US Nuclear Construction Costs Up to Four Times Higher Than Asia's, Sparking Calls for Reform

Silicon Valley investor Bill Gurley has highlighted a stark disparity in nuclear power plant construction costs, noting that China and South Korea can build new fission reactors at a quarter of the cost seen in the United States. Gurley, in a recent social media post, suggested that addressing this "solvable problem" through regulatory changes and intellectual property sharing, potentially involving the U.S. Navy's expertise, should be a priority over other technological concerns.

Data indicates a significant cost gap. Recent estimates show U.S. nuclear construction costs exceeding $6,000 per kilowatt (overnight capital cost), while South Korea's costs are closer to $2,200 per kilowatt. China's figures fall in between, estimated at around $2,500 to $4,174 per kilowatt. This contrasts sharply with historical U.S. nuclear builds in the 1960s, which were significantly cheaper, and the consistent cost reductions observed in countries with continuous build programs.

Experts attribute the U.S. cost escalation to several factors. A primary issue is regulatory instability, with constantly changing requirements leading to design modifications, delays, and costly rework on in-progress projects. The lack of a continuous build program in the U.S. has also resulted in a depleted skilled workforce and a weakened domestic supply chain, forcing new projects to effectively "re-learn" the construction process. Project management challenges, as seen in the Vogtle 3 and 4 reactors which experienced significant overruns and delays, further exacerbate costs.

In contrast, South Korea's success is largely due to its "fleet approach," building multiple reactors of standardized designs in series. This strategy fosters "learning by doing," where experience gained from each project leads to efficiencies and cost reductions for subsequent units. China similarly benefits from building numerous standardized reactors and has focused on indigenizing its nuclear technology and supply chain.

The core of a nuclear reactor, or "nuclear island," accounts for a relatively small portion (around 12%) of the total capital cost. The majority of expenses stem from "soft costs" such as engineering, procurement, construction management, and owner's costs (including interest during construction), which can comprise up to 35% of the total. Long construction periods significantly inflate these financing costs.

Gurley's call for a "Manhattan project type program" underscores the urgency of understanding and rectifying these economic inefficiencies. The U.S. Navy's nuclear program, known for its rigorous safety standards and cost control, is often cited as an example of how disciplined project management and continuous building can lead to more predictable outcomes, even in highly complex nuclear endeavors. Addressing regulatory predictability, fostering a robust domestic supply chain, and potentially embracing modular reactor designs are seen as crucial steps for the U.S. to regain competitiveness in nuclear energy construction.