Commercial competition should ensure a continued drive for cost reductions and it is clear that, for nuclear power, the area to focus on is capital costs and the reduction of commercial risk (and therefore discount rates) through replication. But competition cannot exist without a market so let us assume that, in the next 20 years:

• governments of European and North American countries continue to exert pressure to cut back on carbon dioxide emissions

• renewables, for whatever reason, amount to no more than 20% of nominal generating capacity

• oil becomes scarcer and more expensive

• no new intensive energy source for carbon-free electricity generation (e. g. laser fusion) becomes available.

With these assumptions it seems inevitable that nuclear power will provide an increasingly large slice of electricity generation, not only for heating, cooling, lighting, machines and the many other uses with which we are familiar but also as a substitute for fossil fuels by, for example, supplying the energy for battery — or hydrogen-powered vehicles. This would be supported by CCGT and, depending on the success of development efforts, coal-fired generation combined with carbon capture and sequestration. At the present time, however, the latter looks too expensive and will therefore need some form of government support. Obvious candidate countries for the introduction of coal+CC are those with access to low — price supplies of coal not least because successful implementation of the technology could help to support continued coal exports.

Such an expansion of nuclear power will reduce capital costs through the force of competition and the economies of scale; it will also considerably reduce uncertainties in cost estimates, many of which arise because of the long layoff from reactor construction. Other costs that are likely to be reduced through improved design are operation, maintenance, decommissioning and waste management. Fuel costs will probably rise as demand for uranium increases but, as we have seen, nuclear fuel costs constitute only around 12% of the LCOE and the cost of uranium itself constitutes about one third of this. Interestingly, a recent report19 has suggested a $210 per lb maximum price for uranium based on the cost of extraction from seawater. If this became reality, fuel costs would then constitute about 25% of the LCOE for nuclear. Even before this happened, however, wider use of MOX fuel would probably be an important factor in limiting fuel prices. More widespread use of nuclear will also increase the need for plant that has an improved ability to load follow.

Partly driven by the dearth of orders for large-scale plant, much thought has been given in recent years to the production of small modular reactors that would be capable of being constructed off-site, a practice that is normal for nuclear submarine reactors. Economies of scale would not come from the size of the plant but from the numbers produced. Many such reactor designs have been proposed: the World Nuclear Association website20 lists 16, most with an output in the range 100-300 MW(e). It is claimed that savings can be made on capital cost because these designs would allow simpler safety systems. If overnight cost could be reduced that would, indeed, be an advantage. From the sensitivity study in Section 5.2.6, however, we can see that equally powerful economic arguments might be made based on a shortening of the construction time and a reduction in discount rate because of the scaling down of the overall size and cost of the project.