Economics of Nuclear energy

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A major challenge to the construction of nuclear power plants using current technologies is the very high capital cost of building them - in the region of tens of billions of dollars/pounds/Euros - and the long time they take to build - of the order of 1-2 decades. Once built, however, they produce electricity at very low marginal cost and can continue doing so for many decades - up to 60 years or so. When they reach the end of their lifetimes they must be decommissioned, a lengthy and fairly expensive process which needs to be provided for in advance. In the case of accidents such as at Chernobyl and Fukushima there are large extra costs involved in making the plants safe and cleaning up .

Much of the impetus for the development of some New Nuclear Reactor Technologies including Small Modular Reactors and many Molten Salt Reactor designs is to reduce the cost and time taken to build reactors, as well as making decommissioning cheaper and quicker.

See also Economics and Nuclear Energy

Current Nuclear

Economics of Nuclear Power Plants wikipedia

Historical construction costs of global nuclear power reactors Jessica R. Lovering, Arthur Yip, Ted Nordhaus; Energy Policy; 2016

The existing literature on the construction costs of nuclear power reactors has focused almost exclusively on trends in construction costs in only two countries, the United States and France, and during two decades, the 1970s and 1980s. These analyses, Koomey and Hultman (2007); Grubler (2010), and Escobar-Rangel and Lévêque (2015), study only 26% of reactors built globally between 1960 and 2010, providing an incomplete picture of the economic evolution of nuclear power construction. This study curates historical reactor-specific overnight construction cost (OCC) data that broaden the scope of study substantially, covering the full cost history for 349 reactors in the US, France, Canada, West Germany, Japan, India, and South Korea, encompassing 58% of all reactors built globally. We find that trends in costs have varied significantly in magnitude and in structure by era, country, and experience. In contrast to the rapid cost escalation that characterized nuclear construction in the United States, we find evidence of much milder cost escalation in many countries, including absolute cost declines in some countries and specific eras. Our new findings suggest that there is no inherent cost escalation trend associated with nuclear technology.

Why America abandoned nuclear power (and what we can learn from South Korea) Vox

(based on Lovering et al paper)

The success of France, Canada, Japan and South Korea in controlling nuclear energy costs nextbigfuture

(based on Vox article)

Nuclear reactors' construction costs: The role of lead-time, standardization and technological progress Michel Berthélemy, Lina Escobar Rangel; Energy Policy; July 2015

This paper provides an econometric analysis of nuclear reactor construction costs in France and the United States based on overnight costs data. We build a simultaneous system of equations for overnight costs and construction time (lead-time) to control for endogeneity, using change in expected electricity demand as instrument. We argue that the construction of nuclear reactors can benefit from standardization gains through two channels. First, short term coordination benefits can arise when the diversity of nuclear reactors' designs under construction is low. Second, long term benefits can occur due to learning spillovers from past constructions of similar reactors. We find that construction costs benefit directly from learning spillovers but that these spillovers are only significant for nuclear models built by the same Architect–Engineer. In addition, we show that the standardization of nuclear reactors under construction has an indirect and positive effect on construction costs through a reduction in lead-time, the latter being one of the main drivers of construction costs. Conversely, we also explore the possibility of learning by searching and find that, contrary to other energy technologies, innovation leads to construction costs increases.

European Commission to Recommend 450 to 500 Billion Euro Investments in Nuclear Power by 2050 Uranium Investing News; 15 Mar 2016

The European Commission is set to release a report on the nuclear industry in coming weeks, and German Newspaper Handelsblatt reported on an advance copy of the document.

Department Of Energy Task Force Backs Environmental Progress Call To Save Nuclear Power Plants With Temporary Subsidy Environmental Progress; 22 Sept 2016

A Department of Energy (DOE) Task Force has just backed a key demand made over the last eight months by climate scientists and environmentalists organized by Environmental Progress: that the federal government end policy discrimination against nuclear power that is causing our clean energy crisis.
Writes the DOE advisory board:
[E]lectricity markets must recognize the value of carbon-free electricity generation based on the social cost of carbon emissions avoided, either by assessing a carbon-emission charge on electricity generation or, alternatively, by extending a production payment on carbon-free electricity generation of about $0.027 per kilowatt-electric-hour (kWe-hr) ($213 million for a 1,000 MWe reactor operating at 90% capacity factor) for a period of time.
In calling for a price on carbon or the temporary support for nuclear, the DOE task force is acknowledging that energy production tax credits are not the ideal, long-term solution, but should be given temporarily to save America's largest source of clean power. The federal government has subsidized wind energy production at a similar level for 23 years. The report also endorses the call made by Environmental Progress to include nuclear in state renewable portfolio standards (RPS)

New paradigms for the nuclear energy sector Dan Yurman; energy post; 5 May 2016

A wave of innovation is sweeping across the nuclear sector – so much so that it is difficult for financiers to pick winners at this stage. But the biggest innovation in nuclear energy may come in the form of a new investment paradigm that involves private investors much more than in the past


Trump Team’s Asking for Ways to Keep Nuclear Power Alive Mark Chediak, Catherine Traywick; Bloomberg; 9 Dec 2016

President-elect Donald Trump’s advisers are looking at ways in which the U.S. government could help nuclear power generators being forced out of the electricity market by cheaper natural gas and renewable resources. In a document obtained by Bloomberg, Trump’s transition team asked the Energy Department how it can help keep nuclear reactors “operating as part of the nation’s infrastructure” and what it could do to prevent the shutdown of plants. Advisers also asked the agency whether there were statutory restrictions in resuming work on Yucca Mountain, a proposed federal depository for nuclear waste in Nevada that was abandoned by the Obama administration.


After Hinkley - how to contract for the rest of the nuclear programme Dieter Helm; blog; 5 Apr 2016

Whilst a great deal of attention has focussed on the project to build twin European Pressurised Water Reactors (EPR) at Hinkley, less has been paid to what happens next. There are ambitious plans for another twin EPR reactor at Sizewell, and other types of reactors at Moorside, Wyfra and at Bradwell. Together they amount to over 10 GWs. There is a considerable consensus that whatever the right contractual framework for the first new nuclear reactor Hinkley, it is not necessarily the best model for what might follow. Yet almost nothing yet has been proposed as to how to do it differently. Whilst neutral on whether more nuclear should be built, this paper suggests how, if more are to be built, they could be done. It focuses on the policy contexts, the underlying nuclear strategy, the cost of capital and the role of the government in financing.

Hinkley Point C *

See also Economics - UK Contracts for Difference

New Nuclear

WHAT WILL ADVANCED NUCLEAR POWER PLANTS COST? Energy Options Network; Energy Innovation Reform Project;

A Standardized Cost Analysis of Advanced Nuclear Technologies in Commercial Development
Advanced nuclear technologies are controversial. Many people believe they could be a panacea for the world’s energy problems, while others claim that they are still decades away from reality and much more complicated and costly than conventional nuclear technologies. Resolving this debate requires an accurate and current understanding of the increasing movement of technology development out of national nuclear laboratories and into private industry. Because the work of these private companies is proprietary, they have relatively little incentive to make information public, and the absence of credible information about these technologies and their potential costs gives credence to the claims of nuclear skeptics.
Advanced nuclear technologies represent a dramatic evolution from conventional reactors in terms of safety and nonproliferation, and the cost estimates from some advanced reactor companies—if accurate—suggest that these technologies could revolutionize the way we think about the cost, availability, and environmental consequences of energy generation. Skepticism about the cost of future nuclear technologies is understandably high, given the infamously unmet promise of energy “too cheap to meter.”
Assessing the claims of technology developers on a standardized basis, as muchas possible, is vitally important for any fact-based discussion about the future cost of nuclear. Previous work by the Energy Options Network (EON) found that each company had its own approach to estimating plant costs, making true “applesto-apples” comparisons with conventional pressurized water reactors (PWRs) impossible. This study was designed to address that deficiency.
Comparing the cost of future nuclear technologies to current designs (or other generation technologies) requires capturing cost data for advanced nuclear plants in a standardized, comprehensive manner. Using the plant cost accounting framework developed by the Generation IV International Forum, EON created a cost model for this study that includes all potential cost categories for an nthof-a-kind (NOAK) nuclear plant. It includes default values for each cost category (based on previous cost studies conducted at national laboratories), and provides capability for companies to incorporate new business models and delivery strategies.
Using this model, EON worked with leading advanced reactor companies to obtain reliable, standardized cost projections for their NOAK plants. Advanced nuclear companies that are actively pursuing commercialization of plants at least 250 MW in size were invited to join this study; the eight that were able to participate are listed in table 1. The intent was to focus on reactor and plant sizes that could have a significant role in utility-scale power generation.