ECONOMICS

Cost's estimation

Major cost's analysis

Not everyone noticed that costs of the power plants generally is rapidly increasing. In the nuclear industry this increase is even faster.

Figure 37.IHS Cambridge Energy Research Associate Power Capital Costs Index
Source: Own development based on IHS CERA (Cambridge Energy Research Associate) data, http://www.ihsindexes.com/ [130]

Analysis prepared by Cambridge Energy Research Associate (CERA), presented in Figure no. 37, indicates that in period 2000 - 2008, Power Capital Cost Index increased by 233 % and European Power Capital Index increased by 200%. According to [131], costs of other technologies has been rising much slower. In next years 2009 and 2010, PCCI and EPCCI slightly decreased to 215% and 194%. However CERA forecasts expect future growth for North America PCCI and constant value for European PCCI.

Publications relate to several cost types but in fact costs are commonly mistaken. According to Table no. 6, between 2001 and 2009 overnight cost were estimated between 0,82 mil eur/MW and 7,27 mil eur/MW. However the oldest data, in relation to Figure 41, should be omitted, because they are obsolete. The most recent estimation presented in Harding study (2009) [132] assumed overnight cost of 7,27 mil eur/MW in high scenario. Very reliable data from Moody's report [132] indicates overnight cost of 4,38 mil eur/MW and All-in cost of 5,25 mil eur/MW.

Table 6.Nuclear power plant costs summary, 2001 - 2009
Source: Own development based on M. C o o p e r, "The economics of nuclear reactors: Renaissance or Relapse?", Institute for Energy and The Environment Vermont Law School, June 2009, [132]

J. G a m b l e, "New Nuclear Construction: Vogtle 3 and 4", 23 March 2010, http://nuclearfissionary.com/2010/03/23/new-nuclear-construction-vogtle-unit-3-and-4/, [133]

"Economics of new nuclear power plants", http://en.wikipedia.org/wiki/Economics_of_new_nuclear_power_plants, [134]

Apart from studies presented in Table no. 6, there are several different sources of overnight cost of nuclear power plant. For example,

  • In relation to [135], the U.S. Federal Energy Regulatory Commission staff, estimated cost of 7,5 mil $/MW (5,25 mil eur/MW) in 2008. Moody's Investor Service, taking this data into consideration, noted that busbar cost would be 15 c$/kWh (150 $/MWh and around 105 eur/MW).
  • The same report [135] quotes estimations of Florida Power & Light Company from 2008 of Turkey Point nuclear power plant extension with cost of 4,200 - 6,100 mil $/MW (2,940 - 4,270 mil eur/MW) and estimations of Progress Energy Inc. of two Levy Country reactors with cost of 6,300 mil $/MW (4,410 mil eur/MW) without transmission system upgrade. Important is that calculations are dated in the year 2008. Today cost are higher.
  • In accordance to [4],[70],[136],[137],[138] overnight cost should be estimated on 4,5 mil eur/MW. Calculation of busbar electricity cost based on above assumption is 111,8 eur/MW, with 25 years credit payment period and 5 years construction time. [4]
  • Interesting source of costs are transcripts of the hearings before the U.S. Public Service Commision of Maryland. The testimony from 2008 [139] present total cost of 5,5 - 8,1 mil $/MW (3,85 - 5,67 mil eur/MW) and indicates that estimates are significantly higher than previously predicted. The subsequent 2009 transcript [140] notices total cost of 9 mil $/MW (6,3 mil eur/MW).
  • Recent study of costs of electricity generation [141], assumed overnight cost of 4,5 mil $/MW (3,15 mil eur/MW) in mid-range scenario. The levelized cost of electricity (COE) with operating costs included, ranges from 100 to 160 $/MWh (70 - 112 eur/MWh) depending on scenario. Cost are expressed in 2008 dollars.
  • In 2008 the testimony of Jim Harding [142], indicates overnight cost of 5 mil $/MW (3,5 mil eur/MW) with the proviso that large cost escalation is possible.

    • Discussion about economics of nuclear power plant is not ended, because cost are changing. According to [143], the US overnight costs increased in 2009 to 6 mil $/MW (4,5 mil eur/MW) just after call for tenders for financial loan guarantees. It shows how sensitive is the overnight cost to any activities at the market. It is also worth to notice how important is direct describing cost type. In accordance to [144] average EPC cost in 2009 was 3,21 mil eur/MW, while overnight cost reached 4,94 mil eur/MW. Overnight/EPC cost factor is 1,54, but still financial costs are not included.

    Generally great optimism during estimation of nuclear power plant cost is not proper attitude. Calculations should be carried by objective group of experts not only economists but also electricians and lawyers. How difficult is to estimate future cost of nuclear facility, the following statement testifies:

    "Nobody has ever over-estimated the construction cost of a nuclear power plant at the pre-construction stage."[145]
    - Paul Joskow, Massachusetts Institute of Technology,2006

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