Skip to main content

More on New Nuclear Plant Costs

The Nuclear Energy Agency (NEA), an agency within the Organization for Economic Cooperation and Development (OECD), and the International Energy Agency (IEA) recently published a 2005 update to their “Projected Costs of Generating Electricity” series. The study provides some interesting perspective on some ongoing discussions posted on FuturePundit and Disinterested Party regarding the costs of generating electricity using nuclear power versus other technologies.

The NEA/IEA study uses the levelized lifetime cost approach to compare generating costs for the future. This approach looks at generation costs over the plant economic lifetime, while taking into account the time value of money; that is, money spent yesterday or tomorrow does not have the same value as money spent today. Levelized costs are comprised of all components of capital, Operations and Maintainence (O&M) and fuel costs that would influence a utility’s choice of generation options, including construction, refurbishment and decommissioning, where applicable.

The study finds that at a 5% discount rate, levelized costs for nuclear range between $21 and $31 per MWh (2.1 to 3.1 cents per KWh), with investment costs representing 50% of total cost on average, while O&M and fuel represent around 30% and 20%, respectively. For gas-fired plants, the study finds levelized costs ranging from $37 to $60 per MWh (3.7 to 6 cents per KWh), with investment costs accounting for less than 15% of total costs, O&M accounting for less than 10%, and fuel costs accounting for nearly 80% of total costs, on average. The study finds levelized costs for coal-fired plants ranging between $25 and $50 per MWh (2.5 to 5 cents per KWh). Investment costs for coal plants account for just over a third of total costs, while O&M and fuel account for around 20% and 45%, respectively.

In the recent past, gas-fired generation has been the technology of choice due to relatively low capital costs, construction periods and investment risk. However, for technologies where fuel costs are a large proportion of total generating costs, volatile fuel prices can present significant risks. High volatility of natural gas prices and the future need for large, base-load sources of electricity is diverting attention away from these smaller gas generating units.

Another uncertainty for investors in new power plants will be controls on future emissions; specifically on carbon dioxide. Carbon controls or restrictions on other emissions from fossil generation could directly affect the profitability of fossil fueled power plants, thus significantly increasing the risks associated with investment in those projects.

Gas price uncertainty and the search for non-emitting electricity sources have resulted in the renewed outlook on nuclear power witnessed today. While it may seem that investment costs represent a disproportionate amount of total levelized costs for nuclear power, the relatively smaller proportion of fuel costs result in more stable costs at the residential meter since nuclear is not as susceptible to swings in fuel price.

Modularity of new designs will also provide economic advantages that could reduce these initial capital costs, while helping the industry more quickly reach the “Nth-of-a-kind” plant. A study conducted at the University of Chicago titled “the Economic Future of Nuclear Power” found that first-of-a-kind engineering (FOAKE) costs for new nuclear designs could increase capital costs by as much as 35%. The study finds that new nuclear power plants could “reach the required range of competitiveness” after construction of the first five plants.

The NEA/IEA study concludes that “none of the traditional electricity generating technologies can be expected to be the cheapest in all situations,” and “supports that…there is room and opportunity for all efficient generating technologies.” Generation from nuclear power provides clean and reliable base-load electricity that is not susceptible to fuel price swings and does not result in the emission of harmful greenhouse gases. While there are significant uncertainties in the construction and regulatory realm that must be addressed, the industry is confident that nuclear power must be a part of a reliable, diverse and secure energy mix going forward.

UPDATE BY ERIC McERLAIN: Keep in mind that the figures we quote here don't reflect retail electricity rates, which also include transmission costs. According to the most recent data from the Energy Information Administration, the average retail price of electricity for residential customers in the U.S. clocked in at 8.5 cents per KWh. However, in some areas of the country, that can be significantly higher, especially during periods of peak demand.

Technorati tags: , , , , ,

Comments

Popular posts from this blog

Missing the Point about Pennsylvania’s Nuclear Plants

A group that includes oil and gas companies in Pennsylvania released a study on Monday that argues that twenty years ago, planners underestimated the value of nuclear plants in the electricity market. According to the group, that means the state should now let the plants close.

Huh?

The question confronting the state now isn’t what the companies that owned the reactors at the time of de-regulation got or didn’t get. It’s not a question of whether they were profitable in the '80s, '90s and '00s. It’s about now. Business works by looking at the present and making projections about the future.

Is losing the nuclear plants what’s best for the state going forward?

Pennsylvania needs clean air. It needs jobs. And it needs protection against over-reliance on a single fuel source.


What the reactors need is recognition of all the value they provide. The electricity market is depressed, and if electricity is treated as a simple commodity, with no regard for its benefit to clean air o…

How Nanomaterials Can Make Nuclear Reactors Safer and More Efficient

The following is a guest post from Matt Wald, senior communications advisor at NEI. Follow Matt on Twitter at @MattLWald.

From the batteries in our cell phones to the clothes on our backs, "nanomaterials" that are designed molecule by molecule are working their way into our economy and our lives. Now there’s some promising work on new materials for nuclear reactors.

Reactors are a tough environment. The sub atomic particles that sustain the chain reaction, neutrons, are great for splitting additional uranium atoms, but not all of them hit a uranium atom; some of them end up in various metal components of the reactor. The metal is usually a crystalline structure, meaning it is as orderly as a ladder or a sheet of graph paper, but the neutrons rearrange the atoms, leaving some infinitesimal voids in the structure and some areas of extra density. The components literally grow, getting longer and thicker. The phenomenon is well understood and designers compensate for it with a …

A Billion Miles Under Nuclear Energy (Updated)

And the winner is…Cassini-Huygens, in triple overtime.

The spaceship conceived in 1982 and launched fifteen years later, will crash into Saturn on September 15, after a mission of 19 years and 355 days, powered by the audacity and technical prowess of scientists and engineers from 17 different countries, and 72 pounds of plutonium.

The mission was so successful that it was extended three times; it was intended to last only until 2008.

Since April, the ship has been continuing to orbit Saturn, swinging through the 1,500-mile gap between the planet and its rings, an area not previously explored. This is a good maneuver for a spaceship nearing the end of its mission, since colliding with a rock could end things early.

Cassini will dive a little deeper and plunge toward Saturn’s surface, where it will transmit data until it burns up in the planet’s atmosphere. The radio signal will arrive here early Friday morning, Eastern time. A NASA video explains.

In the years since Cassini has launc…