The economics

Conventional wisdom holds that while there are substantial capital costs for the construction of nuclear power plants, the actual operating costs compare favourably with other sources. Although the true cost of nuclear power is difficult to determine, the 2003 MIT study estimates a cost of 6.7 US cents per kilowatt hour and 2004 University of Chicago studies claim 6.2 US cents per kilowatt hour (University of Chicago, 2004). New technologies, as yet unproven, and equitable carbon pricing policies could make nuclear an attractive economic option.

Proponents and critics alike acknowledge that economics is a major factor influencing the growth of nuclear energy. Critics claim that nuclear power will only attract the significant private investment required if governments guarantee profits and markets and assume major risks and liabilities for cost overruns, fuel and waste disposal costs, decommissioning and accidents. Their view is that nuclear power plants are not economic without direct and hidden subsidies. Virtually all of the nuclear power plants in operation today were developed by government-owned monopolies, with investors insulated from many risks that are borne by taxpayers and consumers.

Investors are cautious about taking on the financial risks associated with capital-intensive projects prone to cost overruns. The long lead times, perhaps a decade from design, through government approvals and construction to completion and regulatory uncertainty, have been significant barriers. Even though worldwide operational performance has improved (the IAEA records an average unit capacity factor of 83 per cent in the period of 2003 to 2005) and average operating costs have decreased in countries such as the US, greater incentives will be necessary.

These range from reform of the licensing process, perhaps by combining construction and operating licences in one application, limiting redesign requirements, and improving performance in operations that have been marked by unplanned and costly shutdowns. Design of simpler reactors and extension of licensed lifetimes would improve the economic case.

There is a worldwide trend towards privatization of electricity generation. The UK's consultation document on the future of nuclear power states: 'It would be for private-sector energy companies to propose and fund the construction and operation of any new nuclear power stations - including full costs of decommissioning and full share of waste management costs' (UK DTI, 2007). The consultation document also recognizes that governments can play an important role in reducing regulatory uncertainty. Most analysts argue that stimulating additional investment will require policy initiatives, such as pricing of carbon, setting up an emissions trading system, and providing tax credits and subsidies in order to demonstrate cost and regulatory feasibility.

0 0

Post a comment