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The Economics of Nuclear Power
Steve Fetter
University of Maryland
Cost of Electricity, U.S. Reactors (2004$/MWh)
Koomey & Hultman (submitted) 2007
0
2
4
6
8
10
12
14
30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 105 110 115 120 125 130 135 140 145 150
Cost of Electricity ($/MWh)
Number of Reactors
30 40 50 60 70 80 90 100 110 120 130 140
Average COE, 2005, all sources
Cost of Electricity, 99 U.S. Reactors (2004$/MWh)
Koomey & Hultman (submitted) 2007Koomey & Hultman (submitted to EP 2007)
0
20
40
60
80
100
120
140
0 20 40 60 80 100
Rank
Cost of Electricity ($/MW)
Components of COE
0
20
40
60
80
100
120
140
1 11 21 31 41 51 61 71 81 91
Rank
Cost of Electricity ($/MWh)
Construction, Interest, Capital Additions, Decommissioning
Non-Fuel O&MFuel
Where’s the Learning Curve?
0
20
40
60
80
100
120
140
1/1/67 1/1/71 1/1/75 1/1/79
Start of Construction
Cost of Electricity ($/MW)
Nuclear Power Economics
Estimated cost of electricity (COE) for a new U.S. nuclear reactor:
ExpenseCOE
($/MWh)
Construction 50
Non-fuel operations and maintenance (O&M)
15
Fuel-related expenses 5
Total 70
Nuclear v. Alternatives ($/MWh)
nuclear coal gas wind solar
capital 50 30 12 60 250
O&M 15 5 3 10 5
fuel 5 10 25-50 0 0
total 70 45 40-65 70 250
+ $100/tC 0 25 12 0 0
new total 70 70 52-77 70 250
Nuclear Capital Cost
• Construction costs in U.S. are highly uncertain– no operating reactors ordered after 1973– last reactor was completed in 1996
• Reasonable estimate for the overnight construction cost of new advanced light-water reactors: about $2000/kWe
– $2 billion for a 1000-MW reactor
Overnight Construction Cost
OCC ($/kW)
Actual
Japan 2300 - 2800
Korea 1800
Estimated
EIA 1500 - 2000
NEA 1800
GE 1400 - 1600
Framatome 1200 - 1300
Westinghouse 1000 - 1700
Finland 1600
Overnight Construction Costs (2004$/kW)
Koomey & Hultman (submitted to EP 2007)
0
2000
4000
6000
8000
0 20 40 60 80 100
Rank
Overnight Construction Cost ($/kW)
From OCC ($/kW) to COE ($/MWh)
Fidc interest during construction factor (~0.2)
Fpreop pre-operating cost factor (~0.1)
Fcont contingency cost factor (~0.1)CF capacity factor (0.85)
Fcrfixed charge rate
Ftax property tax rate
Fins insurance rate
COE
cap=OCC 1+Fidc( ) 1+Fpreop( ) 1+Fcont( )
8766CFFcr +Ftax +Fins( )
(~0.13/y)
From OCC ($/kW) to COE ($/MWh)
COEcap
=
$2000kW
⎛
⎝⎜⎞
⎠⎟1.2( ) 1.1( ) 1.1( )
8760hy
⎛
⎝⎜⎞
⎠⎟MW
103 kW
⎛
⎝⎜⎞
⎠⎟0.85( )
0.13y
⎛
⎝⎜⎞
⎠⎟=
$50MWh
OCC ($/kW)
COEcap ($/MWh)
1200 30
1600 40
2000 50
2400 60
Fixed Charge Rate
Construction costs are financed through debt (bonds) and equity (stock). Electricity sales must be sufficient to pay dividends to investors, after taxes and other expenses are paid, which requires recovering a fraction of total up-front costs each year: “fixed charge rate” or Fcr.
Fcr depends on the rate of return necessary to attract the required capital. For a regulated utility, the average cost of money is modest: 6 to 7%/y (half the rate for large private firms).
Fixed Charge Rate
te corporate income tax rate (38%)b fraction of capital raised with bonds (0.5)
ib rate of return on bonds (5%)
ie rate of return on stocks (8%)N capital recovery/depreciation period (15 y)
Fcr≈
11−te
1−b( )ie
1− 1+ ie( )−N
+bib
1− 1+ ib( )−N
−teN
−bibte
⎛
⎝⎜⎜
⎞
⎠⎟⎟
Fuel Costs: Once-Through Fuel Cycle
Repository
U3O8UF6
Dry Storage
(optional)
Conversion
fresh fuel
LEU
spentfuel
“front end”
“back end”
Wet Storage
Front-end Costs
unit cost units/kg $/kg $/MWh
Uranium $50/kg 10 kg $500 1.3
Conversion $5/kg 10 kg $50 0.1
Enrichment $100/SWU 6 SWU $600 1.5
Fabrication $250/kg 1 kg $250 0.6
Total $1400 3.5
Assumes fuel with 4.4% U235 and burnup of 50 MWtd/kg, tails assay of 0.3% U235, and efficiency of 33%
Back-end Costs
$/kg $/MWh
Wet storage included in capital, O&M
Dry storage $200 0.5
Geologic disposal $400 1.0
Total $600 1.5
Total front + back $2000 5.0
From $/kg to $/MWh
$2000
kgHM
⎡
⎣⎢
⎤
⎦⎥
kgHM
50MWthd
⎡
⎣⎢
⎤
⎦⎥
3MWth
MWe
⎡
⎣⎢
⎤
⎦⎥
d24 h
⎡
⎣⎢
⎤
⎦⎥=
$5MWh
• Compare to total COE of $70/MWh– fuel related costs ~ 7% of COE
• Conversion, enrichment, fabrication costs stable• At $50/kg, uranium 25% of fuel costs, 2% COE
– average price paid by U.S. operators in 2006– if price doubles, COE increases 2%
Uranium Prices
0
50
100
150
200
250
300
350
1970 1975 1980 1985 1990 1995 2000 2005 2010
Uranium Price ($2006/kg U)
Spot market price
Average paid by US reactoroperators
Direct Disposal v. Reprocessing in LWRs
Pu
Repository
U3O8UF6
Interim Storage
Conversion
LEU fuel
MOX fuel
spent LEU
spent LEU
spent MOX
HLW and ILWDU
ConversionUF6
rU
LEU
spent LEU
spent MOX
Reprocessing and Recycle• Widespread agreement that today R&R is more
expensive than direct disposal– official studies in France and Japan– recent studies by MIT, Harvard, Chicago
• Advocates argue difference is small: additional 1.5 to 4 $/MWh (~3-8% of COE)– but total cost is high: $1-3 billion/yr, plus $50-100
billion to reprocess 60,000 tons already discharged
• Advocates argue difference will disappear soon if nuclear power grows and U price increases– but premium is likely to persist for 50-100 yr even if
nuclear grows substantially
Premium for R&R in LWRs
-1
0
1
2
3
4
0 40 80 120 160 200 240
Price of Uranium ($/kgU)
ΔCOE
( / )mill kWh1000/$ kgHM
2000/ = $ kgHM reprocessingprice
1500/$ kgHM
500/$ kgHM
$200/kg interim storage for DD
$200/kg waste credit for R&R
($/M
Wh
)
Breakeven Uranium Price
0
200
400
600
800
500 1000 1500 2000
Reprocessing Price ($/kg HM)
Breakeven Uranium Price ($/kg U)
Monte Carlo
5%
95%
Central Case
50%
$200/kg interim storage for DD
$200/kg waste credit for R&R
These estimates are favorable to R&R
• $200/kg interim-storage charge included for direct disposal (but not R&R)
• $200/kg (50%) cost savings for waste disposal
• MOX fuel fabrication well below recent prices
• No charges for Pu storage, Am removal, reactor relicensing, or extra security for MOX
• Equal disposal costs for spent MOX and LEU (or continuous recycle of without cost penalty)
LWR (direct disposal) v. FBR
Pu
Repository
U3O8UF6
Interim Storage
Conversion
LEU fuel
HLW, ILW
DU ConversionUF6
rU
LEU
spent LEU
MA
Premium for R&R in FBRs
-5
0
5
10
15
0 50 100 150 200 250 300 350 400
Uranium Price ($/kgU)
Δ ( / )COE mill kWh 0$
100$
200$
300$
400$
ΔC cap
( /$ kWe) Utility OwnerUtility Owner
$1000/kg reprocessing
($/M
Wh
)
Uranium Resources• Breakeven U price > $130/kg even in best case
• How much U is available? Red Book gives 16 Mt available at $130/kg, but…
– high-cost resources in many countries (e.g., Australia) not estimated;
– unconventional resources (e.g., phosphates) not included;
– little investment in exploration in last 20 y
– most minerals have steadily decreased in price with increasing consumption
43 of 47 Elements Have Decreased in Price
0.01
0.10
1.00
10.00
100.00
0 20 40 60 80 100
Percent of Cumulative Production (to year 2000)
Rato of Price to Price in 2000Tl
Ta
Sr
Sr
Co
Cs
A Very Rough Estimate of Ultimately Recoverable Uranium Resources
• Red Book give 2.1 Mt at $40/kg• Hore-Lacy: “a doubling of price from present
levels could be expected to create a tenfold increase in measured resources.”
• So there should be 21 Mt available at $80/kg and 210 Mt at $160/kg
• In general:
R ~ 2.1(P/40)
where = long-term price elasticity of supply
Recoverable Resources
Source
Long-term
elasticity of supply
MtU recoverable at price less than
$40 $80 $130
UIC (doubling price creates ten-fold increase in measured resources)
3.32 2.1 21 105
Deffeyes and MacGregor (ten-fold decrease in concentration = 300-fold increase in resource, p ~ c)
2.48 2.1 12 39
Gen-IV (based on U.S. reserves for various mining methods)
2.35 2.1 11 34
Red Book 2.1 11 16
IIASA/WEC Global Energy Perspectives
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
1980 2000 2020 2040 2060 2080 2100
Nuclear Electricity Production (TWh/y)
Cumulative U consumption:LWRs with direct disposal
0
10
20
30
40
2000 2020 2040 2060 2080 2100
Cumulative Uranium Consumption (Mt U)
17 Mt U @ $130/kg (Red Book)
34 Mt U @ $130/kg ( = 2.35)
40 130/ (Mt U @ $ kg = 2.48)