November 08, 2008
Duke Nuclear Power Plants Double In Price
If nuclear power is to be the energy of the future the nuclear industry needs to get costs down.
Duke Energy Carolinas has raised the expected construction costs of its proposed Lee Nuclear Station to $11 billion, excluding financing costs. Thatís roughly twice the companyís original estimates.
Based on the financing costs for Dukeís new coal-powered unit at Cliffside Steam Station, financing expenses would increase the nuclear plantís price to more than $14 billion.
The cost is for 2 reactors.
The utility had originally estimated costs at $4 billion to $6 billion to build the two 1,117-megawatt reactors planned for the plant near Gaffney, S.C.
That works out to about $6.3 billion per gigawatt. Anyone have a good idea on how that translates into pennies per kilowatt hour sold on the wholesale market?
The price of nuclear power plant construction might be in decline since steel prices have declined greatly since the July 2008 commodity price peak.
In China, the world's largest steel producer, prices of benchmark hot-rolled coil dropped to a one-year low of $595 a tonne, down 1 percent on the week and 42 percent from a record high of $1,030 hit in July, data from Metal Bulletin shows.
But nuclear power plant planning and construction takes so long that steel prices could be much higher by the time construction starts on Duke's plants. Nuclear power plant construction costs are therefore hard to forecast.
"That works out to about $6.3 billion per gigawatt. Anyone have a good idea on how that translates into pennies per kilowatt hour sold on the wholesale market?"
Put $6.3B into a payment calculator, assuming 7% interest and 30 year payback, and get $508M per year. Divide by KWH's per year (1,117 * 90% capacity factor * 8,760 hours), get $.058 per KWH. Assume 60 year payback, get $.051 per KWH (which neglects upgrade costs). Add $.02 operating costs, get about 7-8 cents per KWH.
About the same range for wind.
But we need to plug in fuel, labor, on-going maintenance, etc. I vaguely remember that capital costs are like maybe 70% or more of nuclear power plant costs. So your calculation above probably captures most of the costs.
But is the 7% interest cost close to the real cost of capital for a nuclear plant? Wikipedia provides higher numbers for cost of capital:
Industry consensus is that a 5% discount rate is appropriate for plants operating in a regulated utility environment where revenues are guaranteed by captive markets, and 10% discount rate is appropriate for a competitive deregulated or merchant plant environment, however the independent MIT study (2003) which used a more sophisticated finance model distinguishing equity and debt capital had a higher 11.5% average discount rate.
Using 30 year payback I get $663M per year at 10%. I get $749M per year at 11.5%.
"But we need to plug in fuel, labor, on-going maintenance, etc. I vaguely remember that capital costs are like maybe 70% or more of nuclear power plant costs. So your calculation above probably captures most of the costs."
According to the Nuclear Energy Institute, operating costs (which include all of those factors) are just below 2 cents. Now, those are old, existing plants, which have had decades to optimize and fine-tune. OTOH, nuclear advocates claim that new plants should be cheaper to run. Hard to know.
Yes, interest costs are key. The French reduce their costs through public financing, which is a major subsidy. I've seen arguments from Jerome A Paris, on TOD, that is a good idea, and should extend to other high-capital cost forms of generation, like wind. I'm not sure how one decides this kind of thing. There's certainly a lot of competition for this low-cost capital, especially lately....
That looks way too good to be true. They're supposed to be 25MW, for $25M, or only $1/watt. That's less than 20% of larger, more efficient plants. They say it's 5 years off - so this may be too early to evaluate, but if it's real, why would anyone spend $7B for a conventional large plant, when they can just buy 40 of these for $1B, for much faster delivery???
Randall, this seems to merit a post - I'd be very curious for wider feedback.
The press release re: the mini-nuclear-reactors doesn't say how the heat from the reactor is converted to electricity, presumably AC electricity.
Conventional plants do this with turbines/generators as readers will know. Talk of burying these minis- doesn't seen all that compatible with such a scheme. There may be much more cost in getting power from this than just buying the box.
But Los Alamos has licensed it, Hyperion says it will build, I say we shall see.
Except for the five year lead I have no reason to doubt the people involved. In unproved technology my wariness is proportional to the square of time until delivery.
And I hope it works. I like big nukes and if they work out I will like little ones too.
Yes, it looks like the Hyperion unit is just a heat source, and the buyer has to add the turbines/generators, perform installation, etc.
Hard to know how to cost a complete installation. Might be best where only heat is needed, like for tar sands.
I already was intending to write a post on the Hyperion unit. I didn't do it yesterday because I already did 6 posts over the weekend.
As for too good to be true: Yes, that is my guess. But there are plenty of uses of heat sources. I wonder how well it can be damped down in summers. I could see it working in ice box cities in Wisconsin, Minnesota, upstate NY, New Hampshire, Maine, most of Canada (Winterpeg comes to mind), and other colder places.
Yes nuclear is expensive. Largely because an N plant needs lots of steel, concrete, and time. The same however is true for all forms of energy. We have yet to see any cost figures for giga-watt scale wind or solar plants, that include the storage and transmission mechanism that will be necessary. My guess is that when those come in, they will be higher than nuclear.
Further. 6 Billion is a lot of coin, but it is a finite number. Eventually, we will have to finance something very expensive or we will face rolling blackouts. Want to guess how much it costs to install, and operate, diesel powered home generators, and what that will do for CO2 production and pollution?