Table 15.2 provides cost data on the construction of a hypothetical nuclear power plant, and lays out a few commonly used but very different methods for quoting these same costs. The example demonstrates a large disparity of quotations, even when the underlying plant and cost data are the same.

In the example, construction is planned to occur over a five-year period running from 2014 through 2018, so that the plant is ready for grid connec­tion at the start of 2019. The utility receives an offer from a vendor for the construction of the nuclear island and turbine-generator unit under an EPC contract. Rows [3] and [4] of Table 15.2 show a typical construction cost schedule. The vendor’s total EPC OC quoted in 2010 prices and exchange rates is $3500 per kW(e) or $3.5 billion for a 1000 MW NPP.

Lines [5]—[11] show how the cost for the same plant is typically quoted by a utility as it seeks approval for the plant (in regulated markets) or finance and equity partners (in deregulated markets). Line [5] is the ven­dor’s quoted EPC OC cost, but these figures have been adjusted for infla­tion (here assumed to be 3% per year) so that each year’s figure reflects the expected nominal expenditure in that year. Line [6] shows the owner’s costs, i. e., the balance-of-plant, contingency and other costs that the utility has to cover out of its own pocket, in addition to the vendor EPC costs. The owner’s costs shown in line [6] are taken at 20% of the EPC OC figures of line [5].

Line [7] shows the cost of transmission system upgrades which are assumed to be necessary to deliver electricity to the grid once the hypotheti­cal plant is completed at the end of 2018. Line [8] is the sum of lines [5], [6] and [7]. This total cost, which is exclusive of IDC, amounts to $5520 per kW(e) and serves as the basis for the IDC calculations in line [9] assuming a weighted average cost of capital (WACC) of 12%.

Line [10] shows the total costs as expended, inclusive of IDC. Line [11] accumulates total annual costs. By the end of 2018, when plant construction is completed and ready for grid connection, this total cost, inclusive of IDC, is $6930 per kW(e).[95] This is almost twice the vendor’s EPC OC of $3500 per kW(e). The difference between the two estimates is merely a question of the method of quotation, i. e., of what is in and what is out and how the dollar expenditures are denominated, whether in 2010 dollars or in nominal dollars (dollars as expended). If expressed in dollars at 2010 prices, i. e., what the plant would cost at the planning stage, the nominal total of $6930 corresponds to $5752 per kW(e). In contrast, if expressed in 2019

Notes: All figures in $/kW. Example assumes a total EPC overnight cost of $3500 owner’s cost and an allowed capital recovery charge (or WACC) of 12%.

Rows [ 1 ]—[ 15], columns [A]—[E]:

[3] Rate of expenditures is given.

[4] = [3] * $3500

[5] = [4] * (1.03)2 — 2010

[6] = 20% * [5]

[7] Transmission expenditures are given

[8] = [5] + [6] + [7]

[9] [9B] = [ 11 A] * 12% + 0.5 * [8B] * 12% and so on.

Source: adapted from Du and Parsons (2009).

prices, i. e., when the plant starts generating revenue, the cost is $7288 per kW(e).

A structured approach as outlined above allows a better comparison of cost estimates from different sources. However, it requires additional infor­mation than is commonly contained in media reports, utility or government announcements. Irrespective of the level of information available, it can help to identify inconsistencies in the quotations or define the set of common cost components upon which consistent comparisons can be made.

An even more transparent approach is the use of harmonized boundaries and assumptions. This not only facilitates comparisons of the costs of dif­ferent nuclear power projects but also compares nuclear power with alter­natives. The recent OECD report Projected Costs of Generating Electricity (NEA and IEA, 2010) followed the harmonized approach. Despite the harmonization, the report presents nuclear OC between $1560/kW(e) and $5860/kW(e) — a much wider range than five years ago — which shows con­tinued uncertainty about nuclear power OC. Altogether 14 countries, all of which operate nuclear power plants, and two industrial associations con­tributed data for a total of 20 prospective nuclear projects (see Fig. 15.10). At the lower end of the OC estimates are China, Japan, Korea and Russia, i. e. countries with ongoing construction experience. At the higher end, OC

6000

І5, 2000

‘с

CD

>

О

1000

15.10 Expected overnight cost of nuclear power plants (NEA and IEA, 2010).

often reflect FOAK costs — either truly for the first construction of a design never built before (e. g., the EPR at Olkiluoto in Finland), for construction in a region or country without nuclear power (e. g., UAE or Vietnam) or for new construction in countries where active nuclear power construction stopped decades ago (e. g., USA, Belgium, Switzerland or UK).

15.1.2 Finance[96]