A reply to “Historical construction costs of global nuclear power reactors”

Koomey, Jonathan; Hultman, Nathan; Grübler, Arnulf

doi:10.1016/j.enpol.2016.03.052

Cited by 34 publications

(21 citation statements)

References 8 publications

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“…Figure 11 shows mean values of OCC, IDC, and TCC as their sum. These results confirm the importance of taking capital costs into account, as argued by Koomey, Hultman, and Grubler (2017) and Haas, Thomas, and Ajanovic (2019). Source: own depiction.…”

Section: The Importance Of Capital Costssupporting

confidence: 81%

“…One major flaw of the OCC, especially when talking about nuclear power plants, is that they do not take into account the financing cost or construction duration.Construction costs are the major component of the levelized cost are between, 60-80 percent, depending on the cost of capital and the duration of construction(MacKerron 1992;Haas, Thomas, and Ajanovic 2019). It does not make much economic sense to compare reactor costs without including the cost of capital(Koomey, Hultman, and Grubler 2017;Haas, Thomas, and Ajanovic 2019) as nuclear power construction projects are characterized by long construction times, a period where no income is generated. The financing cost consist of the interest to be paid during construction (IDC) but are not limited to the debt part but also to provide an acceptable rate of return to equity investors (D'haeseleer 2013,…”

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confidence: 99%

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Economics of Nuclear Power Plant Investment: Monte Carlo Simulations of Generation III/III+ Investment Projects

Wealer¹,

Bauer²,

Göke³

et al. 2019

SSRN Journal

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This paper analyzes nuclear power plant investments using Monte Carlo simulations of economic indicators such as net present value (NPV) and levelized cost of electricity (LCOE). In times of liberalized electricity markets, largescale decarbonization and climate change considerations, this topic is gaining momentum and requires fundamental analysis of cost drivers. We adopt the private investors' perspective and ask: What are the investors' economics of nuclear power, or-stated differently-would a private investor consider nuclear power as an investment option in the context of a competitive power market? By focusing on the perspective of an investor, we leave aside the public policy perspective, such as externalities, cost-benefit analysis, proliferation issues, etc. Instead, we apply a conventional economic perspective, such as proposed by Rothwell (2016) to calculate NPV and LCOE. We base our analysis on a stochastic Monte Carlo simulation to nuclear power plant investments of generation III/III+, i.e. available technologies with some experience and an extensive scrutiny of cost data. We define and estimate the main drivers of our model, i.e. overnight construction costs, wholesale electricity prices, and weighted average cost of capital, and discuss reasonable ranges and distributions of those parameters. We apply the model to recent and ongoing investment projects in the Western world, i.e. Europe and the United States; cases in non-market economies such as China and Russia, and other non-established technologies (Generation IV reactors and small modular reactors) are excluded from the analysis due to data issues. Model runs suggest that investing in nuclear power plants is not profitable, i.e. expected net present values are highly negative, mainly driven by high construction costs, including capital costs, and uncertain and low revenues. Even extending reactor lifetimes from currently 40 years to 60 years does not improve the results significantly. We conclude that the economics of nuclear power plants are not favorable to future investments, even though additional costs (decommissioning, long-term storage) and the social costs of accidents are not even considered.

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Section: The Importance Of Capital Costssupporting

confidence: 81%

mentioning

confidence: 99%

Economics of Nuclear Power Plant Investment: Monte Carlo Simulations of Generation III/III+ Investment Projects

Wealer¹,

Bauer²,

Göke³

et al. 2019

SSRN Journal

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“…Notably, there are large uncertainties in the future investment cost for nuclear power and this cost varies significantly by country (high in Europe and USA, relatively low in Asia) [48,49,[54][55][56][57][58]. power.…”

Section: Discussionmentioning

confidence: 99%

“…Second, there are rather large uncertainties attributed to these costs [48][49][50][51][52][53][54][55][56]; Finally, including a wide range of assumptions about cost and technology allows us to investigate the breadth of conditions under which nuclear power can play a role in the future electricity system.…”

Section: ) Nuc-expmentioning

confidence: 99%

The cost of a future low-carbon electricity system without nuclear power – the case of Sweden

Kan

Hedenus

Reichenberg

2020

Energy

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To achieve the goal of deep decarbonization of the electricity system, more and more variable renewable energy (VRE) is being adopted. However, there is no consensus among researchers on whether the goal can be accomplished without large cost escalation if nuclear power is excluded in the future electricity system. In Sweden, where nuclear power generated 41% of the annual electricity supply in 2014, the official goal is 100% renewable electricity production by 2040. Therefore, we investigate the cost of a future low-carbon electricity system without nuclear power for Sweden. We model the European electricity system with a focus on Sweden and run a techno-economic cost optimization model for capacity investment and dispatch of generation, transmission, storage and demand-response, under a CO2 emission constraint of 10 g/kWh. Our results show that there are no, or only minor, cost benefits to reinvest in nuclear power plants in Sweden once the old ones are decommissioned. This holds for a large range of assumptions on technology costs and possibilities for investment in additional transmission capacity. We contrast our results with the recent study that claims severe cost penalties for not allowing nuclear power in Sweden and discuss the implications of methodology choice.2 for electricity supply [4][5][6]. In the case of Sweden, the government has set a goal of 100% renewable power production for the electricity sector by 2040 [7]. Currently, nuclear power accounts for 41% of the annual electricity production [8], however the nuclear fleet is aging and decommissioning is planned in the coming decades for economic reasons. This has spurred a political discussion about replacing the old nuclear reactors with new ones. Nuclear power is facing an uncertain future in the transition towards a low-carbon electricity system in Europe due to the risk of radiation leakage, social acceptance, and high investment cost, among other factors. Germany, Belgium, and Switzerland have decided to phase out nuclear power, while Finland and France are building new nuclear power plants.The cost difference for decarbonizing the electricity system with and without nuclear power has been subject to recent debate in the scientific community [9][10][11][12]. Some studies show that excluding nuclear power increases the electricity system cost modestly [13][14][15], while others claim that the increase in cost is substantial [16,17]. Jägemann et al. [13] investigated the decarbonization pathways of the European electricity sector and found that the total electricity system cost, together with the cost of decarbonization, would increase by 11% if nuclear power and carbon capture and storage (CCS) were excluded. Zappa et al. [14] evaluated the cost of a 100% renewable power system for Europe and found that the system cost would be 30% higher than a carbon-neutral electricity system which excludes nuclear and CCS. Pattupara and Kannan [15] analyzed the low-carbon electricity pathways in Switzerland and its neighboring countries and showed that t...

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“…Lovering's analysis has been critiqued by Koomey et al [31] and Gilbert et al [32]. Lovering et al [33] responded with clarifications and additional information that are relevant for this paper.…”

Section: [Ii]mentioning

confidence: 99%

Nuclear Power Learning and Deployment Rates; Disruption and Global Benefits Forgone

Lang

2017

Energies

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This paper presents evidence of the disruption of a transition from fossil fuels to nuclear power, and finds the benefits forgone as a consequence are substantial. Learning rates are presented for nuclear power in seven countries, comprising 58% of all power reactors ever built globally. Learning rates and deployment rates changed in the late-1960s and 1970s from rapidly falling costs and accelerating deployment to rapidly rising costs and stalled deployment. Historical nuclear global capacity, electricity generation and overnight construction costs are compared with the counterfactual that pre-disruption learning and deployment rates had continued to 2015. Had the early rates continued, nuclear power could now be around 10% of its current cost. The additional nuclear power could have substituted for 69,000-186,000 TWh of coal and gas generation, thereby avoiding up to 9.5 million deaths and 174 Gt CO 2 emissions. In 2015 alone, nuclear power could have replaced up to 100% of coal-generated and 76% of gas-generated electricity, thereby avoiding up to 540,000 deaths and 11 Gt CO 2 . Rapid progress was achieved in the past and could be again, with appropriate policies. Research is needed to identify impediments to progress, and policy is needed to remove them. , and thereby more quickly raises living standards and human wellbeing. As the cost of electricity decreases, deployment rate increases. Transition takes place faster and the benefits are delivered sooner.History is replete with examples of one technology replacing another [2,3]. Large infrastructure transitions have commonly taken around a century [10]. Examples are transitions to canals, railways, highways, oil and gas pipelines, telegraph, and electricity grids. Transitions typically follow an S-curve from 0 to 100% complete, with three phases: accelerating to about 20%, near-linear to about 80%, and decelerating to 100% [3,10]. Electricity grids reached 50% of world population in 1960 and 80% in 2010 [11].The transition to nuclear power began in 1954 with the first reactor connected to the grid. Until the 1970s, it was envisaged that nuclear would emulate earlier energy transitions. For example, Wilson [12] projected that nuclear power would supply 14 to 21% of world primary energy by 2000. However, the transition to nuclear reached 4% by 1970, then stalled [3]. The deployment rate of nuclear capacity is currently less than in 1972; the transition has been stalled for 44 years.The rate that technology transitions take place depends, in part, on the technologies being 'fit-for-purpose' and on the learning rates that occur during the transition period. To accelerate the transition to reliable, cheap, clean, safe and comparatively environmentally benign electricity generation, policies need to focus on ways to improve the learning rates and deployment rates of technologies that meet requirements. Historical learning rates provide insight into what rates may be achievable and what could be done to return to rapid rates.The concept of learning rates, or cost e...

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A reply to “Historical construction costs of global nuclear power reactors”

Cited by 34 publications

References 8 publications

Economics of Nuclear Power Plant Investment: Monte Carlo Simulations of Generation III/III+ Investment Projects

Economics of Nuclear Power Plant Investment: Monte Carlo Simulations of Generation III/III+ Investment Projects

The cost of a future low-carbon electricity system without nuclear power – the case of Sweden

Nuclear Power Learning and Deployment Rates; Disruption and Global Benefits Forgone

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