Background #
The costs and construction time of nuclear energy depend to a large extent on the expertise and the political environment. They can therefore also be influenced in the right direction in exactly the same way as renewable energy, and most of the plants in operation now were relatively cheap when they were built. In fact, in the early days of nuclear, prices were on a steady downward trend similar to that of wind and solar [1].
Wind and solar was once also very expensive but have declined in recent years [2]. The cost reductions did not happen by magic but through deployment, learning and a consistent programme of government support intent on driving the price of these technologies down – not abandoning them. There is nothing inherently expensive about nuclear.
How can we do it with nuclear today. Some argue that commercializing advanced reactors is the key [3], while others argue it’s not innovation, but series build of proven standardized designs that lowers the cost and time [4]. Both these have merit but there are things even more fundamental to improving nuclear economics which must be achieved in either case. These basics give us a clue as to what needs to happen first.
Cut financing costs #
The first step to reducing the delivered costs of nuclear electricity has little to do with reactor technology or standardization, but have everything to do with the cost of financing.
The vast majority of the costs of a nuclear plant – over 70% – go to finance the construction of the plant. It is dominated by the expected financial return called the discount rate, which reflects the owners’ expectations or repayment needs. Higher-risk investments usually require a higher discount rate, around 10%, to be willing to invest their money. Investment risk is influenced by various factors unrelated to reactor design.
Figure 1: Source: OECD, Projected Costs of Generating Electricity, 2015 Edition (Table 3.11, assuming 85% capacity factor) [5].
Create a political consensus #
The biggest source of risk is political. The presence of anti-nuclear parties in a given country’s parliament results in increased cost and longer construction times [6]. There are many historical examples of regrettable political interference into nuclear energy, completed plants never permitted to operate [7], operating plants were ordered to close despite being in compliance with regulatory requirements [8], and nuclear-specific taxes [9].
It all adds to the financing cost of nuclear projects as investors invariably factor in a risk premium. Who wants to invest in something the next government or Greenpeace shuts down?
Therefore, a successful nuclear energy program must enjoy strong national support across the political spectrum so that the construction of nuclear is not interrupted by changes of government or political discord. It requires that the need for nuclear energy be established for economic, safety and environmental reasons. There must also be consensus on the safety of nuclear energy, as this is the main concern of all parties. This consensus must be fact-based.
A clear, long-term energy policy from the federal and state governments is needed. It should include decarbonization targets that include all clean energy sources and allow nuclear energy to play a role. This would help justify the intentional long-term program of learning and improving cost efficiency through best practices in management, organizing manufacturing alliances and building efficient supply chains.
Governments may need to reinforce this through direct involvement, providing loan guarantees [10], or taking a share of the project for example [11].
Engage the public #
Like all technologies, nuclear energy must also have broad public support in order to be realized and thrive, lasting for many decades. There is unlikely to be higher demand and lower costs for nuclear without higher social acceptance, and there is unlikely to be higher social acceptance without overcoming the fears.
The truth is that people have been victims of fake news about nuclear since the late 1960s. When most people learn the basic facts about nuclear energy, they become far more supportive of it.
And yet neither governments nor industry have ever, in the 50 years of nuclear energy, made a serious effort to provide those facts.
Regulation Stability and Predictability #
Nuclear reactors will always need safety and environmental regulations. The key is making sure these regulation rules and practices are stable. Changes to these after the facility is designed are project killers. Safety regulators have contributed to delays on nuclear projects in sometimes unfortunate ways, such as when new requirements are introduced after construction has begun [10].
Therefore, if a regulatory authority changes regulations after a design has been approved, either the old rules will continue to apply to permits etc. despite new rules, or the public must bear the full costs of such changes. This would force the supervisory body to justify such changes to the taxpayer or representatives.
The regulatory rules must also be science based. There is several specific areas where regulatory body slowing down or adding cost to the nuclear energy.
Harmonizing regulations and certification process #
A lot can also be done by harmonizing regulations and codes and standards internationally [12]. The current process for certifying nuclear reactor designs is based on an inefficient country-by-country approach. Hinkley Point C is the same European Pressurized Reactor (EPR) reactor as built in France and Finland had up to 7,000 design changes to comply with UK regulations. The UK version uses 25% more concrete and 35% more steel. Meaning that the many lessons EDF have learnt the hard way in France can’t be easily applied in the UK.
The goal of harmonisation is not to have minimal standards and regulations, but standards and regulations that can be applied consistently. It can benefit from looking to other industrial sectors that have been successful in this regard as the aviation industry’s model, which certifies aircraft, subject to strict and uniform standards, across countries.
Standardization and construction in series #
Standardization of reactor design and process is important regardless of whether you choose new advanced reactors or proven designs. It is is especially important to nuclear because so many people and institutions — the designer, the builder and many subcontractors, and the regulator — are needed to work in synchrony to do anything. Any single actor can slow the process down.
Different reactor models also create challenges as safety authorities have to assess each model, preventing fast monitoring and licensing procedures. Standardisation improves efficiency, which means that building the same of reactor design multiple times, using the same experienced engineers, reduces the construction time and costs in the long-term as they gain more experience.[13].
Therefore, it is necessary to standardize the reactor design with the possibility of modest changes, such as switching to a larger reactor or adding safety features, but with the overall main design preserved.
Part of the reasons South Korea had managed to reduce construction time and costs is that they build fleets of standanized reactors rather than one at a time. Every time they build a reactor they learn something new and become productive. The projects in US and Europe by contrast is the first nuclear power stations built in decades.
Design maturity #
A lack of design maturity can lead to numerous adjustments during construction, given the complexity, the scale of nuclear projects, result in delays and cost overruns. The higher the design maturity, the lower the cost. The figure presents quantitative evidence for the correlation between design completion and final overnight Construction Cost (OCC) for recent anonymised nuclear Gen-III nuclear projects.
The FOAK EPR projects at Olkiluoto-3 in Finland and Flamanville in France is estimated that only 40% of the detailed design was complete when construction began, leading to numerous design changes during construction. Tt is estimated that more than 4 500 design modifications were made for the Flamanville EPR project. The same pattern is observed in FOAK AP1000 construction in the United States. The two AP1000 projects (Vogtle and VC Summer) were launched with a design only 30-40% complete. The lack of design maturity was one of the key reasons for the delays and costs overruns experienced by these projects.
Conversely South Korea and Japan has a long track record of starting new-build projects with 70-80% of the detailed design complete. The 2 FOAK 1300MW advanced boiling water reactor (ABWR) at Kashiwazaki-Kariwa NPP in Japan begin with a high level of design and supply chain maturity. It was with a record period of less than 52 months on time and without cost overruns [14].
Complete detailed design prior to construction is important.
Build multiple reactors at the same site #
Building multiple reactors at a single site has been shown to significantly reduce the cost of successive builds – by minimizing mobilization costs, utilizing common buildings and structures, and maintaining the necessary manpower for follow-on units.
Effective Project Management #
Competent project management is essential to ensure its proper execution and to deal effectively with all interfaces and unexpected risks that can reduce costs through more efficient work sequences, higher productivity, shorter activity durations and the parallel reduction of accumulated interest during construction of nuclear power plants.
The key is to avoid disputes between buyer and builder since it is ultimately impossible to resolve who is right and who is wrong, and the construction delays will only hurt everyone. For this to work, transparency is required: the buyer must be able to check the books of the vendor.
Sources #
- https://www.mdpi.com/1996-1073/10/12/2169
- https://www.nrel.gov/news/program/2021/documenting-a-decade-of-cost-declines-for-pv-systems.html
- https://medium.com/third-way/do-we-need-an-airbus-for-nuclear-7f1d2afcea8b
- https://environmentalprogress.org/big-news/2017/2/16/nuclear-must-change-or-die
- Executive Summmary – Projected Costs of Generating Electricity – 2015 Edition (oecd-nea.org)
- https://www.sciencedirect.com/science/article/abs/pii/S0301421514001621#f0005
- https://www.nytimes.com/1991/10/25/nyregion/at-shoreham-a-somber-beginning-of-the-end.html
- http://www.world-nuclear-news.org/C-German_utilities_count_cost_of_phaseout-1011118.html
- http://www.world-nuclear-news.org/C-Swedens-Oskarshamn-1-and-2-reactor-units-to-close-14101501.html
- http://www.world-nuclear-news.org/NN-Vogtle-receives-final-loan-guarantees-2506157.html
- https://www.ft.com/content/5bd0f8e6-f240-11e7-ac08-07c3086a2625
- Perspective on Nuclear Construction — ANS / Nuclear Newswire
- general-fee-questions.pdf (nrc.gov)
- REPORT_CORDEL_Strat_Plan_2014-2018.pdf (world-nuclear.org)
- Projected Cost of Generating Electricity 2020 (Chapter 8.3 – Pages 151-154). Projected Costs of Generating Electricity 2020 – Analysis – IEA
- Westinghouse Is Key to a US Nuclear Revival and Net-Zero Climate Goals – Bloomberg
- Unlocking Reductions in the Construction Costs of Nuclear: A Practical Guide for Stakeholders (oecd-nea.org)
