| The Economics of Nuclear Power | | | | the cost of the electricity produced. |
| Electricity Generation | | | | The back-end of the fuel cycle, including spent |
| Nuclear Technology can also be used to produce | | | | fuel storage or disposal in a waste repository, |
| ELECTRICITY which is very important according | | | | contributes up to another 10% to the overall |
| to economical condition of a country. Nuclear plant | | | | costs per kWh, - less if there is direct disposal of |
| can produce more electricity than thermal or | | | | spent fuel rather than reprocessing. The $18 billion |
| hydro electric plant. | | | | US spent fuel program is funded by a 0.1 cent |
| Isotope produced using Nuclear Technology is | | | | kWh levy. |
| used in many chemical and pharma companies. | | | | French figures published in 2002 show (EUR cents |
| 1)Nuclear power is cost competitive with other | | | | kWh): nuclear 3.20, gas 3.05-4.26, coal 3.81-4.57. |
| forms of electricity generation, except where | | | | Nuclear is favourable because of the large, |
| there is direct access to low-cost fossil fuels. | | | | standardised plants used. |
| 2)Fuel costs for nuclear plants are a minor | | | | The cost of nuclear power generation has been |
| proportion of total generating costs, though capital | | | | dropping over the last decade. This is because |
| costs are greater than those for coal-fired plants. | | | | declining fuel (including enrichment), operating and |
| 3)In assessing the cost competitiveness of | | | | maintenance costs, while the plant concerned has |
| nuclear energy, decommissioning and waste | | | | been paid for, or at least is being paid off. In |
| disposal costs are taken into account. | | | | general the construction costs of nuclear power |
| The relative costs of generating electricity from | | | | plants are significantly higher thanfor coal- or |
| coal, gas and nuclear plants vary considerably | | | | gas-fired plants because of the need to use |
| depending on location. Coal is, and will probably | | | | special materials, and to incorporate sophisticated |
| remain, economically attractive in countries such | | | | safety features and back-up control equipment. |
| as China, the USA and Australia with abundant | | | | These contribute much of the nuclear generation |
| and accessible domestic coal resources as long as | | | | cost, but once the plant is built the variables are |
| carbon emissions are cost-free. Gas is also | | | | minor. |
| competitive for base-load power in many places, | | | | In the past, long construction periods have pushed |
| particularly using combined-cycle plants, though | | | | up financing costs. In Asia construction times have |
| rising gas prices have removed much of the | | | | tended to be shorter, for instance the |
| advantage. | | | | new-generation 1300 MWe Japanese reactors |
| Nuclear energy is, in many places, competitive | | | | which began operating in 1996 and 1997 were built |
| with fossil fuel for electricity generation, despite | | | | in a little over four years. |
| relatively high capital costs and the need to | | | | Overall, OECD studies in teh 1990s showed a |
| internalise all waste disposal and decommissioning | | | | decreasing advantage of nuclear over coal. This |
| costs. If the social, health and environmental costs | | | | trend was largely due to a decline in fossil fuel |
| of fossil fuels are also taken into account, nuclear | | | | prices in the 1980s, and easy access to low-cost, |
| is outstanding. | | | | clean coal, or gas. In the 1990s gas |
| External costs | | | | combined-cycle technology with low fuel prices |
| The report of a major European study of the | | | | was often the lowest cost option in Europe and |
| external costs of various fuel cycles, focusing on | | | | North America. But the picture is changing. |
| coal and nuclear, was released in mid 2001 - | | | | Future cost competitiveness |
| ExternE. It shows that in clear cash terms nuclear | | | | The OECD does not expect investment costs in |
| energy incurs about one tenth of the costs of | | | | new nuclear generating plants to rise, as advanced |
| coal. The external costs are defined as those | | | | reactor designs become standardised. |
| actually incurred in relation to health and the | | | | The future competitiveness of nuclear power will |
| environment and quantifiable but not built into the | | | | depend substantially on the additional costs which |
| cost of the electricity. If these costs were in fact | | | | may accrue to coal generating plants. It is |
| included, the EU price of electricity from coal | | | | uncertain how the real costs of meeting targets |
| would double and that from gas would increase | | | | for reducing sulphur dioxide and greenhouse gas |
| 30%. These are without attempting to include | | | | emissions will be attributed to fossil fuel plants. |
| global warming. | | | | Overall, and under current regulatory measures, |
| The European Commission launched the project in | | | | the OECD expects nuclear to remain economically |
| 1991 in collaboration with the US Department of | | | | competitive with fossil fuel generation, except in |
| Energy, and it was the first research project of | | | | regions where there is direct access to low cost |
| its kind "to put plausible financial figures against | | | | fossil fuels. |
| damage resulting from different forms of | | | | In Australia, for example, coal-fired generating |
| electricity production for the entire EU". The | | | | plants are close to both the mines supplying them |
| methodology considers emissions, dispersion and | | | | and the main population centres, and large |
| ultimate impact. With nuclear energy the risk of | | | | volumes of gas are available on low cost, |
| accidents is factored in along with high estimates | | | | long-term contracts. |
| of radiological impacts from mine tailings (waste | | | | A 1998 OECD comparative study showed that at |
| management and decommissioning being already | | | | a 5% discount rate, in 7 of 13 countries |
| within the cost to the consumer). Nuclear energy | | | | considering nuclear energy, it would be the |
| averages 0.4 euro cents/kWh, much the same as | | | | preferred choice for new base-load capacity |
| hydro, coal is over 4.0 cents (4.1-7.3), gas ranges | | | | commissioned by 2010 (see Table below). At a |
| 1.3-2.3 cents and only wind shows up better than | | | | 10% discount rate the advantage over coal would |
| nuclear, at 0.1-0.2 cents/kWh average. | | | | be maintained in only France, Russia and China. |
| Fuel costs are one area of steadily increasing | | | | FACTORS FAVOURING URANIUM |
| efficiency and cost reduction. For instance, in | | | | Uranium has the advantage of being a highly |
| Spain nuclear electricity cost has been reduced by | | | | concentrated source of energy which is easily and |
| 29% over 1995-2001. This involved boosting | | | | cheaply transportable. The quantities needed are |
| enrichment levels and burn-up to achieve 40% | | | | very much less than for coal or oil. One kilogram |
| fuel cost reduction. Prospectively, a further 8% | | | | of natural uranium will yield about 20,000 times as |
| increase in burn-up will give another 5% reduction | | | | much energy as the same amount of coal. It is |
| in fuel cost. | | | | therefore intrinsically a very portable and |
| The cost of fuel | | | | tradeable commodity. |
| From the outset the basic attraction of nuclear | | | | The fuel's contribution to the overall cost of the |
| energy has been its low fuel costs compared with | | | | electricity produced is relatively small, so even a |
| coal, oil and gas fired plants. Uranium, however, | | | | large fuel price escalation will have relatively little |
| has to be processed, enriched and fabricated into | | | | effect. For instance, a doubling of the 2002 U3O8 |
| fuel elements, and about two thirds of the cost is | | | | price would increase the fuel cost for a light |
| due to enrichment and fabrication. Allowances | | | | water reactor by 30% and the electricity cost |
| must also be made for the management of | | | | about 7% (whereas doubling the gas price would |
| radioactive spent fuel and the ultimate disposal of | | | | add 70% to the price of electricity). |
| this spent fuel or the wastes separated from it. | | | | REPROCCESSING & MOX |
| But even with these included, the total fuel costs | | | | There are other possible savings. For example, if |
| of a nuclear power plant in the OECD are typically | | | | spent fuel is reprocessed and the recovered |
| about a third of those for a coal-fired plant and | | | | plutonium and uranium is used in mixed oxide |
| between a quarter and a fifth of those for a gas | | | | (MOX) fuel, more energy can be extracted. The |
| combined-cycle plant. | | | | costs of achieving this are large, but are offset |
| Fuel costs are one area of steadily increasing | | | | by MOX fuel not needing enrichment and |
| efficiency and cost reduction. For instance, in | | | | particularly by the smaller amount of high-level |
| Spain nuclear electricity cost was reduced by | | | | wastes produced at the end. Seven UO2 fuel |
| 29% over 1995-2001. This involved boosting | | | | assemblies give rise to one MOX assembly plus |
| enrichment levels and burn-up to achieve 40% | | | | some vitrified high-level waste, resulting in only |
| fuel cost reduction. Prospectively, a further 8% | | | | about 35% of the volume, mass and cost of |
| increase in burn-up will give another 5% reduction | | | | disposal. |
| in fuel cost. | | | | For different fuel costs (fossil fuels) or lead time |
| Comparing electricity generation | | | | (nuclear plants). Assumes 5% discount trate, 30 |
| For nuclear power plants any cost figures | | | | year life and 70% load factor. While the figures |
| normally include spent fuel management, plant | | | | are out of date, the comparison remains relevant. |
| decommissioning and final waste disposal. These | | | | Note that the key factor for fossil fuels is the |
| costs, while usually external for other | | | | high or low cost of fuels (top portion of bars), |
| technologies, are internal for nuclear power. | | | | whereas nuclear power has a low proportion of |
| Decommissioning costs are estimated at 9-15% | | | | fuel cost in total electricity cost and the key |
| of the initial capital cost of a nuclear power plant. | | | | factor is the short or long lead time in planning |
| But when discounted, they contribute only a few | | | | and construction, hence investment cost (bottom |
| percent to the investment cost and even less to | | | | portion of bars). Increasing the load factor thus |
| the generation cost. In the USA they account for | | | | benefits nuclear more than coal, and both these |
| 0.1-0.2 cent/kWh, which is no more than 5% of | | | | more than oil or gas. |