2007 Koomey talk on historical costs of nuclear power in the US

Copyright Jonathan Koomey 2007 1

A Reactor-Level Analysis ofBusbar Costs for U.S. Nuclear

Plants, 1970-2005Jonathan G. Koomey* and Nathan Hultman***Staff Scientist, Lawrence Berkeley National Laboratory

and Consulting Professor, Stanford University**Assistant Professor, Georgetown UniversityPresented by Koomey at DTE, in Detroit, MI

April 17, [email protected]://www.koomey.com


Recent interest in nuclear power

• Climate change mitigation issues (e.g.Blair announcement)

• EPACT 2005– Subsidies– Loan guarantees

• International investments (e.g. China)• Expressions of interest by U.S. utilities


New plant status from NEIUpdated 4/2007

FY = Federal fiscal year, CY = calendar year


Goals of this work

• Creating fair, accurate, and comparablehistorical cost estimates

• Explaining history using limiting cases andstatistics

• Comparing historical cost estimates to recentprojections of nuclear costs

• Characterizing mistakes to avoid if nuclearpower is to undergo a rebirth in the U.S.


Status of work• Hultman, Nathan E., Jonathan Koomey, and Dan

Kammen. 2007. "What history can teach us about thefuture costs of nuclear power." Environmental Science &Technology. vol. 41, no. 7. April 1. pp. 2088-2093.

• Koomey, Jonathan, and Nate Hultman. 2007. "A reactor-level analysis of busbar costs for U.S. nuclear plants,1970-2005." Energy Policy (accepted, under revision).January.

• Hultman, Nathan E., and Jonathan G. Koomey. 2007."Energy technology costs and public support for R&D:Accounting for surprise by disentangling uncertainties."Submitted to Environmental Research Letters. April 15.


The Generations of Nuclear Energy

Source: DOE Generation IV Project


Status of new reactor designs

Source: Energy Information Administration, “New Reactor Designs”.http://www.eia.doe.gov/cneaf/nuclear/page/analysis/nucenviss2.html


Previous studies• Komanoff• Rothwell• EIA (Hewlett)• Zimmerman• Navarro• Marshall• Many others


Focus on direct costs• Capital costs• Construction duration• Interest• Capacity factors• Heat rates• O&M costs• Fuel costs• Incremental capital additions• Waste disposal• Decommissioning


Some costs not included• Taxes (these are transfer payments)• Waste disposal costs beyond the 0.1

¢/kWh current fee (uncertainties onYucca Mountain)

• Externalities (e.g. accident risks beyondthose covered by insurance), routineradiation emissions (generally small)

• Subsidies


Why levelized costs?

• ¢/kWh a common metric for comparingsupply and demand-side technologies

• Just analyzing capital costs ignoresother big effects (eg. ∆ capacity factors)

• Collapsing the time dimension can yielduseful insights


Levelization method

• Calculate present value of some futureexpenditure or stream of expendituresusing the real discount rate (e.g.decommissioning 40 years hence)

• Annualize that present value using thecapital recovery factor over the reactorlifetime (generally 40 years) to get thelevelized cost


Weaknesses of levelized costs

• Method depends somewhat on forecasts– less accurate for reactors completed most recently

• Method submerges discontinuous events– long periods of a reactor being off-line– rapid changes in O&M costs or capacity factors

• Levelized cost figures often are comparedinconsistently to other ¢/kWh numbers


Methods• Calculate costs at the reactor level

– Discount rate = 6% real– Use reactor specific data when possible

• Capital costs• Construction duration• Capacity factors• O&M (needs improvement)• Decommissioning (split by PWR vs. BWR)

– Use averages when necessary• Fuel costs• Incremental capital additions (better if by reactor)• Waste disposal


Key data sources

• Capital costs: Komanoff (except 4 reactors)• Construction duration: Komanoff• Interest: Avg US electric utility ROI 1971-2001• Capacity factors: Komanoff, IAEA• Heat rates: NEI• O&M (fixed and variable): NEI, EIA• Fuel: EIA• Incremental capital additions: EIA• Waste disposal: MIT• Decommissioning: OECD


Detective work on four reactors

Koomey with Joe Roy of MMWEC in August 2006. Roysupplied monthly construction cost data for Seabrook. Updatedcapital costs also compiled for Comanche Peak 1&2 and Watts Bar.


Results• Key components of total levelized costs

– Installed costs– Capacity factors– Total O&M costs– Construction duration– Capacity

• Total levelized busbar costs– Over time and rank ordered

• Comparison with current projections


Large increases in installed capitalcosts for plants completed >1982Installed costs include 6%/yr real interest during construction


Projected installed costs are at themid-to low end of historical costs


Projected and historical capacityfactors match up well

Early reactors for which we don’t have cost data

Main sample for which we do have cost data


Operational improvements led tohigher capacity factors for all plants


Projected construction durationsgenerally lower than historical data




Projected capacity similar to history




Projected O&M costs generallylower than historical experience


Total levelized costs by date offirst operation


Projected busbar costs/kWh lowerthan most historical experience


Comparison of best case historicalcosts with current estimates


Implications for new reactors?• Advocates for new plants say “So what? New

plants are totally different from the old ones”– Need to prove this assertion by actually

building plants cheaply• Some lessons have already been learned

– Streamline licensing– Standardize designs– Operate plants more effectively

• IT for construction management and operationsmuch more sophisticated now

• International experience accumulating


Opportunities for a nuclear revival• Interest driven by

– Tax credits/R&D– Need for reductions in

• Greenhouse gas reductions• Imported oil (need electric vehicles)

– International markets• Much improved

– Technology– Design– Management– Construction processes– Licensing


New nuclear infrastructure will bemore highly optimized

McGuire Nuclear Station Reactor Building Models.

1000 MW Reactor (Lianyungang Unit 1)

1978: Plastic models on roll-around carts 2000: 4-D computer aided designand virtual walk-throughs

2002 NRC processing time for 20-yearlicense renewal: ~18 months

Source: Per Peterson, UC Berkeley


Uncertainties for a nuclear revival• Plants still mostly site built• Are there near-term construction bottlenecks?• U.S. political system still decentralized• Fuel prices up a lot recently• Risk of accident anywhere in the world• Link to proliferation (N. Korea, Iran)• Need new repository?• Competition more intense now

– More electricity generation options– Deregulated markets

• Capital markets may be skeptical


Spot prices for Uranium Up!

$113/lb inearlyApril 2007


Advice on evaluating projectedcosts for new reactors

• Compare apples to apples ($/kW)– Inflation adjustment– 1st of a kind vs. Nth of a kind– One vs. two reactors on a site– Full reactor costs vs. power block

• Beware of– Possible certification delays– Lack of specificity of possible bottlenecks– Lack of real world experience in construction

• Check modularization and parts counts• DTE: First mover or fast follower?


Questions to consider onprojected costs of new reactors

• Can DTE afford to wait?– Risks of early adoption– Risks of delay

• Can contract be structured so vendorbears some risk for cost overruns?

• What if uranium prices stay high?• Has DTE considered a scenario exercise?


Comparing projected costs for othernew reactors (EPR, ABWR, ESBWR)

ESBWRABWR

ABWR


Future work• Improved reactor by reactor O&M costs,

forced outage rates, and incremental capitaladditions (sources?)

• Statistical analysis and development oflimiting cases (e.g., pairing of examplereactors).

• Compare cost estimates for site-built andmass produced technologies– is more cost variability guaranteed for site-built

technologies?– How can cost variability be minimized?

• International comparisons


Conclusions• Just examining capital costs gives an

incomplete picture of historical developments• Reactor size interacted with regulatory delays

and slowing electricity demand growth,affecting capital costs, financing costs, O&Mcosts (and perhaps capacity factors)

• Projected capital costs, O&M costs, andconstruction durations are low compared tohistorical experience (but may still be correct)


Conclusions (continued)

• Larger, more sophisticated operatorshave been able to increase capacityfactors and reduce O&M costs

• Key uncertainty is whether theregulatory and technical changesimplemented thus far are enough toresult in real reductions in installedcosts and construction duration


EXTRA SLIDES


Another look at total busbar costs

PWR=Pressurized water reactor,BWR=Boiling water reactor. Cohortindicates one of eight predictive costcategories described by Rothwell :Category 1 denotes Westinghouse PWR< 700 MW; Category 2 = WestinghousePWR 700-1000 MW; Category 3 =Westinghouse PWR>1000 MW;Category 4 = Babcock & Wilcox PWR;Category 5 = Combustion EngineeringPWR; Category 6 = General ElectricBWR < 700 MW; Category 7 = GEBWR 700-1000 MW; Category 8 = GEBWR > 1000 MW. Levelized costs(which exclude subsidies andexternalities) are calculated using a realdiscount rate of 6% as described inonline supplemental material.


Total levelized costs vs. capacity


For plants started > 1968 (with oneexception), capacity was ≥ 800 MW




For plants finished > 1975,capacity was ≥ 800 MW




Overnight costs vs. reactorcapacity


Construction duration increasedfor reactors started >1972




As reactor capacity became > 800 MW,construction duration varied more




U.S. average nuclear capacityfactors improved substantially after

1985


Lifetime capacity factors have alsoimproved, partly due to retirements




Reactor efficiencies don’t vary much




Limited data on incrementaladditional capital expenditures


Avg costs for O&M, fuel, and incrementalcapital additions vary over time


Improvements in capacity factors affecttotal O&M costs after the mid 1980s


Total O&M costs vary widely


Without New Investments U.S.Nuclear Capacity Declines

Capacity With and Without License Renewal

0

20000

40000

60000

80000

100000

120000

1960

1963

1966

1969

1972

1975

1978

1981

1984

1987

1990

1993

1996

1999

2002

2005

2008

2011

2014

2017

2020

2023

2026

2029

2032

2035

2038

2041

2044

2047

2050

2053

Cap

acit

y (

MW

)

Capacity with 100% license renewal

Current licensed capacity

Source: Dominion Resources, 2005, via Joskow (MIT)


RECENT CONSTRUCTION COSTEXPERIENCE ($2002)

Genkai 3 $2,818/kW (overnight)Genkai 4 $2,288/kW (overnight)Onagawa $2,409/kW (overnight)KK6 $2,020/kW (overnight)KK7 $1,790/kW (overnight)Yonggwang 5&6 $1,800/kW (overnight)

Browns Ferry RESTART $1,280/kW (overnight estimate)

Finland EPR (AREVA-Seimens contract only)$2,350/kW (nominal estimate 2005)

Bruce RESTART $1,425/kW (nominal estimate 2005)

Source: Paul Joskow, MIT


New U.S. Reactor Licensing Process

ConstructionLicense

BuildPlant

OperatingLicense

CombinedConstruction

andOperatingLicense

Verificationof

Inspections,Tests,

Analysis,and

AcceptanceCriteria

EarlySite

Permit

StandardDesign

Specification

BuildPlant

Old Process: The two-step licensing process (10 CFR 50)

New Process: Combined licensing process (10 CFR 52)

Source: Berger and Parsons (MIT CEEPR 2005), via Joskow (MIT)


Energy Policy Act of 2005• Loan guarantees for up to 80% of project cost

– Valid for all GHG-free technologies– Higher leverage, lower debt cost reduces overall project cost

• Production tax credit of $18 per MWh for new nuclear capacitythrough 2021, subject to 2 limitations:– $125 million per 1,000-MW per year– 6,000-MW eligible, allocated among available capacity

• Insurance protection against delays during construction and untilcommercial operation caused by factors beyond private sector’scontrol– Coverage: $500 million apiece for first two plants, $250 million for

next four– Covered delays: NRC licensing delays, litigation delays

Source: Joskow (MIT)


Energy Policy Act of 2005

• Renewal of the Price-Anderson Act of 1957– Liability protection extended until 2025

• Legislation updates tax treatment of nuclear decommissioningtrust funds to reflect competitive electricity markets– All decommissioning trust funds will qualify for tax

deductibility (not only those of regulated utilities)• Federal commitment on R&D portfolio ($2.95 billion authorized)• Creates Assistant Secretary for Nuclear Energy at DOE

Source: Berger and Parsons (CEEPR, 2005), via Joskow (MIT)