Once the construction cost of a nuclear power plant is fully amortized (ie., the "construction loan" for the plant is paid-off), nuclear power plants produce extremely cheap electricity. The typical cost of electricity production in today's nuclear fleet is less that 3 cents per kilowatt-hr of electricity produced. In my part of the country (TVA service area), residential electricity sells for about 8 cents per kilowatt-hr – cheap by national standards. Since most plants are "paid-off" within twenty years, nuclear power plants that are more than about 20 years old are tremendous revenue producers for their owners (you and me if we happen to own stock in a company who owns and operates such a plant), and a source of very affordable electricity for their customers (again... you and me).
While the details of the affordability issue can be complex, at a high-level these issues reduce to three primary factors that have driven the purchase cost of modern nuclear power plants out of the "affordable" range for many prospective buyers:
- Todays plants are large (typically greater than 1 GWe in size). Due to "economy of scale" considerations, the nuclear industry evolved to a "one size fits all" mentality in which the one size was a hugh plant. Too bad if you really didn't need all of that electricity production capability in one incremental addition.
- Like all large, complex facilities, these large plants require vast quantities of steel, concrete, wire, and other construction materials, along with extensive labor to design and build the plants. Capital cost estimates for current large plant models range from around $4000 per kWe to as high as $8000 per kWe for a complete plant that is fully-integrated into the utility's electric grid. That's $4-8 BILLION dollars for a single nuclear power plant. Not something you're apt to find in Walmart!
- The time period required to build, license, and commission our most recent nuclear plants (7-10 years) resulted in high finance charges for the capital the utilities had to borrowed to purchase the plants. This protracted time period was in large-part the artifact of an inefficient licensing process that, in practice, made it extremely difficult to predict when a plant would be allowed to start operations and how much finance charges the owner would have to pay in the interim. Neither financiers or owners liked that situation.
The solutions to these challenges ?
- One of the most exciting developments in this regard is the mushrooming interest in small modular reactors (SMRs). These plants, ranging in size from as little as 10 MWe to around 300 MWe, would significantly reduce the "single purchase" cost of plant due simply to their small size. Additionally, many of these plants have features that should enable more automated fabrication and construction, offering the potential to reap the benefits of high-volume "factory fabrication"and simplified field installation.
- During the past several years, the U.S. Nuclear Regulatory Commission has reformed and modified it's design certification and plant licensing process. While maintaining a sharp focus on assuring the safety of new plants, the reformed process should provide a more predictable and accelerated licensing process compared to that experienced in the last several plants built in the U.S. twenty-some years ago.
While there are a number of other relevant factors and dynamics in play, the advent of small nuclear power plant options, and (hopefully) a more reliable licensing process, should go a long way toward achieving Imperative 2.
Next time, Imperative 3.
Sherrell, Col 1:17