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 10 years. 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, Nuclear energy, How fast can we build clean energy?, and How fast can we build nuclear?

Current Nuclear

Economics of Nuclear Power Plants Wikipedia

Economics of Nuclear Power World Nuclear Association; updated March 2020

  • Nuclear power is cost competitive with other forms of electricity generation, except where there is direct access to low-cost fossil fuels.
  • Fuel costs for nuclear plants are a minor proportion of total generating costs, though capital costs are greater than those for coal-fired plants and much greater than those for gas-fired plants.
  • System costs for nuclear power (as well as coal and gas-fired generation) are very much lower than for intermittent renewables.
  • Providing incentives for long-term, high-capital investment in deregulated markets driven by short-term price signals presents a challenge in securing a diversified and reliable electricity supply system.
  • In assessing the economics of nuclear power, decommissioning and waste disposal costs are fully taken into account.
  • Nuclear power plant construction is typical of large infrastructure projects around the world, whose costs and delivery challenges tend to be under-estimated.

Financing Nuclear Energy World Nuclear Association; updated October 2020

  • Nuclear power plants are large infrastructure investments with century-long footprints.
  • A nuclear power plant project is characterised by high upfront capital costs and long construction periods, low and stable operational costs, and lengthy payback periods.
  • This investment profile, combined with the risks associated with construction, mean that the cost of financing is a key determinant of the cost of electricity generated.
  • Typically it is the responsibility of owners or operators of nuclear power plants to secure financing for new nuclear power plants. For investors, the confidence provided by clear, long-term governmental commitment to a nuclear power programme remains critical.
  • Most nuclear power plants in operation were financed in regulated energy markets, where returns on investment were generally secure. Widespread deregulation of markets has altered the risk profile related to investing in new capacity because electricity prices are less predictable.
  • A significant number of models have been used in recent years to facilitate investment. Most combine a long-term power purchase contract, to reduce revenue risk, and a means of capping investor exposure, for example through loan guarantees.

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)

Mapped: The US nuclear power plants ‘at risk’ of shutting down Zeke Hausfather; Carbon Brief; 24 Jul 2018

Nuclear power plants generate more than half of the US’s low-carbon electricity. However, record low gas prices associated with the US fracking boom have made many existing nuclear plants uncompetitive in the current market.

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

Nuclear energy does not cost the earth Tim Yeo; EnergyPost.EU; 27 Apr 2017

Those who claim nuclear is dead, at least for Europe, because of its high costs and lack of public support are wrong, writes Tim Yeo, Chairman of the pro-nuclear group New Nuclear Watch Europe (NNWE). Despite recent financial troubles besetting certain parties in the nuclear sector, there are competitive vendors and competitive projects out there. Key for European countries considering building new nuclear plants is to choose the right technologies.

Is nuclear power really that expensive? Nathanael Johnson; Grist; 26 Jan 2018

examination of the issues in trying to compare nuclear with intermittent renwables taking DIablo Canyon as an example


Nuclear Power Learning and Deployment Rates; Disruption and Global Benefits Forgone Peter A. Lang; Energies; Dec 2017

This paper presents evidence of the disruption of a transition from fossil fuels to nuclear power, and finds the benefits forgone as a consequence are substantial. Learning rates are presented for nuclear power in seven countries, comprising 58% of all power reactors ever built globally. Learning rates and deployment rates changed in the late-1960s and 1970s from rapidly falling costs and accelerating deployment to rapidly rising costs and stalled deployment. Historical nuclear global capacity, electricity generation and overnight construction costs are compared with the counterfactual that pre-disruption learning and deployment rates had continued to 2015. Had the early rates continued, nuclear power could now be around 10% of its current cost. The additional nuclear power could have substituted for 69,000–186,000 TWh of coal and gas generation, thereby avoiding up to 9.5 million deaths and 174 Gt CO2 emissions. In 2015 alone, nuclear power could have replaced up to 100% of coal-generated and 76% of gas-generated electricity, thereby avoiding up to 540,000 deaths and 11 Gt CO2. Rapid progress was achieved in the past and could be again, with appropriate policies. Research is needed to identify impediments to progress, and policy is needed to remove them.


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.


Back of the nuclear napkin: Cost efficiency. Alberta Nuclear Nucleus; 19 Feb 2019

Comparing costs of Solar PV, Wind and Canadian Nuclear, including capacity factor


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.

See also Cost of Energy Review Dieter Helm;

Hinkley Point C *

See also Economics - UK Contracts for Difference

UK nuclear worth £6.4bn last year Jonny Bairstow; Energy Live News; 4 Dec 2017

The nuclear power sector contributed £6.4 billion to the UK economy last year.

The Nuclear Industry Association (NIA) suggests this economic impact rises to £12.4 billion and provides 155,000 jobs when the sector’s spend on associated goods and services in the supply chain and wage spending is taken into account.

Each of the sector’s workers contributes an average of £96,600 in value to the economy, 73% higher than the UK average.

As well as accounting for 0.3% of GDP, the industry also generated around £2.8 billion in tax payments in 2016, rising to £4.5 billion when associated spend is included.

Nuclear power ‘contributed £1bn’ to Scottish economy in 2016 KATRINE BUSSEY; The Scotsman; 4 Dec 2017

The nuclear power industry contributed £1 billion to Scotland’s economy last year and supports more than 12,000 jobs, according to a new report. Research by experts at Oxford Economics, carried out for the Nuclear Industry Association (NIA), examined the contribution the country’s two nuclear power stations made to the economy, along with that of other companies involved in supplying them. More than 4,000 people are directly employed in the sector, the research found, but when companies that supply the industry are also considered, the total rose to more than 12,000.


China Adapted US and European Nuclear Reactor Technology at Four Times Lower Cost Brian Wang; Next Big Future; 30 Apr 2019

China will start operating two new large Hualong nuclear reactors this year and another two next year. Each Hualong nuclear reactor will generate one gigawatt of nuclear power. They were made by adapting third generation US and European nuclear reactor technology designs. CNNC ‘Hualong One’ version will be the main domestic model built with the aim of lowering the price of the reactor to equip the national fleet cheaply while having generation 3 or or 3.5 safety levels.

Target cost in China is $2800-3000/kWe, though recent estimates mention $3500/kW. CGN said in November 2015 that the series construction cost would be CNY 17,000/kWe ($2650/kWe), compared with CNY 13,000/kWe for generation II reactors. This is about four times lower cost than US and European reactors built in the USA. China’s costs have been far lower but China’s build of the Western AP1000 system and the French EPR had cost and time overruns. Hualong was originally planned as a reactor for export but is now a main option in China because of problems on the AP1000 construction.

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.


A September 2020 article by Jessica Lovering and Jameson McBride, "Chasing Cheap Nuclear: Economic Trade-Offs for Small Modular Reactors" in the National Academy Of Engineering's magazine "The Bridge" examines the economics of Small Modular Reactors in the light of historical experience with increasing sizes of conventional large NPPS:

The costs of first-of-a-kind small modular nuclear power reactors (SMRs) and microreactors (<10 MWe capacity) are expected to be high when compared with those of historical large-scale light water reactors (LWRs). There is widespread uncertainty in the nuclear industry about the cost drivers of small reactors after first-of-a-kind builds. “Learning by doing” could result in substantial cost declines as small reactors are deployed in series, facilitated by rapid factory production. On the other hand, scale inefficiencies in small reactors could keep their unit costs stubbornly higher than large-scale designs. These dynamics suggest a trade-off between learning effects and scaling effects in the cost trajectory of small reactors.


Recent large-scale reactor builds in the United States and Europe have been prohibitively expensive as costs escalated over time. Several utilities in the Americas, Europe, and Asia are considering building small reactors as an alternative to new investment in large reactors.

SMRs can provide novel services that large designs have not, including off-grid and emergency power ­supply, and collocated industrial process heat. Additionally, hybrid energy systems could incorporate SMRs with renewables to produce a mix of electricity, heat, and hydrogen to optimize economic performance (Aumeier et al. 2011). If small reactors can achieve consistent learning effects over sustained deployment, unit-cost parity with large designs may be possible.

Because factory-produced commercial nuclear ­power reactors have never been deployed, there is little understanding of how their cost will evolve. Therefore, estimating potential learning effects is a theoretical exercise.

By combining analysis of scaling and learning effects, we explore theoretical deployment levels where SMRs and microreactors reach unit-cost parity with conventional reactors as a function of starting costs, learning rates, and scaling factors. Using ranges of possible values for each parameter, we illustrate potential pathways for microreactor cost evolution.

This study serves two purposes: first, it establishes realistic boundaries on the cost evolution of SMRs and microreactors to help inform investment policy; second, it provides empirical support for attempts to understand comparative learning and scaling effects in factory-fabricated nuclear reactors. We conclude by suggesting policies to drive learning effects and minimize dis­economies of scale.

Economies of Scale for Nuclear Power Plants

Predictions for the growth of commercial nuclear power in the 1950s were predicated on the expectation that the larger reactors of the future would be more cost-efficient. But such economies of scale were not realized.

Early commercial reactors in the United States had capacities of approximately 250–500 MWe per reactor. In the 1960s the industry began building larger reactors, approaching 1 GWe per reactor, but they were considerably more expensive, contradicting the expectation of economies of scale and contributing to the sharp decline in US nuclear construction.

The literature reports a surprisingly small number of attempts to resolve the disparity between expectation and reality for nuclear scaling economics. One study argued that the cost escalation experienced in the US nuclear power industry was caused by industry over­estimation of the scaling effect, which led to an ineffi­cient overincrease in unit size over time (­Zimmerman 1982). Another found that increases in reactor size tended to extend construction duration and thus escalate costs (Cantor and Hewlett 1988). More recently, studies have cited increased reactor size and ­complexity (­Koomey and Hultman 2007). In France, “big size ­syndrome”—the nuclear industry built inefficiently larger and more complex plants as it gained experience with the ­technology—resulted in both longer lead times and higher costs (Escobar Rangel and Lévêque 2015). In short, much of the literature argues that the larger ­nuclear designs were too complex to be built cost-effectively.

Power from mini nuclear plants 'would cost more than from large ones' Adam Vaughan; The Guardian; 7 Dec 2017

Electricity from the first mini nuclear power stations in Britain would be likely to be more expensive than from large atomic plants such as Hinkley Point C, according to a government study.

Power from small modular reactors (SMRs) would cost nearly one-third more than conventional large ones in 2031, the report found, because of reduced economies of scale and the costs of deploying first-of-a-kind technology.

The analysis by the consultancy Atkins for the Department for Business, Energy and Industrial Strategy said there was “a great deal of uncertainty with regards to the economics” of the smaller reactors.

However, the authors said such reactors should be able to cut costs more quickly than large ones because they could be built and put into service in less time.

Small Modular Reactors: Techno-Economic Assessment Department for Business, Energy & Industrial Strategy; 7 Dec 2017

Economic benefits

Watts Bar 2: Economic Catalyst for the Tennessee Valley Mitch Singer (of the Nuclear Energy Institute); Rhea County Economic and Community Development; 12 Sep 2016

If you believe that only large bulk users of electricity will benefit from the imminent commercial operation of Watts Bar 2—the first U.S. nuclear power plant to open in 20 years—you may wish to consider the viewpoint of David Snyder, president and chief executive officer of RevTel Inc. The provider of phone lines, private networks and internet services has but six employees in offices in Dayton and Cleveland, Tennessee.

“Sure, there are big companies like Wacker and Whirlpool, where it’s obvious reliable and abundant power is critical to their operations and their decisions to locate in the Tennessee Valley,” Snyder says. “But these large companies create customers for us with more direct employees, more insurance agents, car dealers and restaurants. We’ve enjoyed steady growth in my business since 2007, which coincidentally is when TVA decided to move ahead with Watts Bar 2.”

Snyder’s insights on the economic chain reaction are supported by the Cleveland-Bradley County Chamber of Commerce, whose data shows there has been $3.2 billion invested in the area since 2009. One of the biggest examples is Wacker Polysilicon North America LLC, which invested around $2.5 billion in the county to build a new plant that provides hyperpure polysilicon for solar power panels and semiconductor electronics. The plant began operating in 2015 and eventually will have 650 employees. Access to available and reliable electricity was a key factor in the company’s decision to locate to Bradley County.

Other large users of electricity in the Tennessee Valley include Fortune 500 companiesWhirlpool Corp., Archer Daniels Midland Co., and Merck & Co. Inc. Other prominent companies in the area are Mars Chocolate North America and Olin Corp.

The construction phase of Watts Bar 2 was a big boost to the local economy in Rhea County, and that will continue as the plant moves toward full commercial operation this summer, Rhea Economic and Tourism Council Executive Director Dennis Tumlin says.

“I see a two-fold benefit to Watts Bar 2 being in operation,” Tumlin says. “In addition to continued industrial growth, we’ve seen expansion of support businesses—and we’ll get a boost [from] refueling outages for both plants.”