2/4/04 22.812 1 February 3, 2004 Nuclear Energy Economics and Policy Analysis Nuclear Energy Economics and Policy Analysis 12/4/04 22.812 3Nuclear Energy Economics and Policy Analysis World Primary Energy Production World Primary Energy Production 1992 2001 (commercial) (Quads =1015 BTU) (Quads =1015 BTU) Petroleum Coal Natural gas Hydro Nuclear Wind, geothermal, solar, wood, and waste 136.5 (39%) 155.3 (38%) 89.3 (25%) 96.0 (24%) 76.9 (22%) 93.5 (23%) 22.9 (6.5%) 26.7 (6.6%) 21.2 (6.0%) 26.4 (6.5%) 2.01 (<1%) 3.1 (<1%) TOTAL 351.1 (100%) 403.4 (100%) U.S. Energy Information Administration: http://www.eia.doe.gov/emeu/iea/table29.html 22.812 Nuclear Energy Economics 4 and Policy Analysis 2 2/4/042/4/04 22.812 5 (2000) Thermal 9318.4 (63.8%) Hydro 2625.8 (18.0%) Nuclear 2434.2 (16.7%) Geothermal 238.7 (1.6%) TOTAL 14617.0 (100%) About 440 nuclear plants provide nearly 17% of world’s electricity. Nuclear Energy Economics and Policy Analysis World net electricity generation by fuel type, 2000 Billions of kilowatt hours U.S. Energy Information Administration: http://www.eia.doe.gov/emeu/iea/table63.html Countries with highest dependence on nuclear power (2000) Source: International Atomic Energy Agency Country France Lithuania Belgium Slovakia Ukraine Bulgaria South Korea Hungary Sweden Switzerland Slovenia Japan Finland Germany Spain United Kingdom Czech Republic United States Russian Federation Canada Number of nuclear plants 59 2 7 6 13 6 16 4 11 5 1 53 4 19 9 35 5 104 23 14 Nuclear percentage of electricity generation 76.4 73.7 56.8 53.4 47.3 45.0 40.7 40.6 39.0 38.2 37.4 33.8 32.1 30.6 27.6 21.9 20.1 19.8 14.9 11.8 WORLD TOTAL 438 16.0 2/4/04 22.812 Nuclear Energy Economics and Policy Analysis 6 32/4/04 22.812 7 Source: International Atomic Energy Agency Nuclear Energy Economics and Policy Analysis 2/4/04 22.812 8 • under construction Construction began 2002 (5 in India, one in DPRK) down in 2002 Source: International Atomie Energy Agency Nuclear Energy Economics and Policy Analysis Relatively few new nuclear plants are on 6 new plants in 4 plants were shut 42/4/04 22.812 9Nuclear Energy Economics and Policy Analysis EIA Projection of World Nuclear Power Growth through 2025 2/4/04 22.812 10 How did we get to this point? • – – – – Nuclear Energy Economics and Policy Analysis Some hypotheses: . . . . . . . . . . . . . . . . . 52/4/04 22.812 11 • power plants • Public concerns over nuclear power plant safety and siting • Nuclear waste disposal • Nuclear proliferation and nuclear terrorism 22.812/ESD.163J Nuclear Energy Economics and Policy Analysis Key obstacles to future nuclear power development High costs and financial risks of nuclear Nuclear Energy Economics and Policy Analysis (S'04): Preliminary Schedule 2/4/04 22.812 12 Class Date Topic 1 Wed Introduction. 2 3 Wed Mon Feb 16 VACATION 4 Tue Feb 17 No Class 5 Mon Feb 23 6 7 8 9 10 Review session 11 Quiz#1 12 13 VACATION VACATION 14 15 16 17 18 19 VACATION 20 21 22 23 24 25 Mon May10 26 Nuclear Energy Economics and Policy Analysis Feb 3 Mon Feb 9 Balance sheets and income statements. The time value of money. Discrete and continuous compounding. Feb 11 Time value of money mechanics (contd.) Wed Feb 18 The effects of inflation. Calculation of capital costs Depreciation, capital recovery, and taxes Wed Feb. 25 Depreciation, capital recovery, and taxes (II) Mon Mar 1 Levelized cost of product. Carrying charges Wed Mar 3 Methods for project evaluation Fri Mar 5 (Makeup Class) Methods for project evaluation (II): Nuclear power economics Mon Mar 8 Wed Mar 10 Mon Mar 15 Scale economies. Investing under uncertainty. Wed Mar 17 Nuclear fuel cycles (I) Mon Mar 22 Wed Mar 24 Mon Mar 29 Nuclear fuel cycles (II): Material balances and simple cost models Wed Mar 31 Nuclear fuel cycles (III): Enrichment case study Mon Apr 5 Nuclear fuel cycles (IV): MOX case study Wed Apr 7 Quiz #2 Mon Apr 12 Nuclear theft & nuclear sabotage Wed Apr 15 Nuclear safeguards, export controls, and the Non-Proliferation Treaty Mon Apr 19 Wed Apr 21 Managing nuclear safety risks Mon Apr 26 Spent fuel/high level waste management (I) Wed Apr 28 Spent fuel/high level waste management (II): Once-through vs. closed cycles Mon May 3 Risk perceptions, risk communication & public attitudes Wed May 5 Global nuclear growth scenarios Term Project Presentations Wed May 12 Term Project Presentations 62/4/04 22.812 13 • – How national economies work; how the international economy works • Microeconomics – Behavior of firms and markets • economics) – Analyzing the performance of real investments � Nuclear Energy Economics and Policy Analysis Some important distinctions Macroeconomics Engineering economics (managerial 2/4/04 22.812 14 • – expectation of future rewards.” – Examples: • Purchasing equipment • Building a plant • Laying in a stock of goods for later sale • Paying tuition • A superbowl ad • R&D – Two essential features of any investment • Time • Risk Nuclear Energy Economics and Policy Analysis Investment analysis What is an investment? “The act of incurring an immediate cost in the 72/4/04 22.812 15 • Engineering economics • Accounting Nuclear Energy Economics and Policy Analysis Another important distinction – Predicting the consequences of alternative future courses of action – Establishing a precise historical record of past economic activity 2/4/04 22.812 16 • – Assets, liabilities, net worth • – Revenues, cost of goods sold, operating expenses,operating income, net income, etc. • • – – Return on investment – Nuclear Energy Economics and Policy Analysis Key concepts for next class Balance sheet Income statement (profit-and-loss statement) Cash flow statement Financial ratios Return on assets Liquidity ratios