Nuclear Power Economic: Cost, Comparison and Waste

Introduction to The Economics of Energy

As the world moves towards a future where cleaner and more plentiful energy sources will be utilized over traditional non-renewables, the research field into the benefits and detriments of nuclear energy continues to grow. While health and safety risks, radioactive waste disposal, and water usage are all concerns for nuclear energy, what are the economic concerns; if any?

By comparing the financial costs of nuclear energy compared to that of an alternative energy source (being coal), this report aims to provide insight into the economic feasibility of ‘going nuclear’. Coal was chosen as the comparison alternative due to both coal and nuclear being ‘baseload’ generators, which run throughout the year and take on most of the energy demand for the given area they supply to. A brief analysis into the economical gains nuclear brings in comparison to coal, will further allow for an economic evaluation to be drawn.

The findings aim to educate on whether it would be beneficial for Australia to venture into the field of nuclear power, based purely on the economics of the industry. Because of this, the data related to Nuclear power stations have been retrieved from the USA, who has been using nuclear fission to generate energy since the 1960s. In contrast, the data relating to coal stations have been retrieved from Australian sources, to enable a comparison to be drawn between the functionality nuclear power would have in Australia compared to that of our heavily relied-on coal. All monetary values have been converted to Australian Dollars (AUD), using the exchange rate valid on the 4th of October, 2019 to facilitate this comparison.

The Levelised Cost of Electricity will be used to determine which power source is more economically efficient for Australia. The LCOE is the total cost to build and operate a power plant over its entire lifetime divided by the total electricity output dispatched from the plant over that period, in units of kilowatts per hour. It considers the various factors that cost a nuclear plant money, including the upfront costs to build it, the costs of the uranium used to fuel the plant, the costs of running the plant, and the waste-related costs. The equation used is:

LCOE = {(overnight capital cost x capital recovery factor + fixed operation & maintenance cost ) /

(8760 x capacity factor)} + (fuel cost x heat rate) + variable operation & maintenance cost.

The information included in the report will break down the components of the Levelised Costs of Electricity, with the aim of coming to a conclusion of whether Australia should adopt a nuclear power scheme, or if staying with coal is more economically advantageous.

Common terms used when discussing upfront costs of a nuclear power plant are ‘capital costs’ and ‘overnight costs’. These include procurement and construction costs, owners' costs (including land, cooling infrastructure, associated buildings, site works, switchyards, project management, licenses, etc.), and other various contingencies. These initial costs of a nuclear plant are significantly higher than that of funding the creation of coal power plants. The overnight costs are measured in the monetary amount per kilowatt capacity of a plant. Overnight costs of a nuclear plant translate to being $8,800/kWHr. This is in comparison to coal, which on average costs $5, 100- 5, 570/kWHr. And so, based on the start-up costs of nuclear-powered energy versus coal-powered energy, it can be stated that nuclear power plants are less expensive in this aspect.

This can be attributed to the fact that building a nuclear reactor for a nuclear power plant takes several hundred or thousands of workers, vast amounts of steel and concrete, and numerous systems to provide electricity, cooling, ventilation, information, control, and communication. Because there are much higher standards for safety-related equipment than the alternative of coal, there are these extra precautions and more complex methods of the building; which also increases the amount needed to be spent on ensuring these standards are being met and being sufficiently inspected. Additionally, there is no one blueprint for a nuclear station, their designs vary depending on location, size, and purpose. For coal-fired power stations, their designs follow the structures of either Pulverised Coal Combustion plants, Fluidised Bed Combustion plants, or Integrated Gasification Combined Cycle plants. Nuclear stations are not as black and white, as more safety concerns and functionality considerations need to be tailored for each individual plant, increasing the expenses relating to design and building.

Nuclear reactors use uranium for fuel. Before uranium goes into a reactor, it must undergo four major processing steps to take it from its raw state to usable nuclear fuel:

1. Mining of the raw uranium. Australia is one of the world's primary uranium suppliers, along with Kazakhstan and Canada. This means that we would not have to outsource our nuclear fuel, but would lose a portion of the product which we currently trade to other countries.
2. Conversion. To sustain the chain reaction necessary to run a reactor, the uranium needs high concentrations of isotope uranium-235. Natural uranium is converted into several different forms to prepare it for enrichment.
3. Enrichment. Specific facilities enrich the uranium, and then convert it into powder form and press it into pellets. Although Australia mines a large portion of the world's uranium, we do not currently enrich it, but rather trade it in its raw state to other nations which convert it. If we were to adopt nuclear power in Australia, it would have to be considered whether we send our uranium away for this process or build our own facilities. The United States, France, Germany, the Netherlands, the United Kingdom, and Russia are the leading nations for fuel enrichment.
4. Fuel fabrication. The fuel fabricator loads the pellets of powdered uranium into sets of closed metal tubes (fuel assemblies), which are the final product that is used in nuclear reactors.

Although the process of uranium enrichment seems more complicated than the combustion of coal, the costs tell a different story. For a nuclear plant, fuel costs are lower than coal at $9,530/kWHr compared to $31,080. Transportation costs are also high for coal because of the amount of material needed to generate the same quantity of energy as the nuclear fuel, therefore even if nuclear fuel was as or more expensive than coal, it would still be cheaper in relation to the amount of it that is needed to produce an equal amount of energy. A 1000 MW nuclear power station running at full capacity would use, per year about 640 kg of 235U, 30 tonnes of enriched uranium, 165 tonnes of natural uranium, and 80,000 tonnes of uranium ore. This compares to about 3 million tonnes of coal for an equivalent size coal-fired plant.

Adopting nuclear in Australia would mean weighing up the costs associated with building facilities on our own land, which would be providing jobs for locals and cutting out export/import costs; or outsourcing, which would save money on building the infrastructure required to process raw uranium, but cut out job opportunities, and increase export and import costs. It can also be considered if whether Australia does build processing facilities, they would only supply domestically or if we would enter the international trade.

To run a nuclear power station, it costs around $198/KWHr whereas to run a subcritical coal-powered plant (the most common type of coal power plant), it costs $43/KWHr. These costs are generally referred to as ‘operation and maintenance costs and include the expenses of running and upkeep of the stations (which is highly crucial in nuclear plants due to their high-risk nature, hence the inflated costs for nuclear).

There are costs associated with the by-product waste produced by a power plant. For a coal plant, this is ash. The amount spent on this is included in operations and maintenance costs as the ash is generally not treated, but rather stored as sludge on-site. For a nuclear plant, these costs include the surcharge levied by the government of the given location where the nuclear plant is placed, for ultimate storage of the high-level waste. In the USA, this is $7405/kWHr AUD. If carried out in Australia, the government would have to calculate the amount they would charge a nuclear plant company for using the land as storage for high-level radioactive waste. So, on average, waste-related costs of nuclear are significantly higher than that of coal, when predicting that Australia would need to uphold similar measures as the USA to dispose of our own Nuclear waste, compared to the more relaxed approach to dealing with our coal by-products.

Overall Economics, Levelised Cost of Electricity (Lcoe), and Conclusion

To summarise the findings of this report, the Levelized cost of electricity will be used. For coal, the LCOE is $135 000 – $145 000/kWH. For nuclear, the LCOE (for three years later) is $122 000-180 000/kWH AUD. And so overall, it can be stated that there is not a significant difference on the cost of nuclear power compared to the coal-fired power that Australia most commonly uses at current. The broad figures of Nuclear power compared to coal can be appointed to the fact that there are wide variations in the structures of nuclear plants compared to those of coal-fired plants.

Depending on the design of the nuclear plant, it may be on average as much as $13,000 cheaper than what we currently spend per kilowatt hour on coal, or for the more complex designs could potentially be $35,000 /kWhr more expensive if the designs we require are more complex.

In conclusion, from an economical perspective, nuclear is not an ideal option for supplying Australia’s power in the future. With significantly higher overnight costs and over four times the running costs than coal which fuels the majority of our power plants as of current, the benefits of the low cost of uranium are overshadowed. While the cost of containing the high-level waste created by the nuclear fission process do not have to be taken on by the Australian government (who would actually profit from the levy), the costs will likely be passed on to the consumers, making electricity prices rise. In the broad range given for the LCOE, although in the lower portion is significantly cheaper than coal, the majority of the range sits above the maximum amount of the LCOE for coal, meaning on average it is more likely to cost as much or more than coal in total. When factoring in the amount that would be needed for infrastructure built to facilitate the transition of our power system from coal-fuelled to nuclear, this amount would further increase.

It is within Australia’s means to be able to afford nuclear power; and if other factors were considered as to why we would convert, it may sway the results that come from an economic standpoint, which are that it would not be saving the Australian government or citizens money by introducing nuclear-powered plants.