers nuclear power among other options as it develops major petrochemical plants around the world and considers how best to supply heat and power to such facilities.

"In Texas, we're blessed with cheap, abundant natural gas, but that's not true around the world, right?" said Schulze, a panelist in a discussion of "Emerging Topics in Nuclear Energy. "So there are scenarios where in Texas is $3 or $4 natural gas, but it could be two or three times higher around the world, right? So that's where nuclear, in our view, looks like it could maybe be something to consider."

Dow, a leading materials science and chemical company, is working to install an X-Energy 320-MW small modular reactor at Dow's 4,700-acre UCC Seadrift site producing plastics and specialty chemicals. Schulze noted that this project has federal financial assistance.

"So, I would encourage Texas and the state legislature to look at how we could bridge the cost to get these first [SMRs] deployed," Schulze said. "That's one of the biggest challenges. There are other challenges with siting and environmental reviews, and all those need to be looked at, but the No. 1 hurdle, I think is cost."

Wieser said he recently heard talk of loans at zero interest for the first 10 years, "and if you happen to complete the reactor and are generating more before those 10 years expire, the only interest you would actually have to pay is the interest required to service the loan and to account for any inflation."

"If it's a multi-billion-dollar project, the rate could be anywhere from low 3% on up," Wieser said. "I think a more industry standard for large mega-projects like this is close to 8%. So it's going to be costing you hundreds of millions of dollars. So, if you could eliminate that, at least up front until you're making revenue, that would go a long way."