Introduction to the Costs of Nuclear Energy Production

The total cost of nuclear energy to the end user is comprised of several main components

• Construction: The largest portion of the total cost to the consumer.
• Operating: Comprised of daily expenses to run the plant including employees, administration, and fuel.
• Waste Disposal: Cost associated with the disposal of nuclear spent fuel.
• Decommissioning: Current charges to fund the future cost of decommissioning the plant.

The components of nuclear energy cost production do not contribute equally to the final cost to the end user. Construction costs represent the largest portion ranging from about 65-75% of total cost, followed by operating costs at about 23-33%, and finally decommissioning costs which contribute a meager 2-3% to the total.

Construction Costs

The majority of nuclear energy’s cost to the consumer is the extensive capital investment required to construct the plant. Construction costs for a nuclear plant can be divided into several subcomponents.

Real Estate: Cost of the land for the plant and the requisite area to surround the plant for security.

Materials: Commodities such as copper, steel, and concrete that go in to the construction of the plant.

Engineering and Design: The costs of engineers and contractors to design and assemble the plant.

Licensing: Costs incurred with inspecting and acquiring approval from the Nuclear Regulatory Commission (NRC) for operating the plant.

Financing: Cost of borrowing capital to build the plant.

Projections for new nuclear construction range dramatically due to fluctuations in materials, financing costs, the uncertainty of engineering and design costs, and the inability to accurately forecast the benefit of economies of volume. The nuclear power plants that exist in the United States today were all built with unique and varying designs. Current proposals for new nuclear construction in the U.S. revolve around the idea of implementing a standardized reactor design that would result in manufacturing synergies from utilization of standard parts, quicker approval from the NRC, and reduction in overall completion time due to the practice effect.

Operating Costs

Employee: Payroll, benefits, and other employee-related expenses make up the largest portion of operating costs.

Supplies: Commodities used in activities required to run the plant including items such as water, industrial gases, office supplies, gloves, paper, uniforms, etc.

Administration: Nuclear power plants are owned by companies that require administrative functions such as Human Resources, Information Technology, Legal, and Accounting to fulfill their obligations as a business.

Fuel: The fuel costs to produce energy from a nuclear reactor.

The Operating costs of a nuclear power plant are the daily expenses incurred to operate both the plant itself and the business that owns it. Operating costs are the second largest contributor of cost to the consumer.

Waste Disposal

Nuclear energy produces no emissions so the waste from energy production does not simply disperse into the atmosphere. The nuclear reaction produces waste that is then disposed of in dry casks and stored at facilities located across the United States and the world. Nuclear energy production results in a small volume of waste that is inexpensive to dispose. There is the possibility of recycling nuclear spent fuel, but that method would only be cost effective if economies of volume in third generation nuclear reactor construction were achieved. Nuclear spent fuel recycling does have the benefit of reducing the operating cost of fuel, but that would be offset by the cost of the recycling facility. When analyzing the cost structure of nuclear energy, the cost of waste disposal is actually included in the fuel subcomponent of operating costs.

Decommissioning

Companies that operate nuclear power plants are required to set aside money each year to build a reserve of funds to pay for the decommissioning of the plant at the end of its useful life. The projected cost to decommission the plant is calculated and spread across the expected life of the plant. Nuclear plants are projected to have a useful life of 40 years with the ability to extend that life through an application and review process with the NRC.

Image Credit

Cofrentes courtesy of Flickr user Toni Rodrigo under the CC license.