WNA assembled a wide-ranging report on nuclear power costs in September 2023. Nuclear power is cost-competitive with other forms of electricity generation, except where there is direct access to low-cost fossil fuels. Fuel costs for nuclear plants are a minor proportion of total generating costs, though capital costs are greater than those for coal-fired plants and much greater than those for gas-fired plants.
Ali, (2023), "A Book: Nuclear Energy – Peaceful Ways to Serve Humanity."
System costs for nuclear power (as well as coal and gas-fired generation) are very much lower than for intermittent renewables. Providing incentives for long-term, high-capital investment in deregulated markets driven by short-term price signals presents a challenge in securing a diversified and reliable electricity supply system.
In assessing the economics of nuclear power, decommissioning and waste disposal costs are fully taken into account. Nuclear power plant construction is typical of large infrastructure projects around the world, whose costs and delivery challenges tend to be under-estimated. For information on financing specifically, please see information page on Financing Nuclear Energy.
Assessing the relative costs of new generating plants utilizing different technologies is a complex matter and the results depend crucially on location. Coal is, and will probably remain, economically attractive in countries such as China and Australia, as long as carbon emissions are cost-free or not fully costed. Gas is also competitive for base-load power in many places, particularly using combined-cycle plants.
Nuclear power plants are expensive to build but relatively cheap to run. In many places, nuclear energy is competitive with fossil fuels as a means of electricity generation. Waste disposal and decommissioning costs are usually fully included in the operating costs. If the social, health and environmental costs of fossil fuels are also taken into account, the competitiveness of nuclear power is improved.
The basic economics metric for any generating plant is the levelized cost of electricity (LCOE). It is the total cost to build and operate a power plant over its lifetime divided by the total electricity output dispatched from the plant over that period, hence typically cost per megawatt hour. It takes into account the financing costs of the capital component (not just the 'overnight' cost).
On a levelized (i.e. lifetime) basis, nuclear power is an economic source of electricity generation, combining the advantages of security, reliability and very low greenhouse gas emissions. Existing plants function well with a high degree of predictability. The operating cost of these plants is lower than almost all fossil fuel competitors, with a very low risk of operating cost inflation. Plants are now expected to operate for 60 years and even longer in the future. The main economic risks to existing plants lie in the impacts of subsidized intermittent renewable and low-cost gas-fired generation. The political risk of higher, specifically-nuclear, taxation adds to these risks.
World Nuclear Association published a report in 2017 on Nuclear Power Economics and Project Structuring. That report notes that the economics of new nuclear plants are heavily influenced by their capital cost, which accounts for at least 60% of their LCOE. Interest charges and the construction period are important variables for determining the overall cost of capital. The escalation of nuclear capital costs in some countries, more apparent than real given the paucity of new reactor construction in OECD countries and the introduction of new designs, has peaked in the opinion of the International Energy Agency (IEA). In countries where continuous development programs have been maintained, capital costs have been contained and, in the case of South Korea, even reduced. Over the last 15 years global median construction periods have fallen. Once a nuclear plant has been constructed, the production cost of electricity is low and predictably stable.
In deregulated wholesale electricity markets the economic justification for any capital investment has been decreasing while the actual need increases due to the ageing of existing plants. The IEA points out that at the turn of the century one-third of investment in electricity flowed into deregulated markets exposed to wholesale price uncertainty, whilst two-thirds went into regulated markets with some assurance of return on capital. By 2014 only 10% of investment was directed into deregulated markets. This has prompted urgent reviews by governments concerned about medium-term energy security. All operating nuclear power plants were built by governments or regulated utilities where long-term revenue and cost recovery was virtually certain. Some of these plants, especially in the UK and USA, now find themselves in a deregulated market environment.
Regulated and government utilities make investments in generation assets, spend money on power plant fuel and operation, and make decisions about retiring existing assets. These decisions are based on long-term planning processes focused on ensuring reliable operation while minimising total costs over the long-term. In a deregulated market a merchant generator depends on the inherently short-term and often volatile market for its revenue, putting the operator at risk; and the developer of a new plant faces considerable uncertainty due to greater completion risk. Government support is needed to mitigate these risks and make new projects bankable.
A further economic aspect is the system cost of making the supply from any source meet actual demand from the grid. The system cost is minimal with dispatchable sources such as nuclear, but becomes a factor for intermittent renewables whose output depends on occassional wind or solar inputs. If the share of such renewables increases above a nominal proportion of the total then system costs escalate significantly and readily exceed the actual generation cost from those sources. This is modelled in a 2019 OECD Nuclear Energy Agency study and very evident in Germany, and is an important consideration beyond the LCOE in comparing sources (see section below on Other costs, below).
Below is the table contents of the 2023 report:
- Assessing the costs of nuclear power;
- Capital costs;
- Plant operating costs;
- External costs;
- Other costs;
- Electricity markets;
- Comparing the economics of different forms of electricity generation;
- Economic implications of particular plants;
- Future cost competitiveness;
- Financing new nuclear power plants;
- Notes & references; and
- Related Information
[Also, see more on nuclear power costs (here).]
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