Investment risk for energy infrastructure construction is highest for nuclear power plants, lowest for solar
Between now and 2050, the International Energy Agency projects that more than $100 trillion will be spent on building net-zero energy infrastructure globally. Yet every single one of these projects runs the risk of higher-than-expected construction costs or time delays. Newer technologies introduced in the past decade, such as hydrogen or geothermal energy, are even more difficult to evaluate as government agencies, energy developers, utilities, investors, and other stakeholders decide which sustainable energy systems are best for future projects.
In a new state-of-the-art study, published in the journal Energy Research & Social Science , researchers at the Boston University Institute for Global Sustainability (IGS) found that runaway construction costs and delayed timelines stymie many energy projects. In fact, the average project costs 40% more than expected for construction and takes almost two years longer than planned, as the study showed.
Nuclear power plants are the worst offenders, with an average construction cost overrun typically twice as much as expected or more, and the most extreme time delays. To be exact, the average nuclear power plant has a construction cost overrun of 102.5% and ends up costing $1.56 billion more than expected.
Looking at newer net-zero options reveals higher risk as well. Hydrogen infrastructure and carbon capture and storage both exhibit significant average time and cost overruns for construction, along with thermal power plants relying on natural gas, calling into question whether these can be scaled up quickly to meet emission reduction goals for climate mitigation.
'Worryingly, these findings raise a legitimate red flag concerning efforts to substantially push forward a hydrogen economy,' says Benjamin Sovacool, lead and first author of the study, director of IGS, and professor of earth and environment. Read More D.C. Democrats seek antitrust probe of big oil and gas mergers
By contrast, solar energy and electricity grid transmission projects have the best construction track record and are often completed ahead of schedule or below expected cost. Wind farms also performed favorably in the financial risk assessment.
For Sovacool, the evidence is clear: 'Low-carbon sources of energy such as wind and solar not only have huge climatic and energy security benefits, but also financial advantages related to less construction risk and less chance of delays,' he says. 'It's further evidence that such technologies have an array of underrated and underappreciated social and economic value.'
Using an original dataset significantly larger and more comprehensive than existing sources, the study provides the most rigorous comparative analysis of construction cost overrun risks and time delays for energy infrastructure projects globally.
'Low-carbon sources of energy such as wind and solar not only have huge climatic and energy security benefits, but also financial advantages related to less construction risk and less chance of delays.'
The researchers compiled data on 662 energy infrastructure projects covering a diverse spectrum of technology classes and capacities, built between 1936 and 2024 across 83 countries, representing $1.358 trillion in investment. This includes emerging innovations such as geothermal and bioenergy, providing fresh insights into the cost dynamics of these recently commercialized technologies. In total, the study evaluated ten types of projects: thermoelectric power plants fueled by coal, oil, or natural gas combustion; nuclear reactors; hydroelectric dams; utility-scale wind farms; utility-scale solar photovoltaic and concentrated solar power facilities; high-voltage transmission lines; bioenergy power plants; geothermal power plants; hydrogen production facilities; and carbon capture and storage facilities.
Understanding what causes energy projects to go over budget and fall behind schedule — and when that tipping point occurs — is another important contribution of this global analysis. The study examined diseconomies of scale, construction delays, and governance factors to identify critical thresholds when project costs surge, helping to inform better risk management strategies.
'I'm particularly struck by our findings on the diseconomies of scale, with projects exceeding 1,561 megawatts in capacity demonstrating significantly higher risk of cost escalation,' says Hanee Ryu, second and corresponding author and a visiting researcher at IGS. 'This suggests that we may need to reconsider our approach to large-scale energy infrastructure planning, especially as we commit trillions to global decarbonization efforts.'
What this could mean, Ryu explains, is that smaller, modular renewable projects might not only bring environmental benefits, but also potentially reduce financial risk and offer better budget predictability.
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