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1 THE ECONOMICS OF NUCLEAR POWER Reinhard HAAS, Albert HIESL Energy Economics Group (EEG) Vienna University of Technology 1

2 CONTENT: Titelmasterformat durch Klicken Textmasterformate 1. Introduction durch Klicken 2. History: Technological learning? Zweite 3. Recent Ebene developments of costs Dritte and Ebene construction times Vierte 4. Nuclear Ebene costs vs market prices Fünfte 5. Nuclear Ebene vs PV 6. Conclusions 2

3 alternatives Dritte Ebene 1. INTRODUCTION In the past: Nuclear is VERY cheap! Today: Nuclear is cheaper than the Objective of this presentation: show practical developments of (monetary) costs and construction times 3

4 A history of mistaken forecasts It is not too much to expect that our Zweite children Ebene will enjoy in their homes [nuclear generated] electrical energy too cheap to meter. Lewis Strauss Chairman US Atomic Energy Commission Source: Rogner IAEA (2006)

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6 Typical nuclear electricity Titelmasterformat durch Klicken generation cost breakdown No insurance costs considered! SOURCE: IAEA 7

7 With respect to external/ social costs: Source: Mycle Schneider: The nuclear end game (2006) 8

8 LEARNING 3. TECHNOLOGICAL (OR NOT) 9

9 Construction Costs ($/kwe) Titelmasterformat durch Klicken Construction Costs Background Industry Experience Last Time $7,000 Zweite $6,000 Ebene $5,000 $4,000 $3,000 $2,000 $1,000 HOW DID INVESTMENT COST DEVELOP OVER TIME? Quad Cities Dresden Oconee Zion NMP-2 Limerick 2 Braidwood 1 & 2 South Texas 1 & 2 Byron 1 & 2 Palo Verde 1 & 2 Catawba LaSalle 1 & 2 $0 McGuire 1 & Commercial Operation Date Source: Jim Harding: Seven Myths of the Nuclear Renaissance (2007) 2 10

10 CONSTRUCTION TIMES OF PLANTS IN FRANCE BEFORE 2000 Flamanville-3 11 Source: Grübler 2010

11 COST DEVELOPMENTS BEFORE 2000 US: US$/kW Civeaux-2: new reactor type 12 Source: Grübler 2010

12 A CURVE OF FORGETTING S BEFORE

13 Cost index ($/kw) Titelmasterformat Technological Uncertainties: durch Klicken Learning rates (push) and market growth (pull) 1.5 Textmasterformate Nuclear Reactors France durch Klicken 1.0 Vierte 0.5 Ebene Fünfte PVs Ebene Japan % interval 90% interval 0.1% mean learning rate (115 case studies): -20% per doubling % Number of doublings (installed capacity) 0.0 Source: Nakicenovic, Schrattenholzer, Grübler various papers 14

14 Technological learning: Titelmasterformat durch Klicken why not for nuclear? Real costs Public subsidies Industry subsidies = Dumping Financial subsidies (by banks by means of low interest rates 2.6%!!!!) Perceived costs For further discussion of industry subsidies: Steve Thomas: The economics of nuclear power (2005) MW cumulative 15

15 COUR DE COMPTES CORRECTIONS Grübler Cour de Comptes 16

16 A comparison of costs (estimates) for (new) nukes in the USA Grübler $4000/kW-$6000/kW 2003 MIT study $2000/kW (base case) $1500/kW (optimistic) Before Dritte 2007 Ebene common $4000/kW 2007 Moody s $5000-$6000/kW 2008 Progress Energy $6400/kW MIT study $4000/kW (base case) 17

17 Textmasterformate A conclusion: durch Klicken At any point-of-time the future costs of nuclear has been underestimated, at least in the Western countries 18

18 3. RECENT DEVELOPMENT OF NUCLEAR COSTS AND CONSTRUCTION TIMES 19

19 SOME RECENT EXAMPLES Olkiluoto-3 (Finland): Construction started in 2004, now expected to be completed 2016 (originally: 2009); 1600 MW Flamanville-3 (France): Construction started in 2006, now expected to be completed 2016 (originally: 2011); 1600 MW Leningrad II-1(Russia): Construction started in 2008, now expected to be completed 2015 (originally: 2013); 1160 MW Russian-designed AES-2006 PWR Shin Kori (Corea): Construction started in 2008, now expected to be completed 2013 (originally: 2012); 1343 MW Sanmen (China): Construction started in 2009, now expected to be completed 2013 (half a year late); 1250 MW 20

20 Titelmasterformat SOURCES durch Klicken IEA/NEA: Projected costs of generating Electricity (2010) Platts: Power in Europe power plant tracker (Last issue: April 2013) Platts: Energy in Eastern Europe power plant tracker (Last issue: July 2013) World nuclear Association, World-nuclear.org 21

21 Construction times 22

22 Investment cost development Olkiluoto 3 vs Flamanville 3 Titelmasterformat durch Klicken 23

23 Investment cost Titelmasterformat durch Klicken development world-wide 24

24 SPECIFIC ASSUMPTIONS ON ECONOMIC ANALYSES Interest Textmasterformate rate: 8%, depreciation durch Klicken time 25 years; fuel Zweite costs: Ebene 12 EUR/MWh up to 2008, then Dritte following Ebene the price of uranium Vierte Ebene other O&M costs: 12 EUR/MWh Fünfte Ebene decomissioning costs: 2 EUR/MWh all cost figures are of 2010! 25

25 The costs of uranium Titelmasterformat durch Klicken Source: The Ux Consulting Company, LLC, 26

26 Total Cost development Titelmasterformat durch Klicken Olkiluoto No insurance costs considered! 27

27 Total Cost development Titelmasterformat durch Klicken Flamanville-3 28 No insurance costs considered!

28 4. Total nuclear costs vs market prices State aid, contracts for differences 29

29 Costs vs market prices in Nordic countries Total costs Olkiluoto Electricity price NORDPOOL Variable costs Olkiluoto 30

30 Electricity price FRANCE Costs vs market prices in France Total costs Flamanville Variable costs Flamanville 31

31 5. NUCLEAR VS Titelmasterformat durch Klicken RENEWABLES 32

32 LEARNING: NUCLEAR VS PV Titelmasterformat durch Klicken 33

33 Europe: 6. CONCLUSIONS No reliabilty regarding construction times. With respect to economics nuclear has NEVER Zweite Ebene in history in Western countries fullfilled its promises Actual investment costs were always higher than costs announced Costs of nuclear as well as construction times are much higher than in the East Why??? 34

34 nowhere! Textmasterformate durch Klicken 6. CONCLUSIONS There are no signs for a cost decrease Forgetting rather than Learning! Photovoltaics has continous opposite cost development Dritte Ebene It will be become much harder for nuclear to recover Fünfte Ebene money in renewable-based electricity markets much less base load needed; Who is the lobby for nuclear (in the West) today? 35

35 WORLDWIDE PV-CAPACITIES Growth rate per year 70% growth /year! * Figures of 2012 preliminary 36

36 Entwicklung in Deutschland Titelmasterformat durch Klicken 37

37 Titelmasterformat Power plant capacities durch Klicken in Western Europe

38 PV costs vs household electricity price in Germany Upper and lower corridor! Grid parity? 39

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