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The economics of nuclear power plants are not favorable to future investments

Investing into third generation nuclear power plants – Review of recent trends and analysis of future investments using Monte Carlo Simulation    https://www.sciencedirect.com/science/article/abs/pii/S1364032121001301     Renewable and Sustainable Energy Reviews  Volume 143, June 2021, 110836  Author links open overlay panelB.WealerabS.BauerbC.v.HirschhausenabC.KemfertacL.Göke

Highlights

•Cost escalations in the nuclear sector observed in previous research continue until today.
•Investing into a nuclear power plant today is not a profitable business case.
•The net present values are mainly negative, in the range of five to ten billion USD.
•Interest during construction is a major cost driver not to be underestimated.
•Policy debates should consider total costs including interest and construction time.

Abstract

This paper provides a review of trends in third generation nuclear power plants, and analyzes current and future nuclear power plant investments using Monte Carlo simulations of economic indicators.

We first review global trends of nuclear power plant investments, including technical as well as economic trends. The review suggests that cost escalations in the sector observed in previous research continue until today, including the most recent investment projects in the U.S. and in Europe.

In order to extend this analysis, we carry out our own investment analysis of a representative third generation nuclear power plant, focusing on the net present value and the levelized cost of electricity. We base our analysis on a stochastic Monte Carlo simulation to nuclear power plant investments.

We define and estimate the main drivers of our model: Overnight construction costs, wholesale electricity prices, and weighted average cost of capital, and discuss reasonable ranges and distributions of those parameters.

Model runs suggest that investing in nuclear power plants is not profitable, i.e. expected net present values are highly negative, mainly driven by high construction costs, including capital costs, and uncertain and low revenues.

Even extending reactor lifetimes does not improve the results significantly. We conclude that our numerical exercise confirms the literature review, i.e. the economics of nuclear power plants are not favorable to future investments, even though additional costs (decommissioning, long-term storage) and the social costs of accidents are not even considered.

March 22, 2021 - Posted by | 2 WORLD, business and costs

1 Comment »

  1. […] The economics of nuclear power plants are not favorable to future investments […]

    Pingback by The economics of nuclear power plants are not favorable to future investments – GNS-GLOBAL NETWORK SYSTEM | March 22, 2021 | Reply


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