CRITICAL
ISSUES FORUM
BENCHMARK
III
Topic:
ŇNuclear Renaissance: Risk versus BenefitsÓ
Students:
Georgy Koshelev, Andrew
Popov
Form
10
Gymnasia
# 41
Teacher:
Helen Patrusheva
Teacher
of English
Gymnasia #41
Novouralsk
Sverdlovsk region
Russia
2008
The
economic domain
In
Benchmark III we are going to demonstrate an understanding of the economic
domain of nuclear energy.
The
economics of new nuclear power plants is a controversial subject. On the one hand capital costs are high,
but fuel costs are low. The question about building a nuclear power plant or
not is strongly dependent timescales and capital financing. Cost estimates also need to take into
account plant decommissioning and nuclear waste storage costs. On the other
hand measures to lessen global warming, such as a carbon tax or carbon
emissions trading, may favor the economics of nuclear power.
Analysis of the economics
of nuclear power must take into account future risk uncertainties associated
with construction costs, operating performance, fuel price, and others. Many
countries have now liberalized the electricity market where these risks, and
the risk of cheaper competitors, are borne by merchant plant suppliers rather than consumers, which can lead
to a significantly different evaluation of the economics of new nuclear power
plants. [2]
The economics of nuclear power plant
Picture 1 Designed by the authors
Capital costs
Because of the large
capital costs for nuclear power, and the relatively long construction period
before revenue is returned, servicing the capital costs of a nuclear power
plant is the most important factor determining the economic competitiveness of
nuclear energy. The investment can contribute about 70% of costs of electricity.
Construction delays can happen (e.g. changes in licensing, inspection and
certification) adding
significantly to the cost of a plant. Because a power plant does not yield
profits during construction, longer construction times translate directly into
higher interest charges on borrowed construction funds. Modern nuclear power
plants are planned for construction in four years or less (42 months for CANDU
ACR-1000, 60 months from order to operation for an AP1000, 48 months from first
concrete to operation for an EPR and 45 months for an ESBWR) as opposed to over
a decade for some previous plants. However, despite Japanese success with ABWRs,
the first EPR (in Finland) is significantly behind schedule.
In Japan and France,
construction costs and delays are significantly diminished because of
streamlined government licensing and certification procedures. In France, one
model of reactor was type-certified, using a safety engineering process similar
to the process used to certify aircraft models for safety. That is, rather than
licensing individual reactors, the regulatory agency certified a particular
design and its construction process to produce safe reactors.
In 2006, Business Week
magazine stated, "..., the [US] industry is aiming to build new plants for
$1,500 to $2,000 per kilowatt of capacity ...Č. However, they also added,
"Trouble is, the cheapest plants built recently, all outside the U.S.,
have cost more than $2,000 per kilowatt."
To encourage development
of nuclear power, under the Nuclear Power 2010 Program the U.S. Department of
Energy (DOE) has offered interested parties the opportunity to introduce
France's model for licensing and to subsidize 25% to 50% of the construction
cost overruns due to delays for the first six new plants. [2]
Operating costs
In general, coal and
nuclear plants have the same types of operating costs (operations and
maintenance plus fuel costs). However, nuclear has lower fuel costs but higher
operating and maintenance costs. [2]
Decommissioning
At the end of a nuclear plant's lifetime (estimated at between 40 and 60
years), the plant must be decommissioned. This entails Dismantling, Safe
Storage or Entombment. Operators are usually required to build up a fund to
cover these costs while the plant is operating, to limit the financial risk
from operator bankruptcy.
In the United States, the Nuclear Regulatory Commission requires plants to
finish the process within 60 years of closing. Since it may cost $300 million
or more to shut down and decommission a plant, the NRC requires plant owners to
set aside money when the plant is still operating to pay for the future
shutdown costs. [2]
Insurance
Insurance for nuclear or
radiological incidents in the U.S. is organized by the Price-Anderson Nuclear
Industries Indemnity Act. In general, nuclear power plants have private
insurance and assessments that are pooled into a fund currently worth about $10
billion. Insurance claims beyond the fund's size would be organized by, and
probably paid by, the U.S. government. In July 2005, Congress extended this Act
to newer facilities. [2]
Cost per kWh
Factoring in all these issues, various groups have attempted to calculate a
true economic cost for electricity generated by the most modern designs
proposed.
If an actual cost per kWh can be calculated,
then it is possible to compare it to other power sources to determine if such
an investment is economically sound.
In 2003, the Massachusetts Institute of Technology (MIT) issued a report
entitled, "The Future of Nuclear Power". They estimated that new
nuclear power in the US would cost 6.7 cents per kWh. However, the Energy
Policy Act of 2005 includes a tax credit that should reduce that cost slightly.
The lifetime cost of new generating capacity in the United States was estimated
in 2006 by the U.S. government. Nuclear power was estimated at $59.30 MWh.
However, the "total overnight cost" for new nuclear was assumed to be
$1,984 per kWe – as seen above in Capital Costs, this figure is subject
to debate. [2]
Decision-making bodies must operate all these
costs.
Nuclear power plant economic impacting
Picture 2
Designed by the
authors
Developing countries
A developing country is that country which
has a relatively low standard of living, an undeveloped industrial base, and a
moderate to low Human Development Index (HDI) score and per capita income, but
is in a phase of economic development. Usually all countries which are neither
a developed country nor a failed state are classified as developing countries.
Countries with more advanced economies than other
developing nations, but which have not yet fully demonstrated the signs of a developed
country, are grouped under the term newly industrialized countries. Other
developing countries which have maintained sustained economic growth over the
years and exhibit good economic potential are termed as emerging markets.
The application of the term developing country to any country which is
not developed is inappropriate because a number of poor countries have
experienced prolonged periods of economic decline. Such countries are
classified as either least developed countries or failed states.
Development entails a modern infrastructure (both
physical and institutional), and a move away from low value added sectors such
as agriculture and natural resource extraction. Developed countries, in
comparison, usually have economic systems based on continuous, self-sustaining economic
growth in the tertiary and quaternary sectors and high standards of living. [2]
These countries need big amount of cheap
electricity. So, they used to make electricity from fossil fuels.
Energy price
In the following table you may see the cost of
energy (kWh) produced by various types of power plants.
|
Electricity generation type |
Costs (USD cents per kWh) |
|
Wind |
4–8 ˘/kWh |
|
Solar photovoltaic |
25–160 ˘/kWh |
|
Solar thermal |
12–34 ˘/kWh |
|
Large hydropower |
2–10 ˘/kWh |
|
Small hydropower |
2–12 ˘/kWh |
|
Geothermal |
2–10 ˘/kWh |
|
Biomass |
3–12 ˘/kWh |
|
Coal |
1–4 ˘/kWh |
|
Natural gas |
2–4 ˘/kWh |
|
Nuclear |
2–6 ˘/kWh |
* (alternative)
* (fossil)
* (nuclear)
Picture 3 Designed
by the authors
The
alternative energy is the most expensive type of energy, but it is also the
less harmful for the environment of our planet. Scientists suppose that most of
the countries will change their preferences in the type of electricity generation
during the following 50 years, because the prices of fossil and nuclear fuels
are growing too rapidly.
Electricity
generation capacity
In
the following table you may see power generation capacity of various types of
power plants.
|
Power plant type |
Capacity (MW) |
|
Wind |
50–250 MW |
|
Solar |
1–7 MW |
|
Hydro |
1 330–6 400 MW |
|
Geothermal |
3–5 MW |
|
Coal |
2200–4200 MW |
|
Natural gas |
2400–4800 MW |
|
Nuclear |
800–1500 MW |
* (alternative)
* (fossil)
* (nuclear)
Picture 4 Designed by the authors
Fossil
and nuclear power plants produce more energy than alternative power plants, but
they are more harmful for the environment of our planet. Modern technologies of
construction hydropower plants assume even higher level of energy producing
than fossil and nuclear power plants use to do.
Conclusion
In
reality, for those countries with rapidly expanding economies which have large
rivers, there is an alternative to fossil fuel except nuclear energy. It is
hydro power. Hydro power has a good price and hydro power plants are powerful
enough.
Free market
A free market is a market
in which prices of goods and services are arranged completely by the mutual
consent of sellers and buyers. By definition, in a free market environment
buyers and sellers do not force or mislead each other nor are they forced by a
third party. The effect of these decisions is described by the natural law of
supply and demand. Free markets contrast sharply with controlled markets, in which governments directly or indirectly
regulate prices or supplies, distorting market signals. In the marketplace the
price of a good or service helps to quantify its value to consumers and thus
balance it against other goods and services. In a free market, this
relationship between price and value is clearer than in a controlled market.
Through competition between vendors for the provision of products and services,
prices tend to decrease, and quality tends to increase. [2]
Index of economic
freedom
The Heritage Foundation, a conservative think tank, tried
to identify the key factors which allow to measure the degree of freedom of
economy of a particular country. In 1986 they introduced Index of Economic
Freedom, which is based on some fifty variables. This and other similar indices
do not define a free market, but measure the degree to which a
modern economy is free, meaning in most cases free of state intervention. The
variables are divided into the following major groups:
á
Trade policy,
á
Fiscal burden of government,
á
Government intervention in the economy,
á
Monetary policy,
á
Capital flows and foreign investment,
á
Banking and finance,
á
Wages and prices,
á
Property rights,
á
Regulation, and
á
Informal market activity. [2]
So, nuclear control is an
intervention in the economy and decreases an index of economic freedom.
Conclusion
As you can see, sale of
nuclear technologies is a controlled part of economy. Nuclear technology market
is under control of NRC and other nuclear agencies; we have written some
information about them in the previous Benchmarks.
It is
regulated by the governmentŐs agencies. We donŐt think that governments violate
the premises of a free-market economy.
Bibliography
and other sources:
2.
http://www.en.wikipedia.org