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Is nuclear energy an option for the new millennium?

By Evelyne Bertel and Peter Wilmer - posted Saturday, 15 July 2000


With current technology and evolutionary reactors, capital cost reductions up to 20% may be obtained by simplification of designs, standardisation and replication, large size or modularity and improved project management. Measures to shorten construction periods greatly influence the plant overnight capital costs, especially when discount rates are high, since interest during construction may reach 25% or more of the total levelised investment cost. Modularity that allows fabrication and assembly in factories rather than on site is a particularly efficient means to reduce construction time and thereby interest during construction.

Savings on overnight costs resulting from increased reactor size, standardisation, multiple unit orders and construction on the same site are illustrated by the Canadian, French and Korean examples.

In the case of Canada it was estimated that the specific overnight cost of a twin Candu 9 plant (capacity 2 x 881 MWe) is 75% of the specific overnight cost of single Candu 6 (capacity 670 MWe). The estimations made in France for PWRs indicate similar trends with 82% overnight cost increase between a single 1 000 MWe unit and a single 300 MWe unit and a 25% overnight cost decrease from a single 1 000 MWe to a twin 1 350 MWe (Figure 2). The Korean nuclear power programme, based upon a standardised approach, illustrates the benefits drawn from the series of Korean Standard Nuclear Power Plants. Capital cost reductions for subsequent units contracted over the last decade amount to 10% for the second and third units and to 15% for the fourth and fifth units as compared to the first unit.

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Within the present market conditions, the prospects for successfully developing, licensing and marketing new evolutionary designs is not clear. In any event, they are unlikely to make a large contribution for the next two decades or more. Over such a time period technical developments of the alternatives to new nuclear plants may be important.

Global climate change and other environmental issues

The increasing awareness of global climate change issues is significant for policy making in the energy sector and creates new opportunities for carbon-free sources. Energy production and uses are responsible for more than three quarters of the anthropogenic greenhouse gas emissions and electricity is a major contributor within the energy sector. Although there are uncertainties on the risks of global climate change, the international community has adopted a precautionary approach that led OECD countries to commitments on reducing their greenhouse gas (GHG) emissions early in the next century, by 2008-2012.

The Kyoto Protocol agreed upon in 1997 under the umbrella of the United Nations Framework Convention on Climate Change sets ambitious GHG emission limits in OECD countries. It seems clear now that the Kyoto Protocol targets will not be met, but OECD countries are considering various measures aiming at lowering or at least stabilising their GHG emissions. The use of nuclear energy could be chosen as one of those measures by some countries – nuclear power contributes already to lower carbon intensity in the energy sector.

Reducing greenhouse gas emissions, and in particular meeting the Kyoto targets, will not be economically neutral even if some measures, such as demand side management or shifting to less carbon intensive supply sources, may not increase the cost of energy services. It is worth noting that, on the basis of the levelised generation costs indicated above, a carbon value of $100/tonne of carbon would make nuclear power the cheapest option in all but one of the eight countries that provided data to the 1998 OECD study.

Security of supply and cost stability

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Several countries implemented nuclear power programmes partly to alleviate their energy dependence and reduce the strategic and economic risks of supply disruption and price volatility. Recent analyses of the International Energy Agency (IEA) have concluded that, in the absence of policy measures aiming specifically at alleviating dependence on OPEC oil, the share of the world oil supplied by Middle East OPEC will grow from the current 25per cent to 55per cent by 2020. Also, the sustainability of the "rush to gas" might be challenged on the grounds that presently known reserves of gas represent only some sixty years of supply based on the present yearly rates of consumption and its use is expanding rapidly.

Natural resources and technologies existing or under development could support broad nuclear development in the 21st century and there is no alternative commercial use for uranium other than nuclear energy. In addition, improved fuel design and management, and advanced reactors, offer ways to reduce significantly the amount of natural uranium required per unit of electricity generated. Breeders and thorium-fuelled reactors could enlarge even further the resource base for nuclear energy.

Sustainable development and the internalisation of external costs

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This is an edited extract from a paper presented to the 23rd Annual IAEE International Conference: Energy Market and the New Millennium: Economic, Environment, Security of Supply, Hilton Sydney, Australia, 7-10 June 2000.



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About the Authors

Evelyne Bertel works for the Nuclear Development Division of the OECD Nuclear Energy Agency, France.

Peter Wilmer works for the Nuclear Development Division of the OECD Nuclear Energy Agency, France.

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