Nuclear power plant construction is typical of large infrastructure projects worldwide, whose costs and delivery challenges tend to be underestimated. These new builds require significant upfront investments, which were mostly caused by highly customized designs of large plants but can be driven down by standardized, reusable designs.
The basic economics metric for any generating plant is the levelized cost of electricity (LCOE). The total cost to build and operate a power plant over its lifetime is divided by the total electricity output dispatched from the plant over that period, typically the cost per megawatt-hour. It takes into account the financing costs of the capital component.
Over the last decade, the LCOE (levelized cost of electricity) of renewable sources, especially solar power, has fallen sharply. This is quite logical; renewables are now being applied globally, so the savings from mass production are being applied. While new nuclear power plants are more expensive than new renewable energy in upfront investment, the latter’s cost is expected to grow as the grid is saturated with intermittent sources and energy storage, and land usage becomes a primary barrier to their expansion. Note that life-cycle land usage by nuclear power (including mining and waste storage, direct and indirect) is 100 m2/GWh which is ½ of solar power and 1/10 of wind power.
In contrast, the LCOE of nuclear energy has been growing. This is also logical, the majority of nuclear plants today are approaching the end of their design life, and only a few have been built in the last 20 years. At present, nuclear energy has been declining for thirty years, and educational capacities and supply chains are in line with this. Opportunities exist to significantly reduce the capital cost and shorten the construction schedule for new nuclear power plants. First, deploying multiple standardized units, especially at a single site, affords considerable learning from the construction of each unit.
We must note that nuclear electricity prices are relatively insensitive to the price of uranium. For nuclear power plants, busbar costs are dominated by capital costs, which can make up more than 60 percent of the LCOE. On the other hand, fuel costs are a relatively small factor in a nuclear plant’s LCOE (less than 20 percent). As a result, the cost of electricity from a nuclear plant is sensitive to construction costs and interest rates but relatively insensitive to the price of uranium, which accounts for only 6% of the total LCOE.
