1. The Economics of Nuclear Power Steve Fetter University of Maryland

2. Cost of Electricity, U.S. Reactors (2004$/MWh) Koomey & Hultman (submitted) 2007 30 40 50 60 70 80 90 100 110 120 130 140 Average COE, 2005, all sources

3. Cost of Electricity, 99 U.S. Reactors (2004$/MWh) Koomey & Hultman (submitted) 2007 Koomey & Hultman (submitted to EP 2007)

4. Components of COE

5. Where’s the Learning Curve?

6. Nuclear Power Economics Estimated cost of electricity (COE) for a new U.S. nuclear reactor: Expense COE ($/MWh) Construction50 Non-fuel operations and maintenance (O&M) 15 Fuel-related expenses5 Total70

7. Nuclear v. Alternatives ($/MWh) nuclear coal gas wind solar capital50301260250 O&M1553105 fuel51025-5000 total704540-6570250 + $100/t C 0251200 new total70 52-7770250

8. Nuclear Capital Cost Construction costs in U.S. are highly uncertain –no operating reactors ordered after 1973 –last reactor was completed in 1996 Reasonable estimate for the overnight construction cost of new advanced light-water reactors: about $2000/kW e –$2 billion for a 1000-MW reactor

9. Overnight Construction Cost OCC ($/kW) Actual Japan2300 - 2800 Korea1800 Estimated EIA1500 - 2000 NEA1800 GE1400 - 1600 Framatome1200 - 1300 Westinghouse1000 - 1700 Finland1600

10. Overnight Construction Costs (2004$/kW) Koomey & Hultman (submitted to EP 2007)

11. From OCC ($/kW) to COE ($/MWh) F idc interest during construction factor (~0.2) F preop pre-operating cost factor (~0.1) F cont contingency cost factor (~0.1) CFcapacity factor (0.85) F cr fixed charge rate F tax property tax rate F ins insurance rate (~0.13/y)

12. From OCC ($/kW) to COE ($/MWh) OCC ($/kW) COE cap ($/MWh) 120030 160040 200050 240060

13. Fixed Charge Rate Construction costs are financed through debt (bonds) and equity (stock). Electricity sales must be sufficient to pay dividends to investors, after taxes and other expenses are paid, which requires recovering a fraction of total up-front costs each year: “fixed charge rate” or F cr. F cr depends on the rate of return necessary to attract the required capital. For a regulated utility, the average cost of money is modest: 6 to 7%/y (half the rate for large private firms).

14. Fixed Charge Rate t e corporate income tax rate (38%) bfraction of capital raised with bonds (0.5) i b rate of return on bonds (5%) i e rate of return on stocks (8%) Ncapital recovery/depreciationperiod (15 y)

15. Fuel Costs: Once-Through Fuel Cycle Repository U3O8U3O8 UF 6 Dry Storage (optional) Conversion fresh fuel LEU spent fuel “front end” “back end” Wet Storage

16. Front-end Costs unit costunits/kg$/kg$/MWh Uranium$50/kg10 kg$5001.3 Conversion$5/kg10 kg$500.1 Enrichment$100/SWU6 SWU$6001.5 Fabrication$250/kg1 kg$2500.6 Total$14003.5 Assumes fuel with 4.4% U235 and burnup of 50 MW t d/kg, tails assay of 0.3% U235, and efficiency of 33%

17. Back-end Costs $/kg$/MWh Wet storageincluded in capital, O&M Dry storage$2000.5 Geologic disposal$4001.0 Total$6001.5 Total front + back$20005.0

18. From $/kg to $/MWh Compare to total COE of $70/MWh –fuel related costs ~ 7% of COE Conversion, enrichment, fabrication costs stable At $50/kg, uranium 25% of fuel costs, 2% COE –average price paid by U.S. operators in 2006 –if price doubles, COE increases 2%

19. Uranium Prices

20. Direct Disposal v. Reprocessing in LWRs Pu Repository U3O8U3O8 UF 6 Interim Storage Conversion LEU fuel MOX fuel spent LEU spent MOX HLW and ILW DU Conversion UF 6 rU LEU spent LEU spent MOX

21. Reprocessing and Recycle Widespread agreement that today R&R is more expensive than direct disposal –official studies in France and Japan –recent studies by MIT, Harvard, Chicago Advocates argue difference is small: additional 1.5 to 4 $/MWh (~3-8% of COE) –but total cost is high: $1-3 billion/yr, plus $50-100 billion to reprocess 60,000 tons already discharged Advocates argue difference will disappear soon if nuclear power grows and U price increases –but premium is likely to persist for 50-100 yr even if nuclear grows substantially

22. Premium for R&R in LWRs $200/kg interim storage for DD $200/kg waste credit for R&R ($/MWh)

23. Breakeven Uranium Price $200/kg interim storage for DD $200/kg waste credit for R&R

24. These estimates are favorable to R&R $200/kg interim-storage charge included for direct disposal (but not R&R) $200/kg (50%) cost savings for waste disposal MOX fuel fabrication well below recent prices No charges for Pu storage, Am removal, reactor relicensing, or extra security for MOX Equal disposal costs for spent MOX and LEU (or continuous recycle of without cost penalty)

25. LWR (direct disposal) v. FBR Pu Repository U3O8U3O8 UF 6 Interim Storage Conversion LEU fuel HLW, ILW DU Conversion UF 6 rU LEU spent LEU MA

26. Premium for R&R in FBRs Utility Owner $1000/kg reprocessing ($/MWh)

27. Uranium Resources Breakeven U price > $130/kg even in best case How much U is available? Red Book gives 16 Mt available at $130/kg, but… –high-cost resources in many countries (e.g., Australia) not estimated; –unconventional resources (e.g., phosphates) not included; –little investment in exploration in last 20 y –most minerals have steadily decreased in price with increasing consumption

28. 43 of 47 Elements Have Decreased in Price

29. A Very Rough Estimate of Ultimately Recoverable Uranium Resources Red Book give 2.1 Mt at $40/kg Hore-Lacy: “a doubling of price from present levels could be expected to create a tenfold increase in measured resources.” So there should be 21 Mt available at $80/kg and 210 Mt at $160/kg In general: R ~ 2.1(P/40)  where  = long-term price elasticity of supply

30. Recoverable Resources Source Long- term elasticity of supply  MtU recoverable at price less than $40$80$130 UIC (doubling price creates ten-fold increase in measured resources) 3.322.121105 Deffeyes and MacGregor (ten-fold decrease in concentration = 300-fold increase in resource, p ~ c) 2.482.11239 Gen-IV (based on U.S. reserves for various mining methods) 2.352.11134 Red Book2.11116

31. IIASA/WEC Global Energy Perspectives

32. Cumulative U consumption: LWRs with direct disposal