Tennessee has moved toward greater reliance on nuclear power to meet both energy and economic development goals, and Gov. Bill Lee is asking state lawmakers to play a supporting role.
About 48% of Tennessee’s electricity came from nuclear plants in 2023, the U.S. Energy Information Administration reported. In 2010, nuclear’s share was about one-third, EIA reported. Over the years, coal has contributed a smaller share of the state’s electricity, opening the door for more nuclear-fueled electricity.
Lee’s proposed 2025-26 budget calls for more than $90 million to support nuclear-related projects, including $50 million toward a Tennessee Valley Authority project to bring a new technology, the small modular reactor or SMR, to East Tennessee. The $90 million also includes money for vocational education and economic development incentives.
TVA isn’t alone in its interest in SMRs. Ontario Power Generation has announced plans to build a 300-megawatt SMR in Darlington, Ontario. Both the TVA and Ontario projects would employ GE-Hitachi SMRs. They would be the first SMRs in North America; other small reactors are in operation in China and Russia.
Cost remains a big question. The first iteration of a new technology generally costs more than future iterations. Estimates quoted in a fiscal note to one nuclear-related bill in the General Assembly start at $1 billion and increase from there; these costs would be borne mostly by TVA and not the state. To offset costs, TVA recently applied for an $800 million SMR grant from the U.S. Department of Energy.
With population growth, changing consumer preferences and the emergence of data centers and artificial intelligence, both large consumers of electricity, has come increased demand for electricity, one lawmaker says.
Nuclear energy offers an almost unlimited way to generate power, says Rep. Clark Boyd, R-Lebanon, in his fifth term in the Legislature, where he chairs the House Business and Utilities Subcommittee. Boyd says the governor, in his proposed budget, “is making it clear this is something Tennessee believes in, … clean energy, and it’s going to be nuclear.”
Boyd says an educational program he attended when he first became chair of the subcommittee broadened his perspective on nuclear energy. The program is offered by the Legislative Energy Horizon Institute, supported by the U.S. Department of Energy, the government of Canada and the bipartisan National Governors Association and National Conference of State Legislatures.
Participants, including Boyd, role-played local utility managers balancing available electrical generation capacity with peak energy demands from winter storms and summer heat waves while trying to meet clean energy requirements.
“I realized real quickly that we were at a crossroads,” Boyd says. “The only chance we have of meeting the rising electricity demand is with nuclear energy.”
“Nuclear can generate a lot of base load,” meaning a steady output of electricity to cover average demand. Boyd says coal plant emissions are much cleaner than they once were, but the plants are being phased out for environmental reasons. Types of natural-gas plants are more suited for quick bursts of energy as needed at peak times, when the energy demand on the electrical grid exceeds the base load. This can occur, for example, when everyone goes home at the same time on a hot afternoon and turns on their air conditioning, he says.
Small reactor tech unproven
Nuclear itself is not necessarily a bad thing, says Sen. Heidi Campbell, D-Nashville, who serves on the Senate Energy, Agriculture and Natural Resources Committee, as well as on the Fiscal Review Committee.
She questions, however, whether the state should contribute $50 million to a TVA project to build a small modular nuclear reactor that would be the first of its kind in the United States. The SMR project would cost billions, and the technology is unproven, she says, and the $50 million in state taxpayer dollars would be better used to support solar and wind energy projects. Campbell says they’re more affordable and scalable compared with SMRs.
Part of Campbell’s concern comes from the novel nature of the small modular reactors. Even as TVA and Ontario Power move toward SMRs, the eventual cost of a SMR remains an open question because they are so new. Early adopters of a new technology bear what are called first-of-a-kind costs, so called because the first iteration of a new technology tends to cost more, sometimes significantly more, than later iterations, both in dollars and in time to completion.
A fiscal note on one nuclear-related bill sponsored by Boyd and Sen. Shane Reeves, R-Murfreesboro, estimated capital costs for an SMR as between $1 billion and $5 billion, based on the U.S. Energy Information Administration’s January 2024 report titled “Capital Cost and Performance Characteristics for Utility-Scale Electric Power Generating Technologies.”
The fiscal note also stated the Tennessee Nuclear Energy Advisory Council’s final report and recommendations released in October 2024 estimated the construction costs of an SMR in Tennessee at approximately $1.4 billion.
SMRs potentially offer cost savings down the line, and adding SMRs to a nuclear power portfolio is a matter of choosing the right reactor for a project, TVA spokesperson Scott Fiedler says.
He describes two types and sizes of nuclear reactors: Three hundred megawatt SMRs can power about 175,000 homes; a 1200 MW reactor can power almost 700,000 homes.
Fiedler framed the question: If a utility is building to meet future needs for electricity, why build SMRs rather than the bigger 1200MW reactors?
“It is not about one or the other,” he said. “It is about making the right decision for your power system.” And SMRs offer flexibility.
“If nuclear is a bigger part of the system,” he continued, “it’s easier and more straightforward to plan 300-megawatt unit outages than a 1200-megawatt unit outage. That’s a big hole in the system when you take an AP1000 (a type of 1200-megawatt reactor) out of service.
“A 300-megawatt unit can be incorporated in the transmission system more easily. The land needs are smaller. You can build it on old coal sites easily. It could be colocated with a data center Mega Park. And, it could provide the flexibility that an AP1000 could not.
“There is also a need for AP1000s. They have different characteristics, and building a diverse energy mix is the way to go,” Fiedler says.
In addition to considering budget items related to nuclear power, the legislature will weigh other bills affecting nuclear development. Boyd has sponsored two: One would allow nuclear energy production facilities to seek pollution control tax credits for certain equipment, the bill description on the legislative website states.
The other includes nuclear power as a source of clean, green or renewable energy. A fiscal note says there would be negligible financial impact. Both bills are going through legislative committees.