The up-front construction of a nuclear energy plant is the main component of overall cost of nuclear energy to the end user because on-going operating costs are relatively low. This is unlike coal fired plants that have a lower up-front cost in construction but higher daily operating costs due to their consumption of large quantities of fuel.
Real Estate for New Nuclear Construction
Nuclear energy plants require a large plot of land for construction. The facility itself is not materially different in size from a coal fired plant, but the surrounding grounds of a nuclear plant are usually larger. This is to satisfy certain safety and security requirements from the Nuclear Regulatory Commission (NRC) and other security agencies. The geographic location of the plant is the determining factor for the cost of the land it sits on. Despite the large amount of land employed by nuclear construction, the cost of the real estate can be put spread across multiple reactors on a given site to increase utilization of the land and decrease the cost of land per unit of energy produced. Although land can be very valuable in certain markets, it pales in comparison with other construction costs and therefore does not act as either a barrier to entry or a limiting cost variable.
Materials in Nuclear Construction
Construction materials such as copper, steel, concrete, and other commodities employed in the assembly of a nuclear power plant can contribute a degree of uncertainty in overall construction cost. Some of these commodities are very variable in cost, such as steel, and the large quantities required for construction can become expensive in a tight market. The price of steel dropped about 49% from July 2008 to August 2009. Many of the new nuclear construction cost projections out there were developed at a time when steel was far more expensive than it is today. The difference in steel prices alone will save tens of millions of dollars in construction materials cost.
Engineering and Design of Nuclear Power Plants
The current nuclear power plants in the United States are all built with unique and varying designs. This led to a compartmentalization of design, repair, and maintenance knowledge across the industry. Each plant requires custom parts for their designs. This method of construction means that there can be no cost synergies across the industry from standardized parts and training of labor. The new round of nuclear construction being analyzed in the US will focus on implementation of a standard design and type of reactor to reduce engineering and design costs by sharing them across many new plants. Additionally, engineering and design of nuclear power plant construction expertise is centralized within the hands of a few companies. When a construction boom occurs, the new nuclear plant projects must all compete for resources from these suppliers. The demand increases without an increase in supply leading to a higher construction costs. The labor costs of contractors to assemble the plant and its ancillary structures is also included in this construction cost segment.
Licensing New Nuclear Construction
The NRC must evaluate each plant individually to ensure that proper safety, security, and operational standards are met. Current nuclear plants in the US experienced long delays in NRC approval as a result of their varying designs. Each design was time consuming and costly to be licensed because it was completely different from other plants in operation. The new nuclear construction with a standardized design will be much easier and quicker for the NRC to evaluate and assign an operating license. This will also reduce overall time to completion, which impacts the financing cost component of new nuclear construction.
Financing New Nuclear Construction Projects
The sleeping giant of the total cost for new nuclear construction is the financing expense associated with borrowing capital to complete the project. Lending institutions charge utility companies a risk premium on their loans because of the uncertainty with new nuclear construction projects. The duration of construction also plays a significant role in the total financing cost because interest is accrued on a massive principal without the plant generating revenue to pay back the loan. New nuclear construction estimated to take three years to build will double in total cost if the project is delayed by two to three years as a result of the massive interest expense accrued during the delay.
Nuclear Loan Guarantees from the US Government
A common misconception with government loan guarantees for new nuclear construction is that it is a subsidy or direct loan from the government. Government loan guarantees for new nuclear construction are more like an insurance policy than a loan. Essentially, the government is backing a loan of a certain amount to a utility company for a new nuclear plant, so in the event that something either delays or halts construction on a new nuclear plant, the lending institution financing the project will be repaid. This is important because a loan guarantee should theoretically reduce the risk premium charged by lending institutions for nuclear construction financing, thereby reducing the overall cost of the project due to decreased interest expense.
Economies of Volume in New Nuclear Construction
Plans for low-cost nuclear energy hinge on the premise of economies of volume in new nuclear construction. This concept would reduce construction costs by implementing standardized designs and practices across the industry. Utilities would reduce their cost to construct nuclear energy plants by decreasing the engineering, design, licensing, and the financing costs associated with new construction. The standard design would be easier and faster for the NRC to evaluate, and engineers and contractors would benefit from the practice effect when building multiple new nuclear energy plants.
Image Credit
North Korean Nuclear Reactor Construction Site courtesy of Flickr user Podknox under the CC license.
A Storm was Coming courtesy of Flickr user MiiiSH under the CC license.
15 Comments
One thing that needs to be brought out in debate is what comparable baseload capacity costs using other fuels.
Lester Brown was on NPR the other day uttering absolute gibberish about how expensive nuclear power was. Richard Lester of MIT, Scott Burnell, NRC, and Grizz Deal from Hyperion, and Lester Brown were on a panel discussion. Brown cited what he called an “independent” study (by none other than Amory Lovins) on nuclear cost, he brought up the cost overruns in Finland, and compared new nuclear with new wind. The other panelists presented good solid information.
But was it really necessary to say, as the Head of Nuclear Science and Engineering at MIT Richard Lester did:
“Lester Brown is right about the cost issue”
Or as Grizz Deal chimed in:
“I completely agree with Lester Brown” at a point when Brown had been attacking big reactor projects as too complex and doomed to massive cost overruns.
When debating one of these anti-nukes, keep in mind all their statements about nuclear cost can be compared to their favorite “baseload” energy source of choice, i.e. solar thermal. Lester Brown cited the cost overrun in Finland as a fact that changed that project from being a “poster child” for the nuclear renaissance to its “tombstone”. No one laughed. It was astonishing.
As Rod Adams pointed out later in his blog post on this podcast, after the cost overrun is factored in the Finns get a reactor for $4400 kW capacity. I would use a figure of $4900 and call it available kW assuming 90% capacity factor.
The Andasol 1 solar thermal plant in Spain, a salt storage plant of the type which is often touted as the “baseload” of the future by these clowns who call nukes too expensive, cost in excess of $19,000 per available kW.
I believe the US subsidies, i.e. 30% ITC and accelerated depreciation, cost taxpayers more per available kW than giving nuke plants away for free. 30% of $19,000 is $5700.
The salt storage that Spanish plant has allows it to operate at nameplate capacity for 7 hours in the dark after a good day in the sun. A cheaper plant, with only 1/2 hour of salt storage like Nevada Solar One cost around $17,000 per available kW when it was built in 2007. I’m using NREL figures for these plants. The designer of the Spanish plant says it produces electricity for 37 US cents kWhr.
This is what the people who call nuclear power too expensive are promoting.
Its preposterous.
Nuclear proponents are used to comparing their industry with fossil fuel generators that are allowed to freely emit their wastes into the environment. But this is not what the “nukes cost too much” debate is about today. Its about what do we do if all the fossil fuels have to be replaced, or if their emissions have to go to zero?
It came as a surprise to me to find that pro-nuclear types, who claim they defer to the best science when it comes to radiation and the safety of their plants, do not tend to understand that CO2 emissions are a problem.
This is incredible. I say what this means is that pro nuclear people do not understand what a scientific case is. They have no respect for the most reputable scientific organizations in the world, i.e. the science academies of the world, who have come together as a group of groups to warn civilization it is playing with fire with unrestricted CO2 emissions. It isn’t just Al Gore, or the IPCC. Pro nukes who say there is something wrong with the climate case are saying Ralph Cicerone, President of the National Academy of Sciences, is stupid. Every other head of every science academy in the developed world must be a moron as well. This is what you are saying.
Being this anti-science has got to make it harder for pronukes to sell the idea that radiation is not the end of the world. No wonder there is so much BS floating around about ridiculously tiny tritium releases at VY. What can you say, you pay attention to data gathered by scientists? Who would listen to you?
The strongest voices dumping on nuclear over its cost are people who have understood that fossil fuel generators can’t emit CO2 anymore. Hence they do not have a cheaper source than nuclear for baseload and they know it.
Yet the farce continues. Pro nuclear people have bought into the line that nukes cost a lot compared to coal therefore the industry needs standard designs, small reactors, streamline the license, etc. when all they have to do is point out that there is no alternative as cheap as nuclear, by a long shot, for large scale baseload.
@David – I fully intend to present cost comparisons of multiple energy sources, especially baseload sources. I already have figures that clearly show nuclear has the lowest production costs in the industry for baseload generation, beating out coal, petroleum, and natural gas by a considerable margin. But that is for another day.
Question for you: Is there something wrong with streamlining the licensing process and determining which of the new generation of reactors should be implemented as a standard design in order to curb construction costs? You seemed to refer to the concept with a touch of disdain, but I feel that any way to avoid a billion or more dollars in interest expense, and another billion or so in materials and engineering & design is an intelligent choice to make when looking to build new nuclear plants. Do you have a good reason as to why new nuclear construction in the US should not try to leverage these cost-saving concepts?
David Lewis wrote:
Do you mean the Ralph Cicerone who said last month that the recent controversies surrounding climate research have eroded public trust in scientists and damaged the image of science as a whole?
Do you mean the guy who has said the following:
If there’s something wrong with the “climate case” then it’s because of the unprofessional and unscientific actions of the researchers themselves (or at least Cicerone seems to think so), not because of the opinion of a few of nuclear engineers.
Besides, a wise advocate is careful about what he hitches his wagon to, and when it comes to PR, climate catastrophe is a poor horse indeed. Not only is it currently suffering from the credibility issues that Cicerone mentions above, but it also ranks dead last in the American public’s list of priorities. To put it bluntly, most of the public just doesn’t seem to care, or at least, they are more concerned with jobs and energy right now.
Thus, winning issues are the high-paying jobs and energy security that building new nuclear plants would provide. These benefits are certainly more tangible than some vague chicken-little threat — a farce that has now gone as far as to undermine the public’s trust in science itself.
So who does care about these climate issues? Apparently, the polls indicate that it is a small minority of activists with very loud voices. As you point out:
Let me turn that around. I’d say that the strongest voices who insist that fossil fuel generators can’t emit CO2 anymore are the same people who have been dumping on nuclear, and they have been doing that for a long time now. I have been listening to their ridiculous arguments for my entire life, and I know firsthand that their claims about nuclear energy are unscientific nonsense. So please tell me, why should I start listening to these people now?
David is absolutely right. Once subsidies are backed out of the equation, nuclear is the lowest cost non-carbon option. Yet the reigning conventional wisdom is that new reactors are the most expensive option. Remember, too, that Gen III Reactors are designed to last 60 – 80 years, and if they merit life extensions proportional to the ones being given to current Gen II reactors, this will mean operational lives of 90 – 120 years.
Nuclear advocates should adopt the practice of providing, directly to the reporters making or confirming or accommodating false assertions about price, well-sourced and well-supported information that demonstrates actual costs compared with actual costs of other non-carbon (while operating) resources. This should be done while maintaining a factual and respectful tone. If enough of us do this enough, things will start to change.
@ Frank – I agree with you on this issue, especially the point you make about providing factual cost data in a respectful manner to source who would have people believe fallacies about the cost of nuclear energy.
I hope that I did not give the impression that I believe nuclear energy is too expensive. My intent with this particular post was merely to explain the various costs that go into constructing a new nuclear power plant. Don’t worry, we will get to cost comparisons factoring in subsidies, etc, we’re just not there yet. Still setting the stage and explaining the fundamentals for those who may not be as informed. It’s like the no child left behind act – right now I’m working on educating (myself) and others about the basics. Then on to the real meat of the issues.
The problem is the cost is all upfront. It’s real easy to shout numbers like a $8 billion, but nobody ever talks about the per kWHr cost. Nuclear is cheaper than every other source except possibly coal. Of course, paying for Carbon emission would level that playing field as nuclear is the only power source that pays for it’s byproducts. Even still, I’m not for taxing carbon. You could very easily cut hundreds of millions off of the expenses for nuclear is you cut through the red tape and denied the intervenors lawsuits.
Jason,
Nice break down of the big picture items that go into a nuclear power plant. I think many of us engineering types take this type of stuff for granted and we forget to break it down for others. And it is always a good reminder to see the basics every now and then.
You made the comment that you are working on cost structures. I would recommend that you pay some attention to CAES. This is making the rounds in wind arenas as a gotcha against nuclear about how wind can be combined with CAES to level out power put onto the grid. I became insterested in this subject over the past few weeks and keep coming across documents that are always battling against nuclear in some fashion. I just downloaded a pro-wind research article published in Energy that made the point how wind with CAES should be used to compete with nuclear.
I agree with Frank as well. In recent article in the Washington Post a person was quoted about how the Vogtle plants will cost the ratepayers significant money and the plants should be stopped. Turns out this person as a life long natural gas advocate and his business was based on smoothing out natural gas prices and supplies for his industrial clients so he stands to lose significant income once Vogtle 3&4 come on line. A friend and I were conversing on this issue by email and then the friend sent my email to the reporter dirrectly. Remarkably the reporter responded with a statement to the effect that he had not considered that possibility and would look futher into the point we were trying to make. I have not heard back from him but that is okay since at least our points registered with reporter.
Keep up the good work.
Interesting point about CAES, Bill. Compressed air storage is a great way to make an expensive power source a bit more reliable and much more expensive. With CAES the only possible way for wind to be profitable would be to store ALL wind energy in compressed air (at a considerable loss – most likely 50-70%). Then ONLY put that power out to the grid during peak demand in super summer. This is what most of the natural gas turbines in the country do now, hence the 11% capacity factor.
Of course the potential energy of that compressed air would be orders of magnitude more dangerous than a nuclear plant (watch the antis jump on me for that one even though I’m right).
Thanks, Bill. I will make sure I pay attention to CAES when developing cost comparisons across multiple energy sources. I am quite interested to see how that cost stacks up – wind and solar are already very expensive (don’t worry, I fully intend to back that up in a later post).
@David: I share your dismay about global-warming deniers/skeptics in the nuclear world. A very intelligent, highly-placed Ph.D. in the nuclear world recently said to me, “We’re advocating new nuclear plants simply because they’re better–we don’t have to resort to all the B.S. about nuclear mitigating greenhouse gases. Those claims are a crock.” Then I have heard people on the environmental side who are worried about rising global temperatures angrily denounce the nuclear industry for lying about the role of nuclear plants in greenhouse-gas avoidance. The nuclear climate-change skeptics believe very much in the same PRA and modeling that supports reactor safety, etc. while disregarding the same science underlying the climate-change PRA and its conclusions.
The climate-change defenders consider the climate science sound because of the PRA and modeling but denounce the same methodology when it finds nuclear power low-risk.
As for cost, government estimates from 2008 put the cost to the nation from climate- change impacts in the $trillions. These analyses do not include the human and ecological costs rising acidification of coastal waters (caused by carbonic acid from excess CO2 uptake in the ocean) and the concomittant effects on marine life. Nuclear power is the only large-scale way to replace the offending fossil fuel plants. So even if the cost per nuclear kWh were doubled, it would still be worth every penny to have a reliable source of base-load electricity to meet growing demand while shutting down coal-fired plants.
@Gwyneth – great points on the “hidden” costs associated with other forms of energy production. I am also going to be taking a look at the environmental impact of strip coal mining because it is an extremely devastating practice that is often overlooked. It’s not just the emissions being spewed, but also the impact of the mines which are far more invasive than a uranium mine.
@Jason: What about the health costs of fossil fuel combustion? The emissions from coal-fired and gas-fired plants cause 24,000 deaths a year, according to a Clean Air Task Fund study, along with hundreds of thousands of cases of cardiac, respiratory, and other diseases–and that’s just from fine particulates created by NOX and SOX.
And here’s a quote from a report from the National Academies:
“Coal accounts for about half the electricity produced in the U.S. In 2005 the total annual external damages from sulfur dioxide, nitrogen oxides, and particulate matter created by burning coal at 406 coal-fired power plants, which produce 95 percent of the nation’s coal-generated electricity, were about $62 billion; these nonclimate damages average about 3.2 cents for every kilowatt-hour (kwh) of energy produced. A relatively small number of plants — 10 percent of the total number — accounted for 43 percent of the damages. By 2030, nonclimate damages are estimated to fall to 1.7 cents per kwh.
“Coal-fired power plants are the single largest source of greenhouse gases in the U.S., emitting on average about a ton of CO2 per megawatt-hour of electricity produced, the report says. Climate-related monetary damages range from 0.1 cents to 10 cents per kilowatt-hour, based on previous modeling studies.
“Burning natural gas generated far less damage than coal, both overall and per kilowatt-hour of electricity generated. A sample of 498 natural gas fueled plants, which accounted for 71 percent of gas-generated electricity, produced $740 million in total nonclimate damages in 2005, an average of 0.16 cents per kwh. As with coal, there was a vast difference among plants; half the plants account for only 4 percent of the total nonclimate damages from air pollution, while 10 percent produce 65 percent of the damages. By 2030, nonclimate damages are estimated to fall to 0.11 cents per kwh. Estimated climate damages from natural gas were half that of coal, ranging from 0.05 cents to 5 cents per kilowatt-hour. ”
http://www8.nationalacademies.org/onpinews/newsitem.aspx?RecordID=12794
Good resource. I look forward to reviewing it in more detail and hopefully using it as a reference in a later post.
FUNNY how so many rightwingers apparently struggle with accepting the “science” supporting nuclear power while simultaneously denying climate change. They want to believe the lying nuclear propaganda AND their fundy preachers and politicians but since the lying nuclear propaganda is cloaked in pseudo-science they have to cozy up on some level to reality and that causes them great conflict. It’s sometimes quite amusing to observe rightwingers in conflict with reality, but unfortunately many well-meaning people who don’t know better will often blithely accept the lies as true, as the lying author of this lying blog appears to hope.
I would like to see a real analysis of nuclear costs that takes into consideration the ENTIRE nuclear fuel cycle and its consequences all the way from mining to long term storage of radwaste and dealing with the inevitable cancers resulting from not only the best-case zero-accident assumptions but considering that accidents and sabotage/terrorism will also occur in the real world.
High level reactor waste is going to contain significant quantities of Pu-239 which has a half-life of nearly 25,000 years. A general rule of thumb when dealing with high level wastes of any kind is that it takes TEN HALF-LIVES of careful storage under guard for its radioactivity to be dissipated to the point that it isn’t dangerous anymore. So in the case of Pu-239 that’s almost 250,000 years, meaning SOMEBODY has to either store and guard it for all that time or else suffer the very real and severe consequences of criminals, incompetents, and accidents causing its release.
The proper way to look at nuclear power is to imagine the test of time. Imagine for example that the ancient Egyptians had created hundreds of nuclear power plants all over the place, fully knowing that their nuclear garbage would be dangerous for many tens of thousands of years, yet selfishly harvesting their “cheap power” in total disregard of everyone who would come after. We would consider them criminal psychopaths today, long after their civilization had vanished and long after we had forgotten most of their names and the specific individuals responsible for their irresponsibility. We would hate them, we would revile them, we would use them as models for what to never let our own culture become. By now we would likely be committing a major part of our global energy on containing their garbage (adding new ‘shells’ around their crumbling structures, like Chernobyl will have to be maintained for the next quarter million years) and doing the best we could to clean up what leaked out and to counteract the excess radioactivity we would all be exposed to from the arrogant irresponsibility of a psychopathic culture that existed thousands of years before.
You pro-nuke types should take a longer view and realize your children and grandchildren and their children far down the line will hate you and consider you a primitive savage for being so selfish as to contaminate the world almost forever (on a human scale) for your 40 years of ‘cheap’ power per nuke plant. Cheap? As long as you do not hold any value for your children, perhaps you can think of it that way. But it is not going to be cheap for the many generations who will have to deal with the results of the psychopathic uncaring attitudes you hold today.
“FUNNY how so many rightwingers apparently struggle with accepting the “science” supporting nuclear power while simultaneously denying climate change.”
Support for nuclear power is neither exclusively right-wing, not exclusive to the reality of climate change.
“High level reactor waste is going to contain significant quantities of Pu-239 which has a half-life of nearly 25,000 years.”
Pu-239 is fissile. We don’t recycle our spent fuel right now because there’s the irrational fear that the Pu-239 will be separated from the Pu-240 and Pu-241 that reactor grade plutonium is contaminated with, and turned into weapons. That this is orders of magnitude more difficult than specially making Pu-239 or enriching U-235 – both things governments can feasibly do on the DL – seems lost on this fear.
Anyway, yeah. Backgrounding spent fuel takes 250,000 years – but spent fuel tailings only takes 300-500 years to background. No, it’s not in your generation, but reprocessing and storing the fission products is /far/ less insane than trying to control a repository for a quarter million years to store something that’s going to slowly become nearly pure weapons grade plutonium before it’s fully backgrounded.
Of course, you later trot out the “think of the children” red herring – stored nuclear fuel is a solid, man. It stays where you put it, and one would hope that you’re not storing it in your children’s playpen. We’re not contaminating the world – that’s what coal plants do, having uranium in their fly ash. Support for nuclear power means preventing climate change and trying to
/deprecate/ coal and natural gas.
But hey, you think I’m psychopathic. That’s cool. I just want to prevent entire countries from flooding, killing their populations. The Maldives? Gone in less than 100 years if we don’t replace our carbon producing energy sources at a realistic speed. But, you know, /I/ lack empathy. Seriously, dude? Get some damned perspective.
5 Trackbacks
[...] Construction: The largest portion of the total cost to the consumer. [...]
[...] costs of a nuclear power plant are the second largest contributor of the cost of nuclear energy to the consumer. These are the daily expenses incurred to [...]
[...] Construction costs of a nuclear power plant represent the largest expense of nuclear energy. Cost estimates for new nuclear construction in the US developed over the past decade project the “all-in” costs (total cost, including financing) to be anywhere from $5 to $9 billion. I think these estimates are far too high and will challenge them and the assumptions in a future post. However, up to 50% of the $5 to $9 billion can be attributed to interest expense from financing the project. [...]
[...] received a comment from a reader named DancesWithFascists on Jason Morgan’s post entitled Construction Costs of New Nuclear Energy Plants. I’ve decided to make my response to this comment a dedicated [...]
[...] main cost components of energy are construction costs and production costs. Total cost per kWh can be calculated by taking the per kWh cost of [...]