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LOBAL 2003 | 16-20,
November o
recently by private investors; as well as a “low variant"’ at 5% for the sake of comparison with the previous 1997 study and other international studies as well). However, the study also provides
Nb» Print, UuHibin indications on external costs (costs not directly supported by the producer). November 16-20. 2000 The main conclusion of the study is that, for base-load generation units entering commercial operation around 2015, nuclear power, with a levelised generation cost of 28,4 €/MWh, is more competitive than CCGTs, which stands at 35 €/M\VlT for a gas price of 3.3 $/MBtu, and coal (8% discount rate). Nuclear and CCGT technologies exhibit comparable generation costs at a 11% discount rate.
As shown in Figure 1, nuclear power competitiveness is further increased when costs related to greenhouse effect gases (C02) are taken into account when estimating the MWh cost (two assumptions are considered : a very low cost of 4 € per metric ton of C02, and 20 €/t). Indeed, the internalization of costs related to the C02 emitted by fossil fuel fired technologies should become mandatory in the EU as early as 2004 following the adaptation of the relevant European directives into the national law of each EU member state.
50
40
30
2 20
10
0 Nuclear CCGT Coal FCB Coal CPTF
Figure 1. Levelised “2015"’ base-load electricity generation costs (8% discount rate) Source [9]
The breakdown of the base-load nuclear kWh levelised generation cost, is given in Figure 2 in terms of investment (including decommissioning), operating and maintenance, fuel cycle, and fiscal costs.
D investment cost ■ O&M costs D Fuel costs D R&D costs ■ Fiscal costs
Figure 2. Base-load Nuclear kWh levelised generation cost breakdown (8% discount rate). Source [9]
As far as nuclear investment costs are concerned, the study relies on the costs of the EPR basic design as derived following a detailed economic optimization phase carried out by Framatome-ANP and 3
3 In this study, all calculations are perfonned with constant € at the economic conditions of 2001, and assuming the parity 1 $ = 1 €.
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LOBAL 2003 | 16-20,
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Nb» Print, UuHibin November 16-20. 2000 Comments on key parameters
S Level of the overnight investment cost for the nuclear reactor
All existing types of reactors may benefit from return of experience and series effects to reduce their cost for building new capacities. Among them, the European Pressurized Reactor (EPR) from Framatome ANP which is a light water reactor of about 1600 MWe has similar investment cost as existing reactors but with increased performances (improved safety, better thermal yield, higher fuel bum up ,...). Major competing reactors are: the ABWR from General Electric and the API000 from Westinghouse,... .
The reported overnight cost for such capacities exceeding 1000 MWe ranges from 1280 €/kWe to 1700 €/kWe. For smaller units, the overnight cost is higher: the AMPERE report for example considers the range 1600 €/kWe to 1850 €/kWe for the AP 600 from Westinghouse.
What is the cost of capital ?
The cost of capital has a great influence on the competitiveness of nuclear electricity.
European life cycle cost studies levelise the flows with discount rates usually in the 5 to 10% range, without directly addressing the question of financing, while Northern American countries often exhibit higher discount rates in their studies (11% to 12%), and implement financial studies which consider the investment to be financed partly by equity fund and partly by debt/loan and account for their different costs. To compare the cost-of-capital assumptions between the two approaches requires explicating the relationship between European studies discount rates, and the return on equity (ROE), debt cost/loan interest rate, and debt to equity ratio, and the way corporate income taxes are dealt with.
In financial studies, only net profit flows are discounted (that is to say after deduction income taxes and other taxes), and nominal, rates may be considered together with inflation rate assumptions, while life cycle cost studies generally do not take into account taxes1" and use real discount rates (i.e. net of inflation). So that real rates have to be used for the comparison as well as ROEs before taxes.
In real terms, the discount rate used in the power generation cost assessment is formally equivalent to the Weighted Average Cost of Capital (WACC) calculated in financial studies.
WACC = % of equity fund * ROEBt + (1- % of equity fund) * i Where : (1- % of equity funds) is the share of debt in the investment cost
ROE bt is the real rate of return on equity before tax “i ” is the real rate of loan interest
Building a new reactor is the kind of project that can be financed with an equity share of 30%. Some studies considerer however an equity share up to 50%. The expected rate of return on equity after tax in this business sector is expected to reach about 9% real, meaning about 14.5% real before tax (assuming an income tax of 38%). Long term risk-free interest rates are nowadays around 2.5% real. Including a risk premium for the loan raises then the interest rate to 5% real.
111 Note that the DIDEME 2003 study, which is perfonned from an investor standpoint, accounts for fiscal taxes
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that contribution Tinturier pare
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Relevant greenhouse against increase
and
[11] [12] [10] [8] [9] [6] [7] [5] [3] [4] [1] [2] ■/ confirms References Thus, essential generation generation Acknowledgements
200
LOBAL 2003 | 16-20,
Nmentw
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14/15
S6 93 107 770 370 9% 263 13.0 144.6 20 waste
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reactor €
13 S4 S5 S6
238
S5 93 level 110 739 342 8% 232 11.5
143.8 fuel fleet 20 years 0.161
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45
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the 93 S4 9.6 195 112 7% BFF 307 medium 702
reactor 142.7 or uranium, 20
(2000)
MOX For
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111
follows:
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147 339
9% 240 and 13.2 average current 152.8 lifetime
Report €
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EDF). SI S2 S3
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0.152 years assessment. 111
12 uranium,
and
for S2 93 reactors 101 is and 314 8% 720 213 reactor 11.8
152.0 41 Dessus 18 includes:
UOX
BFF
cost for
[4] summarized (covered 37 waste
(1999)
: 111
is Pellat
BFF
SI 93 97
190 103 uranium 7% 239
report 10.5
FF cycle 151.3
18
BFF reprocessed 1 conditioning),
assessment
cost
level Report
reactors reactors cost
the
” 20
(17.5 generation
and :
APPENDIX open
in reprocessing, cost
storage,
total Charpin waste assumptions:
depleted high value). 1999)
corresponding
value) “ an
period period
1999
total
cost
loaded loaded
the of from
to /MWh)
to
the
99 investment the
(1999 of uranium 1999
(BFF
interim cost
and in
in
back-end
(FF disposal)
MOX MOX 1970 waste (vitrified following considered
(including storage
plant fuel fuel,
(switch
1977-1998 1999-2049 1999) of Francs
(BFF,
costs
20 28
the
cost dismantling
final cycle
depleted
from
Disposal
Charpin-Dessus-Pellat scope
on situation)
“ spent
component included of
fuel
2010 interim
MOX
storage (BFF
Total
generation
with French with
/MWh) Fuel BFF the 12 13 14 canisters). waste in in
are Final
99
of
use)
and (TWh)
quantities of based reprocessing, cycle 55
reprocessing
MOX UP2-800
reprocessing Al.
current
is (FF 56 incl.
generation
back-end stops interim of
p fuel and
fuel
of back-end Waste
MOX
disposal
billions scenarios
cost cost/Total (not + recycling reprocessing
of Table
varying
of expenses
total
reached
from
cycle
reprocessing
spent standardized estimated UOX UP2-800 Pu conversion generation waste no final Reprocessing
means
have fuel R&D assessment back-end
Includes BFF Excerpt
Back-end Back-end Back-End Power Back-End Average 100% Waste strategy) (continuation (extension Reprocessing Partial extension 12 13 14 The Summary Considered The The The they 2001 o
2003 1 16-20.
November
for
15 15/15 Nuclear
of Hague
value)
reprocessing
La S6
if Fleet 17.1 12.1 follows: 170 87,1 0.24 0.12 184 3.8 77.6 3.2 20 26.5
of 1999
as
use (even
S5 (French) 18.3 17.8 14.2 139 8.8 0.76 0.04 154 57.5 20 2.5 2&d
the
assumptions:
(constant assessed
storage
is S4
Existing 15.9 1.1 102 116 9.1 5.1 o.oa - 20 years), 23.9 41 26.6 “
storage. [5],
Francs
the interim following
(150
period) S3
on
for 14.7 10.4 147 0.79 0.07 161 72.2 3.2 7&4 20 22.2 4 report
interim fuel main
French
for Group used
of
S2 two
15.1 15.3 13.6 120 be 134 7.5 0.73 - 20 45.1 2 2g MOX
(1999-2049 the used
to
for on
3
be Working
billions SI
15.9 1.1 111 5.1 o.oa - 23.9 9.1 3d. 20 97 21.9 in the
based expenses
& assumed cannot by
Charpin-Dessus-Pellat
required is
2049 is
site the
to
site of storage
storage report
storage period
prepared conversion conversion
back-end
1999
excluded.
Hague
the
conversion
is
Hague authors
La
Hague report interim
interim
interim
storage from
La
Hague future
the
fuel La storage the the
uranium
storage
fuel of
fuel
Hague) Hague)
La
of
the the
expenses,
uranium
such Hague) Hague)
La La
to
interim
150
option, of UOXfuel UOX MOX interim with without La La
p Expenses
request
option, recycling
storage storage
long the
stopped), A2.
related from (without (without Total Spent Spent (with Total (with storage & Dismantling Depleted Reprocessed Items Reprocessing Pu HLW Spent at HLWinterim HLWinterim
second first is storage the ”
to cost interim
Table
Plants Excerpt
15 The Due For interim 2001 o
2003 1 16-20,
November