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March 20, 2007

Nuclear power costs

Nuclear energy costs dependent upon assumptions

The cost of generating power via nuclear energy can be separated into the following components:

* The construction cost of building the plant.
* The operating cost of running the plant and generating energy.
* The cost of waste disposal from the plant.
* The cost of decommissioning the plant

Quantifying some of these costs is difficult as it requires an extrapolation into the future. Construction costs are currently difficult to quantify but dominate the cost of Nuclear Power. The problem is that third generation power plants currently proposed are claimed to be both substantially cheaper and faster to construct than the second generation power plants now in operation throughout the world.

For example Westinghouse claims its Advanced PWR reactor, the AP1000, will cost USD $1500-$1800 per KW for the first reactor and may fall to USD $1200 per KW for subsequent reactors. They also claim these will be ready for electricity production 3 years after first pouring concrete.

If we assume a 7% interest rate and 4 year construction period, US operating costs in the second best quartile, the cost of electricity production for plants that cost $1.2 Billion, $1.5 Billion and$ 2.0 Billion US dollars would be 3.3, 3.8 and 4.4 US cents per KW-Hr respectively. If the AP1000 lives up to its promises of $1200 per KW construction cost and 3 year construction time, it will provide electricity fully cost competitive with Fossil Fuel based generating facilities.

Atomic insights also has some cost estimates

2003 MIT study estimated 6.75cents /kw hour
Capital cost of the plant - $2000 per kilowatt capacity
Construction duration - 5 years
Capacity factor - 85%
Plant lifetime - 40 years
Required return on equity - 15%
Interest rate - 8%
debt to equity ratio - 50/50

Reduce construction cost 25% - 5.5 cents /kwh
Reduce construction time 5 to 4 years - 5.3 /kwh
Further reduce O&M to 13 mills/kWe-hr - 5.1 /kwh
Reduce cost of capital to gas/coal - 4.2 /kwh

Actual current experience in the USA is capacity factor 90%, increasing plant life to 60 years, and shifting the debt to equity ratio to 80/20.
The state as investor instead of private capital there, would translate more or less like that:
Required return on equity - 5%
Interest rate - 5%
debt to equity ratio - 95/5

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