The construction duration has a significant impact on the total overall costs, because of the cost of financing. In general, reduction in the construction duration results in a decrease in interest during construction (i. e., the cost of financing), as illustrated by an example in Figure 6.4. The data for this figure was calculated with an assumption of the overnight capital cost of USD 2 000 per kWe uniformly distributed over the construction period, at 5% and 10% discount rates.

With respect to SMRs, Figure 6.4 shows that, for example, if the construction duration for a small plant is three years instead of six years for a large plant, the saving due to lower interest during construction will be 9.3% at a 5% discount rate and 20% at a 10% discount rate. Thus, the reduction in investment costs due to shorter construction period increases considerably with the growth of the discount rate.

The effect of a reduction in interest due to a shorter construction period, illustrated by Figure 6.8, applies to both on-site construction and factory manufacturing of the plants.

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