The nuclear sector commonly clusters nuclear power plant (NPP) life-cycle costs as

capital cost, operation and maintenance, fuel and decommissioning.

• Total capital investment cost (or capital cost): an all-inclusive plant capital cost, or lump-sum up-front cost. This cost is the base construction cost plus contingency, escalation, interest during construction (IDC), owner’s cost (including utility’s start-up cost), commissioning (non-utility start-up cost), and initial fuel core costs for a reactor (EMWG, 2007).

• Operation and maintenance (O&M): costs inclusive of, but not limited to: (i) actions focused on scheduling, procedures, and work/systems control and optimization; (ii) performance of routine, preventive, predictive, scheduled and unscheduled actions aimed at preventing equipment failure or decline with the goal of increasing efficiency, reliability, and safety (Sullivan et al., 2010).

• Fuel cost, the sum of the costs for the fissile/fertile materials (natural uranium, low-

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enrichment uranium, highly enriched uranium, mixed oxide fuel, uranium-thorium, etc.) and the enrichment process of the fuel in fissile materials, plus other materials used in the fuel assemblies (zirconium, graphite, etc.), services required to produce the needed materials (mining, milling, conversion, enrichment, fabrication), fuel fabrication, shipment and handling, costs of spent-fuel disposal or reprocessing and waste (including low-level, high-level and transuranic waste) disposal.

• Decommissioning: costs for the administrative and technical actions taken to allow the removal of some or all of the regulatory controls from a facility. The actions will ensure the long-term protection of the public and the environment, and typically include reducing the levels of residual radionuclides in the materials and on the site of the facility, to allow the materials’ safe recycling, reuse, or disposal as ‘exempt waste’ or as ‘radioactive waste’ and to allow the release of the site for unrestricted use or other use (IAEA, 2007a).

These costs contribute in different ways to the economics of a NPP. In general it is possible to compare them using one of the most important indicator for policy makers. This indicator, usually called levelized unit electricity cost (LUEC) or levelized cost of electricity (LCOE), represents a unit generation cost of electricity, accounting for all the NPP life-cycle costs and is expressed in terms of energy currency, typically [$/KW h]. For both large reactors (LRs) and SMRs the capital cost is the main component (50-75%) of the LCOE, followed by O&M and fuel, as shown in Table 10.1. From this consideration arises the opportunity to analyse in detail the nature of the capital cost item. In accordance with the glossary provided by EMWG (2007), Table 2 lists and clusters all the main accounts included in the capital cost.

If the construction time increases, almost all the cost items, apart from the equipment, are affected by such increase. In particular, the cost items affected by a time schedule increase are as follows:

• Labour cost: on the construction site of a reactor plant, thousands of people are employed.

• Rent fees for building infrastructures (e. g. special cranes).

• Escalation: the amount of all the cost items tends to increase because of a generalized inflation mechanism; the inflation rate may specifically relate to the price dynamics of the main inputs, such as structural materials, energy, etc.

• Interest during construction: financial costs related to the capital remuneration increase with the investment duration.

In addition to the cost increase, each day of construction schedule delay represents a loss in terms of missed electricity generation and potential revenues.

Once construction and commissioning are completed, the NPP enters the operation mode. In this phase almost all the costs are fixed (Parsons and Du, 2009). A large part of the operation and fuel costs is independent of the electricity generated (fixed costs). Even if the plant has a low capacity factor, the labour cost, which is the main component of O&M costs, does not change, and neither does most of the maintenance cost.

As a consequence of the essentially fixed nuclear generation costs, the NPP manager’s interest is generally to run the plant at its target (i. e. nominal) capacity. For this reason nuclear power is most suited for base load production.