ECONOMICS OF NUCLEAR POWER PLANT

Introduction

Nuclear Power has been one of the major sources of energy to countries whom have accepted nuclear technology. Their dependence on nuclear power has contributed very much to the development and growth of their nation economically. Even though there are public uncertainty through international organizations and people towards the energy source, the widespread development of nuclear technology has never being stopped due to its greater potentials that are being overseen by many.  For the past centuries, coal, gas and fossils have been the major source of power to the world, leading to the slowly rather nearly to the depletion of these resources. As fossils are non-renewable resources, its trend of scarcity and towards depletion has opened the door for nations after nations to consider nuclear power energy source alternative.

With the implementation of sustainability and environment conservations other sources of energy such as hydro, wind, solar and biomass have been sought and developed globally. However, big countries have also experience the rapid increase in energy consumption due to further developments, commercial growths and increase in population. In trying to meet the energy demand, a few energy sources would certainly be unstable compared to a variety of sources being adopted and implemented. Nowadays Nuclear power has been one of the energy sources that many countries are slowly embarked on for their future as they begin to encountered complexities in the conventional energy sources such as coal, gas and fossil fuel in terms of prices and availability.

Base on the history of nuclear energy, experts have revealed the industry have gone through decades of power development from demonstrating that power reactors could be designed, built and operated; showing that power reactors can be operated economically; the reaffirmation by the nuclear industry to providing a safe source of electrical generation and serious public skepticism after a number of nuclear accident around the world. Currently into the 21^st century with around the sixth decades of nuclear power, the uncertainty of public’s faith is still a major factors in nuclear power countries and internationally.

In terms of safety, the main priority and being the cornerstone of nuclear developments is the addressing of the three basic S’s which are the improvements and maintaining of Safety, Security and Safeguard of nuclear energy. By implementing and enforcing the safety , the Atomic Energy Licensing Board (AELB) has drafted into their vision and mission their regulating authority with credibility and encouraging innovative culture towards ensuring Nuclear safety, securing and safeguarding its peaceful uses.

Industry technologists are continuing their dedication and commitment to developments of new design systems with advancing improvements and attaining to operating reactors economically. Reactor safety is the most significant factor in these developments and will continue to play significant role in nuclear developments.

Nuclear is proven to be more competitive economically with fossil fuels for electrical generation, despite its high capital costs for decommissioning power plants and the need to internalize its entire waste disposal. The economics of nuclear are found to be more outstanding when the social, health and environment costs of fossil fuels are taken into account. However experts have declared for the industry to survive, nuclear advocates must be committed to restoring the public faith in the integrity of the industry and have the willingness to publicly participate in healthy.

From the perspective of the economics of nuclear, the paper will briefly elaborate on the resources, its availability and the cost of processing into nuclear fuel. In addition, other costs included for brief discussion are the capital cost and operating and maintenance cost in the long run.

The Cost of Nuclear Fuel

One of the basic attractions of nuclear energy is that its low fuel costs as compared with coal, oil and gas fired plants. The nuclear fuel or the Uranium does go through a cycle from getting the raw materials to processing and to waste which is known as the nuclear fuel cycle. The nuclear fuel cycle starts from the mining of the uranium, and then it goes to milling where the uranium is extracted from the ore, then to the process of conversion and enrichment and ends with the disposal of the nuclear waste.

In the conversion process, the uranium is refined into uranium dioxide for reactors that do not required enriched uranium, but most is converted to uranium hexafluoride ready for enrichment process. The enrichment process then enriched the uranium to the required level known as low enriched uranium which is then reconverted to produce enriched uranium oxide before it is fabricated into fuel pellets. Fuel fabrications are always involving very specific design.

Based on the overall cost of fuel, the enrichment process and fabrication is almost half the total cost. Accounted also to the cost of fuel are the management of radioactive used fuel and the disposal of used fuel. However with the total cost of nuclear fuel including the management and disposal of used fuel in a nuclear power plant it comes to about one third of the total cost for a coal-fired power plant and generally about one fifth of those for a gas turbine power plant.

According to the US Nuclear Energy Institute, for nuclear power plant the cost of uranium is about 14% of plant costs while for coal power plant the coal costs is about 78% and 89% for gas fired plant or gas turbine power plant. Uranium also has the advantage of being highly concentrated energy source which can be transported at lower cost. A one kilogram of uranium will produces 20,000 times as much energy as coal which is really a huge difference and much more economical.

Reprocessing of used fuel can be another possible way of further reducing the cost whereby the remaining not fission uranium plutonium and are extracted. According to Areva, about eight fuel assemblies reprocessed can yield one MOX fuel assembly, two-thirds of an enriched uranium fuel assembly, and about three tonnes of depleted uranium (enrichment tails) plus about 150 kg of wastes. It avoids the need to purchase about 12 tonnes of natural uranium from a mine. Shown below is the uranium price taken in March last year 2011.

Table: The Approx. US$ cost to get 1Kg of uranium as UO₂ reactor fuel.

Uranium:	8.9kg U3O8 x $146	US$1300
Conversion:	7.5kg U x $13	US$98
Enrichment:	7.3 SWU x $155	US$132
Fuel Fabrication:	Per kg	US$240
Total Approximation:		US$2770

The Operating Costs

The operating costs are rated as the second largest contributor to the cost of nuclear energy where it covers the cost incurred on operating and maintaining the plant.  It can also be referred to as production cost where fuel, employees, administration and supplies cost included.

Based on the studies conducted by the Nuclear Energy Agency (NEA) which is also an agency for the Organization of Economic Co-operation and Development (OECD) from 1983 to 2005, a trend of fuel and operation and maintenance (O&M) costs of nuclear power plant over the period were projected and being compared with other competing energy sources. The result of the studies shows a relative stability in the overall generating costs of nuclear power plant.

From the results of the studies by OCED/NEA, there are two different factors that contributed to the stability of the overall generating cost of NPP over the years:

1. Nuclear fuel costs have fallen due to lower uranium and enrichment prices together with new fuel designs allowing higher burnups.
2. Operating and maintenance (O&M) cost have now been stabilized at levels which are more competitive with other energy source power plant used for base load generation.

For instance, the fuel costs in the United States have fallen from 1.28 cents per kWh in the mid 1980’s down to 0.44 cents per kWh only to 2005. The latest nuclear fuel price is around 0.65cents per kWh. The price of uranium have continued to rise over the years, but it does create a minor impact on the electricity cost since the uranium is only a small fraction of about 5% of the total kWh cost.

Since the overall marginal costs of operating nuclear plants are quite low, it can only be competed in terms of costs by other power plants that generate electricity without using fuel, which refers to renewable energy sources such as hydro, geothermal, biomass, solar, wind and other renewable sources. However most of these renewable energy sources generate power at lower rate compared to nuclear but on lower scale.

Shown below is the Average US nuclear production cost from 1981 to 2003. From the table, it can be realized the downward trend in fuel and O&M cost from 1985 to 2003.

Table: Average US nuclear production costs, (cents per kWh)

	1981	1985	1990	1995	2000	2003
O&M costs	1.41	1.93	2.07	1.73	1.37	1.28
Fuel    costs	1.06	1.28	1.01	0.69	0.52	0.44
Total	2.47	3.21	3.08	2.42	1.89	1.72

Comparing Economics of Different Forms of Electricity Generation

To prove the often discussed attractions of the nuclear power, it would be necessary to compare its operating cost to other existing energy that has been the conventional energy sources over the decades. Here the production costs between nuclear power plant, coal power plant, gas-fired power plant in kWh.

Figure: Electricity Production Costs in US 1995-2008(cents per kWh)

Production Cost = Operation & Maintenance Cost + Fuel cost.

From the figure above it can be clearly concluded that Nuclear is far less expensive than Oil and gas but runs closer below coal production costs.

Conclusions

There is no doubt that nuclear power plant is the most efficient and economical electrical generating source currently in use at large scale. Even though some renewable energy source may compete well in operating costs in terms of kWh but they will have huge difference in power scale. Apart from the low fuel costs, the O&M costs are also remarkably low relative to those other electricity power generating source. Coal power plant may have similar operating expense but its maintenance will be higher due to more carbon emissions. New innovative nuclear technology has also increased its reliability thus having fewer breakdowns making it safer. Nuclear power plant will continue to be more efficient with the development and implementation of more advance technologies such higher burn up fuels. The enrichment and spend fuel management will also contribute to the stability in nuclear fuel cost.

Other attractive features of nuclear power plant that supports its economic advantage is free emissions from the power plant itself. However in reality, there are emissions produced from the nuclear fuel cycle from mining and transporting of uranium for conversion, enrichment and fabrication. Overall nuclear energy does reduce greenhouse emission gas which is rather a contentious issue.

References

1.      John Ritch, “The New Economic of Nuclear Power”, World Nuclear Association, Published 2005, pg 11-13.

2.       John Ritch, “The Nuclear Fuel Cycle”, World Nuclear Association, ‘June 2011 Vol, Pg 1-4.

3.      Jason Morgan, “Operating Cost of Nuclear Power plant”, Nuclear Fissionary, Published March 15, 2010.