nuclear energy economy

Nuclear energy  economy

The main use of nuclear energy is generating electricity. Nuclear power is cost competitive with other forms of electricity generation except where there is direct access to low cost  fossil fuels.

Fuel costs for nuclear plants are minor proportion of total generating costs, though capital cost are greater than those for coal -fired plants and much greater these for gas fired plants. In assessing the economics of nuclear power De commissioning and waste disposal costs are fully taken into account.

Coal is and will be probably remain economically attractive in countries such as China, U.S. and Australia with abundant and accessible domestic coal reserves as long as carbon emission are cost free.

Nuclear energy in many places competitive with fossil fuels for electricity generation despite relatively high capital cost and need to internalize all waste disposal and De commissioning costs. If health and environmental costs of fossil fuels are also taken in to account, the economics  of nuclear power outstanding.

The basic attraction of nuclear energy has been its low fuel cost compared to coal, oil gas fired plants.

In March  2011 uranium cost

Approximate U.S. dollars cost to get  1 kg uranium as UO2 reactor fuel

Uranium ( spot price

Uranium --------- 1299 U.S. dollars
Conversion -------  98   U.S. dollars
Enrichment --------1132 U.S. dollars
Fuel fabrication ----240 U.S. dollars
--------------------------------------------
Total cost          --- 2769 U.S. dollars


At 45,000 Mwd/t burn up this gives 3,60,000 Kwh electrical energy per kg. Hence fuel cost 0.77 cents/ Kwh

Fuel costs are one area of steady increasing efficiency and cost reduction. For instance the Spain the nuclear energy cost reduced by 29 per cent over period 1995-2001. This involved boosting enrichment levels and burn up to achieve 40 percent fuel cost reduction. Prospectively a further 8 per cent increase in burn up will give another 5 percent reduction in fuel cost.

Uranium has the advantage  of being highly concentrated energy which easily and cheaply transportable. The quantities needed are very much less than  for coal or oil. One kilo gram of natural uranium will yield about 20,000 times as much energy as same amount of coal. it is therefore intrinsically a very portable and tradable commodity.

There are other possible savings. For example if used fuel is reprocessed and recovered Plutonium and uranium is used mixed oil (MOX) fuel more energy can be extracted. The cost of achieving this are large, but offset by MOX fuel not needing enrichment and particularly by smaller amount of high level wastes produced at the end. Seven UO2 fuel assemblies give rise to MOX assembly plus some vitrified high level waste, resulting in only about 35 % of volume mass and cost of disposal.



Comparison the economics of different forms of electricity generation.

It is important to distinguish between economics of nuclear power plants already in operation and those of planning stage. Once capital investment cost are effectively “sunk” existing plants operation at very low costs and are effectively “ cash machines” . Their  operation and maintenance and fuel costs ( including used fuel management) are along with hydro plants,  the low end of the spectrum and make them very suitable as base load suppliers.

The U.S. figures 2008 published by NEI shows that the general picture with nuclear generating power at 1.82 C/Kwh .

Doubling the uranium price (say from 25 dollars to 50 dollars per lb U3O8) takes the fuel cost up from 0.5 to 0.62 U.S. Cents per Kwh , an increase of one quarter, and is expected cost of generation of the best U.S. plants from 1.3 U.S. Cents per Kwh  to 1.42 cents per Kwh  (an increase of 10 percent). So while there is some impact, it is comparatively minor especially by comparison with the impact of gas prices on economics gas operating plants. In these 90 percent marginal cost can be fuel. Only if uranium prices rise to above 100 dollars per lb U3O8( 260 pall / kg Uranium) and stay there  for prolonged period (which seem to be unlikely) will the impact on nuclear generating costs be considerable.

Nevertheless, for nuclear power plant operating in competitive power markets where it is impossible to pass on any fuel price increase( utility is a price taker) higher uranium prices will cut corporate profitability, yet fuel cost have been relatively stable over a period- the rise  in world uranium price 2003 to 2007 added generation costs, but conversion, enrichment and fabrication costs did not follow the same trend. 


Nuclear future cost competitiveness

There are three broad -components  capital, finance and operating costs. Capital and financing cost makes up project cost.

Capital costs

 Compress several things the bare plant cost (usually identified a engineering-procurement-construction ( EPC cost  )  the owner costs (land, cooling infrastructure, administration and associated buildings, site works, switch yard project management licenses etc )  cost escalation and inflation. Owner costs may include transmission infrastructure . The term overnight capital costs is often used, meaning EPC plus owners cost and excluding financing, escalation due increased material and lab our costs and inflation. Construction cost-some times called “ all in cost “ adds to overnight cost any escalation and interest during and up to  the start of construction. It is expressed in the same units as overnight cost and is useful for identifying total cost of construction and for determining the effects of construction delays. In general construction cost of nuclear power plant are significantly higher than for coal-or gas fired power plants because of need to use special materials and incorporated sophisticated safety features and back up control equipment.

Long construction period will push up financing costs, and part they have done so spectacularly Asia construction times have tended to be shorter, for instance Japanese reactors which began operating in 1996 and 1997, and build over period 4 years and 48 to 60 months  in typical projection plants to do. 

Decommission costs are about 9-15 per cent initial capital costs of nuclear power plant. But when discounted they contribute only few per cent to the investment costs and is less to generation costs. U.S.A. they account for 0.1 -0.2 cents / Kwh which are more than 5 % of  cost of electricity produced.

Financing costs

Financing costs, will depend on the rate of interest on debt, the debt equity ratio  and if regulated how capital costs are recovered. There must be allowance for rate of return on equity which is risk capital.

Operating costs include operating and maintenance (O&M ) plus fuel. Fuel cost figures include used fuel management and final waste disposable . These costs while usually external for other technologies are internal for nuclear power.(i.e. they have to be paid or set aside security by utility generating power , and cost passed on to the customer in a actual tariff).

The “back end “ of fuel cycle including used fuel storage and disposal in waste repository, contributes up to 10 % of overall cost per kwh - rather less if there is direct disposal of fuel used rather than reprocessing. The 26 million U.S. dollars U.S. fuel program is funded by0.1 cent /kwh levy.

It is important to note that capital cost figures quoted by reactor vendors or which are general and cannot site specific, will usually just for EPC costs. This is because owners costs will vary hugely,  most of all according to whether a plant is Greenfield or established site perhaps replacing an old plant.

The end of 2008 vendor figures for overnight costs (excluding owner cost have been quoted as

GE -Hitachi ESBWR just under U.S. dollars 3000/ KW
GE-Hitachi ABWR just over U.S. dollars 3000/KW
Westinghouse AP 1000 about U.S. dollars 3000/KW

There several possible resources of variation which preclude confident comparison of overnight or EPC capital costs-e.g. whether initial core load of fuel included. Much more obvious is whether the price for nuclear Island alone ( nuclear steam supply system or whole plant including turbines and generators all the above figures include these.) further differences relate to site works such as well as land are permitting-usually they ensure all owner costs as out lined earlier in this matter .Financing costs are additional adding typically around 30 per cent and finally there is the question of  whether cost figures are in current or (specified year dollar values or in those of the year in which spending occurs.)

Overall expenditure you look nuclear power plant with a life 60 years ( generation third reactors ) capital cost will easily recoverable and nuclear power is cheap if you take long time into consideration.