Economics of nuclear power plants

This article is a subarticle of Nuclear power

The Economics of new nuclear power plants is a controversial subject, since multi-billion dollar investments ride on the choice of an energy source. Nuclear power plants typically have relatively high capital costs for building the plant, but relatively low operating costs (which typically include the full cost of spent nuclear fuel processing and disposal via a surcharge on generation) and maintenance costs. Therefore, comparison with other power generation methods is strongly dependent on assumptions about capital financing and construction timescales for nuclear plants.

New plants under construction

Four ABWRs are already in operation in Japan, and two are building in Taiwan.

The 1600 MWe European Pressurized Reactor (EPR) reactor is being built in Olkiluoto, Finland. A joint effort of French AREVA and German Siemens AG, it will be the largest reactor in the world. In December 2006 construction was about 18 months behind schedule so completion was expected 2010-2011.

As of March, 2007, there are seven nuclear power plants under construction in India, and five in China.

Russia has begun building the world’s first floating nuclear power plant. The £100 million vessel, the Lomonosov, is the first of seven plants (70 MWe per ship) that Moscow says will bring vital energy resources to remote Russian regions.

Early Site Permit Applications have been filed in the U.S. for several AP1000 plants. Four are to be built in China. Two EPRs are also to be built in China.

A list of expected new U.S. nuclear power plants is at this reference.

New plant designs

Plant designs currently available for building include AREVA's European Pressurized Reactor (EPR) and its SWR-1000, General Electric's ABWR and ESBWR, and Westinghouse's AP1000. Canada (see CANDU), Russia (see VVER), India and China also have indigenous plant designs.

For a full list, see the table at the bottom of .

Capital costs

An AP1000 (with passive-safety features) is estimated by Westinghouse to have an "overnight capital cost" of $1,000 to $1,100 per kilowatt-electric (kWe) installed capacity (for a 1,117 MWe plant), after the first few plants are started. For an ESBWR (a fully passively safe plant), General Electric estimates $1,160 to $1,250 per kWe for a first-of-a-kind 1,560 MWe plant.

The recent liberalisation of the electricity market in many countries has made the economics of nuclear power generation less attractive. Previously a monopolistic provider could guarantee output requirements decades into the future. Private generating companies have to accept shorter output contracts and the risks of future lower-cost competition, so desire a shorter return on investment period which favours generation plants with lower capital costs. A further difficulty is that due to the large sunk costs but unpredictable future income from the liberalised electricity market, private capital is unlikely to be available on favourable terms, which is particularly significant for nuclear as it is so capital-intensive.

In many countries, licensing, inspection and certification of nuclear power plants has added delays and construction costs to their construction. In the U.S. many new regulations were put in place after the Three Mile Island accident's partial meltdown. Gas-fired and coal-fired plants have not faced such regulations. Because a power plant does not yield profits during construction, longer construction times translate directly into higher interest charges on borrowed construction funds. However, the regulatory processes for siting, licensing, and constructing have been standardized since their introduction, to make construction of newer and safer designs more attractive to companies. Modern nuclear power plants are planned for construction in four years or less (42 months for CANDU ACR-1000, 60 months from order to operation for an AP1000, 48 months from first concrete to operation for an EPR and 45 for an ESBWR) as opposed to over a decade for some previous plants.

The smallest nuclear power plant that can be built is often larger than other power plants, making it possible for a utility to build such plants in smaller increments, and in areas of low power consumption. (However, that may change in the future with SSTAR.)

In Japan and France, construction costs and delays are significantly diminished because of streamlined government licensing and certification procedures. In France, one model of reactor was type-certified, using a safety engineering process similar to the process used to certify aircraft models for safety. That is, rather than licensing individual reactors, the regulatory agency certified a particular design and its construction process to produce safe reactors. U.S. law permits type-licensing of reactors, a process which is being used on the AP1000 and the ESBWR.

To encourage development of nuclear power, under the Nuclear Power 2010 Program the U.S. Department of Energy (DOE) has offered interested parties the opportunity to introduce France's model for licensing and to subsidize 25% to 50% of the construction cost overruns due to delays for the first six new plants. Several applications were made, two sites have been chosen to receive new plants, and other projects are pending (see Nuclear Power 2010 Program).

Operating costs

In general, coal and nuclear plants have the same types of operating costs (operations and maintenance plus fuel costs). However, nuclear has lower fuel costs but higher operating and maintenance costs.

Insurance

Insurance for nuclear or radiological incidents in the U.S. is organized by the Price-Anderson Nuclear Industries Indemnity Act. In general, nuclear power plants have private insurance and assessments that are pooled into a fund currently worth about $10 billion. Insurance claims beyond the fund's size would be organized by, and probably paid by, the U.S. government. In July 2005, Congress extended this Act to newer facilities. For full history, details and controversy, see Price-Anderson Nuclear Industries Indemnity Act.

In the UK, the Nuclear Installations Act of 1965 governs liability for nuclear damage for which a UK nuclear licensee is responsible.

The Vienna Convention on Civil Liability for Nuclear Damage puts in place an international framework for nuclear liability.

Subsidies

Critics of nuclear power claim that it is the beneficiary of inappropriately large economic subsidies — mainly taking the forms of taxpayer-funded research and development and limitations on disaster liability — and that these subsidies, being subtle and indirect, are often overlooked when comparing the economics of nuclear against other forms of power generation. However, competing energy sources also receive subsidies. Fossil fuels receive large direct and indirect subsidies, such as tax benefits and not having to pay for the Greenhouse gases they emit. Renewables receive large direct production subsidies and tax breaks in many nations.

Energy research and development (R&D) for nuclear power alone has and continues to receive much larger state subsidies than R&D for all renewable energy sources put together or for fossil fuels. However, today most of this takes places in Japan and France: in most other nations renewable R&D as a whole get more money. In the US, public research money for nuclear fission declined from 2,179 to 35 million dollars between 1980 and 2000. However, in order to restart the industry, the next six US reactors will receive subsidies equal to those of renewables and, in the event of cost overruns due to delays, at least partial compensation for the overruns (see Nuclear Power 2010 Program).

Comparisons with other power sources

Generally, a nuclear power plant is significantly more expensive to build than an equivalent coal-fueled or gas-fueled plant. However, coal is significantly more expensive than nuclear fuel, and natural gas significantly more expensive than coal — thus, capital costs aside, natural gas-generated power is the most expensive. But servicing the capital costs for a nuclear power plant can dominate the costs of nuclear-generated electricity, contributing about 70% of costs in one study (which assumed a 10% discount rate).

A comparison of the "real" cost of various energy sources is complicated by several uncertainties:

• The cost of climate change through emissions of greenhouse gases is hard to estimate. Carbon taxes may be enacted, or carbon capture and storage may become mandatory.
• Outside the U.S., the cost or even political feasibility of disposal of the waste from reprocessedspent nuclear fuel. (Disposal of U.S. spent nuclear fuel, which currently is not reprocessed, is funded by a fixed surcharge on generation: the U.S. government is obligated to take title to the fuel.)
• Many renewables are intermittent and require some form of back-up power or storage, which increases their price when accounted for.
• Some renewable energy sources are in their infancy: wind power and solar power, while being employed now, are earlier in their development than nuclear.
• Governmental instabilities in the next plant lifetime. New nuclear power plants are designed for a minimum of 60 years (50 for VVER-1200), and may be able to be refurbished. Likewise, the waste from reprocessed fuel remains dangerous for about this period.

A UK Royal Academy of Engineering report in 2004 looked at electricity generation costs from new plants in the UK. In particular it aimed to develop "a robust approach to compare directly the costs of intermittent generation with more dependable sources of generation". This meant adding the cost of standby capacity for wind, as well as carbon values up to £30 (€45.44) per tonne CO₂ for coal and gas. Wind power was calculated to be more than twice as expensive as nuclear power. Without a carbon tax, the cost of production through coal, nuclear and gas ranged £0.022-0.026/kWh and coal gasification was £0.032/kWh. When carbon tax was added (up to £0.025) coal came close to onshore wind (including back-up power) at £0.054/kWh — offshore wind is £0.072/kWh -- nuclear power remained at £0.023/kWh either way, as it produces negligible amounts of CO₂. (Nuclear figures included decommissioning costs.)

The lifetime cost of new generating capacity in the United States was estimated in 2006 by the U.S. government: wind cost was estimated at $55.80 per MWh, coal (cheap in the U.S.) at $53.10, natural gas at $52.50 and nuclear at $59.30. However, the "total overnight cost" for new nuclear was assumed to be $1,984 per kWe -- as seen above in Capital Costs, this is far too high. Also, carbon taxes and backup power costs were not considered.

An OECD/IEA study from 2005 estimated nuclear power total-lifetime costs per kwhr-electric versus coal and natural gas for 12 nations: nuclear generally beat coal (even without a carbon tax) even though the study unrealistically assumed 40-year plant lifetimes (new plants are designed to operate for 60 or more years).

Costs for Clean coal and Carbon capture and storage can be found in those articles.

Current nuclear reactors return around 40-60 times the invested energy when using life cycle analysis. This is better than coal, natural gas, and current renewables except hydropower.

Other economic issues

Nuclear Power plants tend to be very competitive in areas where other fuel resources are not readily available — France, most notably, has almost no native supplies of fossil fuels. The province of Ontario, Canada is already using all of its best sites for hydroelectric power, and has minimal supplies of fossil fuels, so a number of nuclear plants have been built there.

Nuclear power plants (except old BWRs and new ABWRs) cannot rapidly adjust their level of power production (called "load-following"), and are generally intended solely for "baseload" supply. Some new experimental reactors, notably pebble bed modular reactors, are specifically designed to do this, for peaking power purposes.

Any effort to construct a new nuclear facility around the world, whether an existing design or an experimental future design, must deal with NIMBY or NIABY objections. Because of the high profiles of the Three Mile Island accident and Chernobyl disaster, few municipalities welcome a new nuclear reactor, processing plant, transportation route, or nuclear burial ground within their borders, and some have issued local ordinances prohibiting the locating of such facilities there. However, a number of U.S. areas, some already with nuclear units, are campaigning for more (see Nuclear Power 2010 Program).

A Council on Foreign Relations report on nuclear energy argues that a rapid expansion of nuclear power may create shortages in building materials such as reactor-quality concrete and steel, skilled workers and engineers, and safety controls by skilled inspectors. This would drive up current prices.[2] It may be easier to rapidly expand, for example, the number of coal power plants, without this having a large effect on current prices.

See also

• Russian floating nuclear power station