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Nuclear Power Economics

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6/30/10 1:44 AMNuclear Power Economics | Nuclear Power CostsPage 1 of 15http://www.world-nuclear.org/info/inf02.htmlThe Economics of Nuclear Power(April 2010)Nuclear power is cost competitive with other forms of electricity generation, exceptwhere there is direct access to low-cost fossil fuels.Fuel costs for nuclear plants are a minor proportion of total generating costs, thoughcapital costs are greater than those for coal-fired plants and much greater than those forgas-fired plants.In assessing the economics of nuclear power, decommissioning and waste disposalcosts are taken into account.The relative costs of generating electricity from coal, gas and nuclear plants vary considerablydepending on location. Coal is, and will probably remain, economically attractive in countriessuch as China, the USA and Australia with abundant and accessible domestic coal resources aslong as carbon emissions are cost-free. Gas is also competitive for base-load power in manyplaces, particularly using combined-cycle plants, though rising gas prices have removed muchof the advantage.Nuclear energy is, in many places, competitive with fossil fuel for electricity generation, despiterelatively high capital costs and the need to internalise all waste disposal and decommissioningcosts. If the social, health and environmental costs of fossil fuels are also taken intoaccount, the economics of nuclear power are outstanding.See also the December 2005 World Nuclear Association report (pdf 310 kB) The NewEconomics of Nuclear Power.External costsThe report of a major European study of the external costs of various fuel cycles, focusing oncoal and nuclear, was released in mid 2001 - ExternE. It shows that in clear cash terms nuclearenergy incurs about one tenth of the costs of coal. The external costs are defined as thoseactually incurred in relation to health and the environment and quantifiable but not built into thecost of the electricity. If these costs were in fact included, the EU price of electricity from coalwould double and that from gas would increase 30%. These are without attempting to includethe external costs of global warming.The European Commission launched the project in 1991 in collaboration with the USDepartment of Energy, and it was the first research project of its kind "to put plausible financialfigures against damage resulting from different forms of electricity production for the entire EU".The methodology considers emissions, dispersion and ultimate impact. With nuclear energy therisk of accidents is factored in along with high estimates of radiological impacts from minetailings (waste management and decommissioning being already within the cost to theconsumer). Nuclear energy averages 0.4 euro cents/kWh, much the same as hydro, coal isover 4.0 cents (4.1-7.3), gas ranges 1.3-2.3 cents and only wind shows up better than nuclear,at 0.1-0.2 cents/kWh average. NB these are the external costs only.6/30/10 1:44 AMNuclear Power Economics | Nuclear Power CostsPage 2 of 15http://www.world-nuclear.org/info/inf02.htmlThe cost of fuelFrom the outset the basic attraction of nuclear energy has been its low fuel costs compared withcoal, oil and gas fired plants. Uranium, however, has to be processed, enriched and fabricatedinto fuel elements, and about half of the cost is due to enrichment and fabrication. In theassessment of the economics of nuclear power allowances must also be made for themanagement of radioactive spent fuel and the ultimate disposal of this spent fuel or the wastesseparated from it.Areva figures early in 2008 showed 17% of the total kWh generation cost for its EPR being fuelcosts, and these broke down: 51% natural uranium, 3% conversion, 32% enrichment, and 14%fuel fabrication.In January 2010, the approx. US $ cost to get 1 kg of uranium as UO2 reactor fuel (at likelycontract price for the natural uranium from a mine):Uranium:8.9 kg U3O8 x $115.50US$ 1028Conversion: 7.5 kg U x $12 US$ 90Enrichment: 7.3 SWU x $164 US$ 1197Fuel fabrication: per kg US$ 240 Total, approx: US$ 2555At 45,000 MWd/t burn-up this gives 360,000 kWh electrical per kg, hence fuel cost: 0.71 c/kWh.But even with these included, the total fuel costs of a nuclear power plant in the OECD aretypically about a third of those for a coal-fired plant and between a quarter and a fifth of thosefor a gas combined-cycle plant.Fuel costs are one area of steadily increasing efficiency and cost reduction. For instance, inSpain nuclear electricity cost was reduced by 29% over 1995-2001. This involved boostingenrichment levels and burn-up to achieve 40% fuel cost reduction. Prospectively, a further 8%increase in burn-up will give another 5% reduction in fuel cost.Comparing the economics of different forms of electricity generationFor nuclear power plants any cost figures normally include spent fuel management, plantdecommissioning and final waste disposal. These costs, while usually external for othertechnologies, are internal for nuclear power (ie they have to be paid or set aside securely by theutility generating the power, and the cost passed on to the customer in the actual tariff).Decommissioning costs are about 9-15% of the initial capital cost of a nuclear power plant. Butwhen discounted, they contribute only a few percent to the investment cost and even less to thegeneration cost. In the USA they account for 0.1-0.2 cent/kWh, which is no more than 5% of thecost of the electricity produced.The back-end of the fuel cycle, including used fuel storage or disposal in a waste repository,6/30/10 1:44 AMNuclear Power Economics | Nuclear Power CostsPage 3 of 15http://www.world-nuclear.org/info/inf02.htmlcontributes up to another 10% to the overall costs per kWh, - less if there is direct disposal ofused fuel rather than reprocessing. The $26 billion US used fuel program is funded by a 0.1cent/kWh levy.The cost of nuclear power generation declined over the 1990s and into the new decade. Thiswas because declining fuel (including enrichment), operating and maintenance costs, while theplant concerned has been paid for, or at least is being paid off. In general the construction costsof nuclear power plants are significantly higher than for coal- or gas-fired plants because of theneed to use special materials, and to incorporate sophisticated safety features and back-upcontrol equipment. These contribute much of the nuclear generation cost, but once the plant isbuilt the cost variables are minor.Long construction periods will push


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