Rising oil and gas prices and mounting pressure to decarbonize power grids are unlikely to spur a global buildout of nuclear generation, despite renewed momentum for weaning Europe off Russian natural gas supplies, A.B. Bernstein analysts said.

While Russia's invasion of Ukraine has helped revive nuclear power's attraction in Europe, where the technology will join the European Union's green taxonomy in 2023, neither government policy incentives nor technological advancements are likely to trigger a "renaissance" of new projects, according to a March 25 Bernstein report.

"It is too premature to assume a nuclear renaissance given the significant capex commitments and track record of execution risks," the analysts wrote, citing cost overruns on delayed regulatory and construction timelines.

"For brand new nuclear projects, we are easily looking at a timeline of mid to late 2030s for commissioning, in the best possible scenario of 5 year permitting/approval process and [around an] eight to 10-year construction period," they continued, meaning that new builds will not be able to substantially displace fossil fuels until at least 2040.

In the U.S. specifically, energy consultancy ClearView Energy Partners told clients Feb. 1, "new plant construction has suffered from diseconomies of scale, the lack of a robust supply chain and an absence of experienced developers."

New nuclear facilities like SCANA Corp. and South Carolina Public Service Authority's V.C. Summer expansion, on which construction was stopped in 2017 amid deep cost overruns and a cover-up that resulted in criminal charges; Georgia Power Co.'s delayed Alvin W. Vogtle Nuclear Plant expansion and Teollisuuden Voima Oyj's Olkiluodon Ydinvoimala plant in Finland, known as Olkiluoto 3, have hit the balance sheets of utilities far beyond initial estimates and resulted in bankruptcy for some contractors.

Olkiluoto 3 was connected to Finland's grid earlier in March, 12 years after its initially planned in-service date, and Southern Co. subsidiary Georgia Power estimates that Vogtle's third and fourth units will begin service at the end of the first quarter of 2023 and during the fourth quarter of 2023, respectively.

While French President Emmanuel Macron announced a goal in February of starting construction of six nuclear reactors by 2028, the Bernstein analysts noted that estimated costs for Electricité de France SA's Flamanville 3 facility expected to come online in 2023 have "more than quadrupled" amid "management and quality-control issues."

Other countries planning new facilities include Poland, the Czech Republic, the U.K. and the Netherlands after a governing coalition agreement in 2021 provided for two small reactors. Any attempt by European countries to reduce their reliance on natural gas must also grapple with uranium sourcing, with 40% of EU imports coming from Russia and Kazakhstan and costs for the fuel set to potentially soar.

In the U.S., states like West Virginia, Wyoming and Kentucky are exploring new nuclear power as Congress considers federal nuclear production tax credits.

Due in part to some of the difficulties construction of traditional reactors has encountered, small modular reactors, or SMRs, that generate less power but are also less costly to build and involve less risk, are attracting interest. But the U.S. Nuclear Regulatory Commission recently denied an application by Oklo Inc. to build one at the Idaho National Laboratory, citing unresolved safety and design issues.

"Design certification is not necessarily less onerous than for large reactors," A.B. Bernstein told clients. "SMRs are also unlikely to move the needle near-term and will need sustained support for the next 10-15 years before being commercialized in the early to mid-2030s."

Clearview also noted the potential for net capacity losses since "it takes between two and 15 SMRs, depending on the design in question, to replace the capacity of an existing reactor."

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