Overall competitiveness of various generating
technologies is often expressed in terms of “levelized
cost.” Levelized cost “represents the present value of
the total cost of building and operating a generating
plant over an assumed economic life, converted to
equal annual payments and expressed in terms of real
dollars to remove the impact of inflation” (EIA 2010f,
5). Levelized costs include overnight capital cost, fuel
cost, and fixed and variable O&M costs. The 2009 MIT
study estimate of levelized costs for additional generat-
ing capacity (2007 constant dollars) is: nuclear $0.084/
kWh, coal $0.062/kWh, and natural gas $0.065/kWh
(Deutch et al. 2009, 6). This study assumed a 40 year
operating lifetime for the nuclear plant, not the 60 year
lifetime that is becoming the U.S. norm, meaning the
levelized costs for nuclear energy are likely overesti-
mated relative to coal and natural gas.
The study also included a risk-premium in terms
of a higher weighted cost of capital for the nuclear
case, which was not included in the coal or natural
gas case. This is due to a poor industry track record
in the 1980s and 1990s, in terms of construction cost
overruns, schedule delays, and loan defaults. While
indications are that this premium may not be mer-
ited today, it is the opinion of the MIT authors that it
should only be removed once demonstrated plausible
by actual construction. As a result, many are closely
watching the progress of the Vogtle nuclear project
underway near Augusta, Georgia. With this risk pre-
mium removed (and still only considering a 40 year
operating lifetime), nuclear levelized costs would be
reduced to $0.066/kWh, which is competitive with
both coal and natural gas (Deutch et al. 2009, 6). The
study also includes another estimate which includes a
notional $25/ton charge on the CO 2 emitted into the
atmosphere. This charge does not impact the level-
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