Skip to main content

NEI White Paper on New Nuclear Plant Costs

Titled "The Cost of New Generating Capacity in Perspective" found on our Financial Center section at
Like all new generating capacity, there is considerable uncertainty about the capital cost of new nuclear generating capacity. Credible estimates of overnight capital costs range from $2,400/kWe to as much as $4,540/kWe. This wide variation in costs can be attributed to several factors:
  • uncertainty about escalation of commodity prices and wages,
  • the fact that design work is not complete and, until it is, it will be impossible to produce a precise cost estimate, and
  • some early estimates did not include all the costs involved in the construction of a power plant (see “Understanding the Cost Components of New Generating Capacity,” page 4).
While these costs are daunting, it is important to recognize that capital costs are only the starting point for any analysis of new generating capacity. A more accurate measure of economic competitiveness, and one that is more important to regulators and consumers, is the cost of electricity produced by a particular project compared to alternative sources of electricity and to the market price of electricity when the power plant starts commercial operation. This generation cost takes into account not only capital and financing costs, but also the operating costs and performance of a project.

Analysis by generating companies, the academic community, and financial experts shows that even at capital costs in the $4,000/kWe to $6,000/kWe range, the electricity generated from nuclear power can be competitive with other new sources of baseload power, including coal and natural gas. These results are absent any restrictions on carbon dioxide emissions. With regional or national programs that put a significant price on carbon emissions, nuclear power becomes even more competitive.
NEI's White Paper is based on a number of studies including FPL's (pdf) and Progress Energy's (pdf) Petitions for new nuclear plants to the Florida PSC, Connecticut's Integrated Resource Plan (pdf), and the Congressional Budget Office's report titled "Nuclear Power's Role in Generating Electricity." Here's more from the White Paper:
Although nuclear project costs are undeniably large, total project cost does not measure a project’s economic viability. The relevant metric is the cost of the electricity produced by the nuclear project relative to alternative sources of electricity and relative to the market price of electricity at the time the nuclear plant comes into service. As illustrated by the detailed financial modeling cited above, new nuclear power plants can be competitive, even with total project costs exceeding $6,000/kWe, including EPC and owners’ costs and financing.

These findings are confirmed by results from a Nuclear Energy Institute (NEI) financial model (see Table 1). NEI’s modeling shows that a merchant nuclear plant with an 80 percent debt/20 percent equity capital structure, supported by a federal loan guarantee, will produce electricity in the range of $64/MWh to $76/MWh. (The range reflects EPC costs from $3,500/kWe to $4,500/kWe) A high-cost ($4,500/kWe EPC cost) nuclear plant producing electricity at $76/MWh is competitive with a gas-fired combined-cycle plant burning $6-8/mmBtu gas or a super-critical pulverized coal (SCPC) plant.


NEI’s modeling shows that, in the absence of a significant price for carbon, loan guarantees and supportive state policies (such as CWIP) are essential for merchant and regulated nuclear plants, respectively. Without this federal and state government support, it is difficult to see how new nuclear plants can be financed and constructed competitively. With this support as a transition to a carbon-constrained world, the next nuclear plants should be competitive and economically viable.
Be sure to check out the rest.


Matthew66 said…
I would also point out that the design life of a nuclear power plant is a lot longer than the design life of a gas turbine and most coal plants, meaning that the owner has a lot longer to recover those costs. The plants being proposed today have a 60 - 80 year design life, probably with replacement of major components like steam generators every 20 - 25 years. After the debt is paid off, in maybe 15 years, these plants will be the most incredible cash cows for their owners, much as the plants built in the 1970's and 1980's are now.
Charles Barton said…
The problem I have with the "NEI White Paper on New Nuclear Plant Costs" is simple. The cost of a new nuclear plants is appalling, yet no attention is given to remedies. This is very much a practical consideration, because the climate scientists tell us that we should replace all fossil fuel power plant by 2050, and further more we need to acknowledge that far more of society's energy will be delivered then in the form of electricity than is the case today. Even with efficiency, we will need far more electricity than we use now.

I believe that this can be accomplished with nuclear power, but not with dinosaurs like the AP-1000 and the ESBWR. We need to be thinking about how nuclear plants can be built on the cheap, and this will involve developing Generation IV reactors, mass produced in factors, with improved but low cost safety technology, innovative attention to siting, and a very different approach to capitalization.

It is time that the nuclear industry woke up and faced its problems.
gunter said…
More NEI fluff.

The May 2008 Moody's Corporate Finance Special Report has new reactor construction starting out at minimum $7000 /kw.

So NEI is still behind the financial curve. The financial community has recognized that there is no way of tallying the actual financial cost at this point other than to say the cost of nuclear is still sharply rising.
Anonymous said…
There's a number of good speakers discussing plant lifecycle management at this month's Managing Outage and New Build Risk conference in Orlando.

Popular posts from this blog

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…

Sneak Peek

There's an invisible force powering and propelling our way of life.
It's all around us. You can't feel it. Smell it. Or taste it.
But it's there all the same. And if you look close enough, you can see all the amazing and wondrous things it does.
It not only powers our cities and towns.
And all the high-tech things we love.
It gives us the power to invent.
To explore.
To discover.
To create advanced technologies.
This invisible force creates jobs out of thin air.
It adds billions to our economy.
It's on even when we're not.
And stays on no matter what Mother Nature throws at it.
This invisible force takes us to the outer reaches of outer space.
And to the very depths of our oceans.
It brings us together. And it makes us better.
And most importantly, it has the power to do all this in our lifetime while barely leaving a trace.
Some people might say it's kind of unbelievable.
They wonder, what is this new power that does all these extraordinary things?

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.


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…