Operating 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 operate and maintain the plant. These costs in the industry are typically referred to as production costs.
- Fuel
- Employees
- Administration
- Supplies
Fuel
Fuel costs are the most commonly thought of expense for any power plant. Different types of power plants have drastically different cost of fuel. A nuclear power plant’s operating cost profile has a substantially smaller proportion of fuel than other types of power plants. Fuel accounts for approximately 26% of a nuclear power plant’s operating costs; coal, natural gas, and oil fuel costs account for about 80% of their respective power plants’ operating costs. Unlike other types of power plants, nuclear plants also have to absorb the cost of waste disposal. This cost is comprised of payments made to the Nuclear Waste Fund and is a portion of a nuclear power plant’s fuel cost.
Nuclear power plants use Uranium-235 as fuel, an enriched form of natural Uranium. Over the thirteen month period of October 2008 through November 2009 natural Uranium prices ranged from $40 to $55 per pound. Although Uranium prices do vary, the typical refueling period for a nuclear power plant is every eighteen months. This indicates that procurement and processing of natural Uranium is not a frequent occurrence.
Once natural Uranium is acquired, it must go through an enrichment process to produce fissile material required for the nuclear reaction. Enrichment costs are also considered part of fuel costs. The average fuel cost at a nuclear power plant in 2008 was $0.0049 per kWh.
Employees
The people who work for the utility company, from the plant operator all the way to the CEO, are by far the largest operating cost. Utility companies typically own multiple types of energy production facilities and some employees are not specifically attributable to a nuclear power plant. In order to get a true plant-level profitability analysis, these shared employees’ expenses would need to be allocated to each facility. This detailed financial information is not readily available to the public as it is not required by the SEC to report facility-level profitability. Employee related expenses are fairly predictable because most plants are running lean and headcount cannot be reduced making this mainly a fixed expense.
Administration
Utility companies own nuclear power plants and they are accountable for providing certain things to their employees and their shareholders. The nature of a publicly-traded company requires administrative staff in Human Resources, Legal, Information Technology, and Accounting functions. The salary and benefits expenses associated with these employees are a part of the Employee cost group, but all of the business infrastructure and outside consulting services required to complete administrative tasks fall under this category. Recruiting fees, auditing fees, legal outsourcing, information technology consultants, and the computer infrastructure of the organization are examples of these costs. Security is typically provided by an outside firm whose costs also fall under this category.
Supplies
Nuclear power plants require many of the same supplies as any other business in addition to a few unique items. Office supplies, water, gloves, uniforms, waste cans, and repair and maintenance parts are all included in this category. Nuclear power plants must maintain higher standards of operational excellence due to the scrutiny placed on the industry and the potential safety hazards of equipment in poor condition. High repair and maintenance expenses are a result of these standards, yet it can be argued that the increased cost is offset by the enhanced performance of the nuclear power plant.
Operating Costs of a Nuclear Power Plant per kWh
Employees, administration, and supplies cost a nuclear power plant $0.0137 per kWh on average in 2008. Fuel, including contributions to the Nuclear Waste Fund, amounts to about $0.0049 per kWh, bringing the total operating costs of a nuclear power plant to approximately $0.0186 per kWh.
Image Credit
billet of highly enriched Uranium courtesy of Flickr user BlatantNews.com under the CC license
Looking forward...
4 Comments
Hi Jason,
This is a good summary article. It would be great to see a similar break down of coal and natural gas plants, wind and solar so that the comparison could be clear. If the operating costs are only 1.8 cents a kwh why does the electricty cost nearly 4 to 12 cents a kwh? This would be a helpful post.
Thanks for a great read!
David – don’t worry, I will get there with the other technologies I just need a little more time.
If you recall, there are three cost components to nuclear energy generation: construction costs, operating costs, and decommissioning costs. Construction costs represent the bulk of the cost figure (somewhere between $0.025 to $0.065 per kWh). Then you add operating costs and decommissioning costs, which combined are less than $0.02, and there is your $0.04 to $0.12 per kWh.
Right now I’m just laying the groundwork on this category. I will be bringing this all back together in a cost per kWh post in the next couple of weeks – stay tuned and thanks for the great questions!
You failed to include costs to build the plant, dispose of waste, transport the fuel, and clean up. This would also take a lot of money to accomplish!
Those costs are all described in different articles if you’re interest. They are all accounted for in the price of the electricity on your utility bill. Decommissioning (clean up) is paid for by the owner and about $300 million per plant. Spent fuel transport and disposal is also paid for at about $0.001 per kWhr and doesn’t account for the value of the 99% unused material in the fuel that can still be used. Construction cost is also accounted for and generally takes about 10 years of operation to recover (even though a plant can operate for as much as 80 years).
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[...] 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 [...]