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Economics - The Basics
Breaking down the costs
As with real estate, location is a very important
factor when determining the costs of nuclear power.
It is generally the availability of fuel, as well
as appropriate space that ultimately dictates
which method of power production is undertaken.
Regardless of the high start capital costs and
the problems with the spent fuel, nuclear is quickly
becoming the best choice from an economic point
of view.
The way to describe costs of power plants is:
So it's pretty clear what Dollar means, but what
is a kilowatt hour?
A watt (W) is what (no joke intended) is used
to measure electricity. The kilo (k) in front
means there is a thousand watts. A 'M' would mean
a million. Now, it is not enough to know how much
electricity is used. We have to know how long
we use it for. And so that is where the time part,
hours, comes into it.
Example: Ten 100W light bulbs on for an hour
is 1kWh
There are a series of parts that go into figuring
out the various costs, which are basically divided
into direct (internal) and external costs.
External Costs
There are several possible external costs, including
decommissioning (turning off the plant) and dismantling
(getting rid of the plant), health costs associated
with radioactive releases and possible (though
not likely) serious accidents. However, it has
been shown by one OECD report that through adequate
planning and budgeting through the life of the
plant, these potential costs are actually incorporated
into the actual cent/kWh figure. This means that
the supposably external costs become internal,
so the user of the electricity is actually paying
for them already!
Internal Costs
There are several main factors that go into figuring
this out. There are:
- Capital cost - This is the money used in actually
building the plant.
- Fuel - The money used to purchase the fuel
for the reactor. This is generally a really
small percentage of the total cost.
- Insurance - Like everything, there needs to
be insurance for the building, the workers and
the community if something bad were to happen
- Fixed Operating and Maintenance (O & M)
- These don't change day to day. It covers things
like wages, and only really depends on the size
of the plant
- Variable O & M - These change depending
on the output, covering things like wear and
tear on the machinery. If you push the generator
harder, it's going to put out more power, but
break down sooner
The University of Chicago conducted a very indepth
study into the costs associated with nuclear power.
The cost of producing electricity from different
sources is given in the table below
| Type |
Cost (AUS$/MWh) |
No. of Big Macs/Hour |
| Nuclear |
69 |
28 |
| Coal |
49 |
20 |
| Gas Combustion Turbine |
75 |
30 |
| Solar - Photovoltaic |
269 |
108 |
| Solar - Thermal |
210 |
84 |
| Wind |
73 |
30 |
| Geothermal |
106 |
42 |
| Biomass |
120 |
48 |
| Tidal |
93 |
37 |
These are average costs only and will fluctuate
from country to country depending on the availability
of fuel, construction and labour costs, taxes,
subsidies and other factors. As can be seen nuclear
power is currently on par with other forms of
power generation when looking at the dollar cost.
The final cost to the consumer of some of these
alternatives is much higher when the costs of
transmission infrastructure and other costs incurred
by the electricity companies are included. According
to the Australian
Greenhouse Office the average Australian household
will pay $100 per megawatt hour and use 6 megawatt
hours of electricity a year.
We can end by saying that nuclear is almost equal
or better than other methods of power production
with respect to the pure financial cost, unless
there is a source of raw fossil fuel close by.
References
- University of Chicago, August 2004, The Economic
Future of Nuclear Power.
- Uranium Information Centre, Briefing Paper
#8, May 2005, The Economics of Nuclear Power.
- OECD/NEA, 2003, Nuclear Electricity Generation:
What Are the External Costs?
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