U.S. nuclear power plants are not nationally owned
or operated, though they are very heavily regulated.
Due to the fragmented nature of the U.S. electrical
power generation industry, the capital cost of a new
reactor can represent an unacceptable risk to an entity
proposing to add new capacity. Economic risks are
often too high for individual companies considering
adding new nuclear capacity without mitigation as-
sistance from the government, often in terms of loan
guarantees. Historically in the 1970s and 1980s default
rates on these loans were as high as 50 percent (Indi-
viglio 2010). Other anticipated economic risks include
liability concerns, licensing delays, regulatory or
statutory changes, mid-stream government mandated
design changes, construction delays, and the resulting
increased finance costs and delayed return on invest-
ment.
Capital costs are often estimated in terms of “over-
night cost.” Overnight cost “is an estimate of the cost
at which a plant could be constructed assuming that
the entire process from planning through completion
could be accomplished in a single day” (EIA 2010f,
2). This concept allows financing to be treated sepa-
rately and is useful for making more meaningful com-
parisons across technologies. In a 2009 update to an
oft-cited 2003 Massachusetts Institute of Technology
(MIT) study, titled Update of the MIT 2003 Future of Nu-
clear Power, the authors estimate that major U.S. con-
struction projects, like nuclear plants, have increased
15 percent annually from 2003 through 2009 (Deutch
et al. 2009, 6). Their estimate of overnight costs for ad-
ditional generating capacity (2007 constant dollars) is:
nuclear $4000/kW, coal $2300/kW, and natural gas
$850/kW (Deutch et al. 2009, 6). For a notional 1 GW
reactor the overnight capital cost would be $4 billion.
sharon
(sharon)
#1