Reactor Economics 2007 Reactor Economics 2007

Jim Harding

California Senate Energy Committee Hearing

December 10, 2007

San Diego

Key DevelopmentsKey Developments

• Near certain carbon controls• Persistently high fossil fuel prices• Growing government subsidies for non-carbon resources

• Possible loan guarantees• Possible production tax credits

• The “China Effect” – concrete, steel, copper – up substantially since 2002

• Nuclear supply chain moribund for two decades• Electric industry restructuring

• Less certain cost recovery• Transmission bottlenecks and lead time

Since 2002… Since 2002…

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Jun-98 Jun-99 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06

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x Chemical Engineering Plant Cost Index

Marshall & Swift Equipment Cost Index

Chemical Engineering Plant Cost Index

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1950.00 1960.00 1970.00 1980.00 1990.00 2000.00 2010.00

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avg. slope from 1959 - 2005 ~ 3.5 %/yravg. slope from 2002 - 2005 ~ 7.4 %/yr

Steeper Curve Than in the Mid 80s

Pulverized Coal

Gas (CCCT) Eastern IGCC

Wind Nuclear

Capital Cost ($/kW)

2438 700 2795 1700 4000

Total cost (cents/kWh)

5.8 6.8 6.8 7.1 8.9

CO2 Capture Cost ($/kW)

940 470 450 NA NA

Cost for CCS (cents/kWh)

6.2 2.8 3.4 NA NA

Cents/kWh 12.0 9.6 10.2 7.1 8.9-9.8

Cents/kWh (credits $10-30)

6.2-7.9 7-7.7 7.1-8.7 7.1 8.9-9.8

Standard and Poor’s Assessment

Beware Old Studies, Particularly for Beware Old Studies, Particularly for Nuclear Power Nuclear Power

• Studies• GE/Westinghouse ($1000-1500/kW)• University of Chicago ($1500/kW)• World Nuclear Association ($1000-1500/kW) • US Energy Information Administration

($2083/kW)• Newer analyses disagree – S&P ($4000/kW),

Florida Power and Light, Keystone report ($3600-4000/kW), Moody’s ($5000/kW)

US Projections – Decades AgoUS Projections – Decades Ago

Construction start Estimated Overnight Actual Overnight % Over

1966-1967 $560/kW $1170/kW 209%

1968-1969 $679/kW $2000/kW 294%

1970-1971 $760/kW $2650/kW 348%

1972-1973 $1117/kW $3555/kW 318%

1974-1975 $1156/kW $4410/kW 381%

1976-1977 $1493/kW $4008/kW 269%

Mark Gielecki and James Hewlett, Commercial Nuclear Power in the United States: Problems and Prospects, US Energy Information Administration, August 1994. Data is in 2002 dollars.

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1970 1975 1980 1985 1990 1995 2000

Date of first operation

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Shoreham

Nine Mile Point 2 Watts Bar 1

Comanche Peak 2

Copyright Jonathan G. Koomey 2007

Comanche Peak 1

US Economics – Two Decades Ago

Koomey, Jonathan, and Nate Hultman. 2007. “A Reactor-Level Analysis of Busbar Costs for US nuclear plants,” 1970-2005, forthcoming in Energy Policy

Recent Japanese ExperienceRecent Japanese ExperiencePlant MWe COD Yen@COD 2002$s/kW 2007$s/kW

Onagawa 3 825 Jan 2002 3.1 Billion 2409 3332

Genkai 3 1180 Feb 1994 4 Billion 2643 3656

Genkai 4 1180 Jul 1997 3.2 Billion 1960 2711

KK 3 1000 Jan 1993 3.2 Billion 2615 3617

KK 4 1000 Jan 1994 2.2 Billion 2609 3608

KK 6 1356 Jan 1996 4.2 Billion 2290 3167

KK 7 1356 Jan 1997 3.7 Billion 1957 2707

Y 5 (SK) 1000 Jan 2004 1700 2352

Y 6 (SK) 1000 Jan 2005 1656 2290

Average 2354 3257

Cost data from MIT 2003 Future of Nuclear Power study. Average does not include South Korean units.

Escalation Likely Worse for Nuclear Escalation Likely Worse for Nuclear

• Industry moribund in Western Europe, US, and Russia since TMI and Chernobyl

• Twenty years ago (US): 400 suppliers, 900 N-Stamp holders; today 80 and 200

• Only one forge for large parts – Japan Steel Works; maybe Creusot Forge (France)

• Skilled labor and contractor limits• Uranium production well below current

consumption

Lifecycle Costs

Cost Category Low Case High Case

Capital Costs 6.0 7.9

Fuel 1.6 2.0

Fixed O&M 1.3 1.8

Variable O&M 0.5 0.5

Total (Levelized Cents/kWh) 9.4 12.2

Costs are in real discounted 2007 cents/kWh

Jeff Combs, President, Ux Consulting Company, Price Expectations and Price Formation, presentation to Nuclear Energy Institute International Uranium Fuel Seminar 2006

Fuel cycle steps MIT This analysis

Uranium $30/kg $300/kg

Enrichment $100/SWU $140-340/SWU

Fabrication $275/kg $275/kg

Disposal $400/kg $400/kg

Reprocessing $1000/kg $1500-2000/kg

Fuel cycle cost

Open 0.5 cents/kWh 1.6-2 cents/kWh

Closed 2 cents/kWh 3.4-4.3 cents/kWh

Differential 4x 2-3.5x

Reprocessing Is ExpensiveReprocessing Is Expensive

Efficiency and Renewables are Efficiency and Renewables are Disruptive TechnologiesDisruptive Technologies

A disruptive technology is often cheaper than the operating cost of the existing system

Demand is not limited to growth in serviceEfficiency resources cost less than operating costs for

existing gas (or coal with carbon taxes); they pay for themselves with +3x more carbon savings per dollar

Wind was disruptive from 2002-2005 and may be againPhotovoltaics may soon become oneOnly disruptive energy technologies can grow fast enough

to solve climate challenges

Rapid Worldwide Growth in Renewables

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1960 1965 1970 1975 1980 1985 1990 1995 2000

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Efficiency Is A Resource = 22 Fewer 1 GW Plants Since 1970

Some Is Driven By Technical Some Is Driven By Technical InnovationInnovation

Figure 1 - Annual Lost-Opportunity Achievable Potential Supply Curve

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$0 $10 $20 $30 $40 $50 $60 $70 $80 $90 $100 $110 $120

Levelized Cost (2004$/MWH)

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Northwest Power Planning Council, Achievable Savings, August 2007

Codes, Standards, and Programs Are Also Needed

Figure 10 - Annual Utility Program Conservation Savings1980 - 2005

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Historical Northwest Utility Programs

Northwest Power Planning Council, Achievable Savings, August 2007

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NW CFL Market Shares

US CFL Market Shares

Figure 8 -Estimated ENERGY STAR CFL Market Share for the Northwest and U.S., 2000-2006

Sources: NW CFL sales 2000-2006: PECI and Fluid Market Strategies sales data reports; and NEEA estimate of an additional 1.5 million WAL-MART CFLs sold region-wide in 2006 (See Appendix A [Section 9.1.1] of MPER3 for more detail); U.S. and NW population estimates 2000-2006: U.S. Census 2004; U.S. market shares and non-CFL sales 2000-2005: Itron California Lamp Report (2006); U.S. market share 2006: D&R International (personal communication).

Compact Fluorescent Market Penetration

The Bottom LineThe Bottom Line

• Twenty years from light water reactor technology will be roughly the same as it is today

• Efficiency resources, wind turbine technology, and photovoltaics are improving rapidly

• Take one example --- Nanosolar• started by the Google founders, backed also by Swiss Re• Building two 430 MW/yr thin film PV production facilities this

year in Germany and California, using a technology they equate to printing newspapers

• Target price is $0.50/peak watt --- cheaper than delivered electricity price in most parts of the world

• The cheapest, least risk strategy is rapid development of efficiency resources