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Is nuclear energy an option for the new millennium?

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

Primary energy demand is likely to grow rapidly to support economic development while the world population will continue to increase. Views differ on future energy demand growth rates as well as on energy supply mixes beyond the next decade, but there is a consensus that all natural resources and technological options are relevant to policy making in the energy field. Nuclear energy’s future will depend essentially on its characteristics, advantages and drawbacks, from a decision-maker viewpoint, as compared with alternatives since the potential availability of fuel resources is not a limiting factor.

Key factors affecting decision making in the energy sector include technical performance, economic competitiveness, health and environmental impacts, security of supply and social acceptance. The relative importance of those factors and the way they are assessed vary from country to country and over time. Economic competitiveness will be assessed differently by private investors operating on deregulated markets than by state-owned companies enjoying monopolies. Therefore, it is unlikely that one technology or energy source will be the winner everywhere and, consequently, energy systems will continue to be different in various areas of the world.

Status and short-term trends

Nuclear power plants are connected to electricity grids in more than 30 countries and provide some 17% of the electricity consumed worldwide. Most of the nuclear units in operation are less than 20 years old and although they generally were licensed for a limited time at the outset, their lifetimes are now expected to exceed 40 years, reaching 50 years and more in some countries.


In many countries where nuclear units are in operation today, nuclear energy clearly is an option for the next millennium. The economic advantages of existing nuclear units have been demonstrated already in deregulated electricity markets, for example in the United Kingdom and in the United States; they are in most cases the cheapest option available for base load generation.

Some nuclear power plants will not meet market requirements because of their size, age and/or poor technical performance. For most nuclear power plant operators, however, market competition provides opportunities to take advantage of their low variable costs.

The experience in countries such as Germany and the United States shows that nuclear power plant operation and maintenance (O&M) costs may be reduced significantly through more efficient practices and technology progress. Fuel cycle costs, the other element of variable costs, have decreased significantly for nuclear power plants owing to technology progress and lower prices of uranium and most services. Extending the lifetime of nuclear units, and often upgrading their capacity at the same time, has become commonplace in many OECD countries.

Factors affecting the long term

The viability of the nuclear option in the medium and long term depends mainly on its economics but policy issues, such as measures to alleviate the risk of global climate change, security of energy supply and public acceptance also will play a role. The outcomes of comparative assessments of alternative options will differ from country to country and even from company to company and will evolve with time.

Economics of new nuclear units


New nuclear units that could be ordered now and commissioned by 2005-2010 will compete essentially with state-of-the-art coal-fired and gas-fired power plants. Renewable sources, besides hydropower, generally are not considered for base load generation and/or are not competitive with classic thermal power.

The levelised lifetime generation costs presented in the 1998 OECD study provide some insight on the competitive position of the alternative options in participating countries. The outcomes of the OECD study show that a new nuclear plant would seldom be the cheapest option. Nuclear power remains competitive in countries where nuclear programmes are based upon series of standardised units, and/or where fossil fuel prices are expected to stay high. Even in those countries, the competitive margin of nuclear power tends to shrink owing to low fossil fuel prices on international markets and technological progress enhancing the performance of fossil-fuelled power plants, especially combined cycle gas turbines.

The economics of new nuclear units is driven by their capital costs, especially in a deregulated environment where investors prefer to avoid financial risks and tend to seek high discount rates. In a changing business environment with no captive market or guaranteed electricity price, investors in the power sector are likely to chose less capital-intensive technologies, such as combined cycle gas turbines, that allow investment amortisation over a shorter period of time.

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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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