The Economic Future of Nuclear Power: Summary of Economic Findings

Agost 2004

Economics of Deploying Plants during the Next Decade

• Capital cost is the single most important factor determining the economic competitiveness of nuclear energy.
• First-of-a-kind engineering (FOAKE) costs for new nuclear designs could increase capital costs by 35 percent, adversely affecting nuclear energy's competitiveness.
• The risk premium paid to bond and equity holders for financing new nuclear plants is an influential factor in the economic competitiveness of nuclear energy. A 3 percent risk premium on bonds and equity is estimated to be appropriate for the first few new plants.
• Without federal financial policy assistance, new nuclear plants coming on line in the next decade are projected to have a levelized cost of electricity (LCOE) of $47 to $71 per megawatt-hour (MWh). This study provides a full range of LCOEs for first nuclear plants for alternative construction periods, plant lives, capacity factors, and overnight cost estimates. LCOEs for coal and gas-fired electricity are estimated to be $33 to $41 per MWh and $35 to $45 per MWh, respectively.
• With assistance in the form of loan guarantees, accelerated depreciation, investment tax credits, and production tax credits, new nuclear plants could become more competitive, with LCOEs reaching $32 to $50 per MWh.

Economics of Deploying the Next Series of Nuclear Plants

• With the benefit of the experience from the first few plants, LCOEs are expected to fall to the range of $31 to $46 per MWh; no continued financial assistance is required at this level.

Future Greenhouse Gas Policies

• If stringent greenhouse policies are implemented and advances in carbon capture and sequestration prove less effective than hoped, coal-fired electricity's LCOE could rise as high as $91 per MWh and gas fired electricity's LCOE could rise as high as $68 pe MWh. These LCOEs would fully assure the competitiveness of nuclear energy.