FS01%20Economics

FS01%20Economics - Economics of Nuclear Power Authors Mark...

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November 2006 1 The key determinants of the cost and economic viability of nuclear energy include: 1 the capital costs of reactor construction the time taken to build the reactor the interest rates associated with project fnancing the reactor’s eFfciency and perFormance the costs of adequate liability insurance relating to accidents and terrorist acts the required rate of return on capital investment the costs of reactor decommissioning the costs of radioactive waste storage and disposal Economics of Nuclear Power Authors: Mark Diesendorf & Peter Christoff energyscience.org.au Industry based costings are unreliable and unverifed. The nuclear industry has been hugely subsidised. Nuclear power is currently more expensive than wind power in the UK and USA. fact sheet 01
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November 2006 2 Comparisons between the costs of nuclear energy and energy from other sources are usually distorted in favour of nuclear power by overstating likely reactor performance, understating the time taken to build the reactor and therefore of the costs of Fnancing construction, understating the required rate of return, understating the costs of accidents (the liability of plant owners is limited by governments and therefore the real cost of an accident will be borne by the state), and excluding estimated costs of reactor decommissioning, waste storage and disposal. The costs of waste storage and disposal have usually been subsidised or borne entirely by the state, and the costs of decommissioning are hard to forecast. A fully competitive electricity market may favour other energy technologies and further increase investment risks and therefore costs to nuclear producers and energy users. A report to the UK Sustainable Development Commission points out difFculties of obtaining objective data on the economics of nuclear power. The following concerns apply equally well to Australia: “There are few sources of data on the costs of future nuclear power that relate directly to UK circumstances… The problematic category is capital costs, where there is no recent European or North American experience. Examination of the limited number of published capital cost estimates that apply directly to the UK shows that all appear to derive from studies originally designed to apply to other countries and from vendors of reactor systems .” 2 (our italics) Other problems arise where studies fail to identify the discount rate used to convert capital cost in dollars per kilowatt into a levelised cost of electricity in cents per kilowatt-hour; some studies address new or modiFed types of reactors that are only in the design stage and have not been built; some studies do not specify the year of the currency; and most studies do not reveal whether they assume that a single reactor or a batch of identical reactors is ordered, yet the expected cost depends strongly upon this assumption. The British experience of nuclear power costs was disastrous, as revealed when the UK electricity industry was
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This note was uploaded on 05/30/2009 for the course AEM 2300 taught by Professor Lee,d.r. during the Spring '06 term at Cornell.

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FS01%20Economics - Economics of Nuclear Power Authors Mark...

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