Engineers Australia Nuclear Engineering Panel. The Economics of Nuclear Power

Transcription

1 Engineers Australia Nuclear Engineering Panel The Economics of Nuclear Power Martin Thomas AM FTSE HonFIEAust HonFAIE 26 September 2012 Engineers Australia - Nuclear Engineering Panel - 26 Sep 12

2 The presentation 1 - Introduction 2 - Australia and the nuclear fuel cycle 3 - Nuclear power in the world 4 - Technologies reviewed 5 - Capital costs 6 - Operating costs 7 - Levelised Cost of Electricity (LCOE) - some comparisons 8 - Conclusion where next?

3 Why should Australia even think about nuclear power? Concerns rising as atmospheric CO2 concentrations approach 400ppm, highest level for thousands of years. Is this a worry? Weather patterns show some concerning changes. True or false?? Serious attention turning to low emission generation alternatives. Why then include solar and wind but exclude nuclear? Nuclear power, despite profitable uranium exports and commercially proven, is eschewed by Australian Government. Why is this so? Opponents claim nuclear too expensive; too long to build; too risky operationally and waste disposal too dangerous. Are these claims true? Australia may need to include nuclear power in low emissions portfolio by 2050 when 80% carbon emissions reduction targeted. Will it do so? Will international investors contribute to portfolios that exclude nuclear power? That is the question!

4 Infrastructure on the cliff edge Australia is facing a potential monumental infrastructure disaster as the politicians dither with long-term carbon questions and undertake speculative research on coal technologies. Unless someone starts actually making hard decisions now, fasten your safety belts for a very large rise in power prices in the eastern states, which will flow into inflation and interest rates. COMMENTARY ROBERT GOTTLIEBSEN 15 Jul 2009

5 Some facts, some thoughts and some questions Australia currently has around 50,000MW generation capacity By 2050 it will need around 100,000MW, much of it new build That will cost investors around $BN in generation assets alone in highly competitive capital and technology markets But doubled 2012 installed capacity by 2050 must deliver 80% less carbon emissions! How? Low emission technologies (LETs) comprise - in maturity order hydro, nuclear, wind, solar, geothermal, biofuels, tides, exotics Will Australia accept nuclear power as a LET? If not why not? Are 30 other nations wrong? What about France? If yes then why? When? At what cost? By whom? And who will be the investors - and why will they invest?

6 What are Australia s candidate generation technologies to 2050? Coal Oil and gas Nuclear Geothermal Hydro Solar Wind Other renewables Distributed energy and energy storage

7 Why would Australia want to consider nuclear power? Cost competitiveness of nuclear versus other low emission technologies Meeting 2050 carbon reduction targets Security of supply and independence from imported fuels Diversity of domestic electricity production Reduction in carbon pricing volatility Reduction in all power generation impacts climate change and otherwise The quest for sustainability!

8 The world nuclear power industry some facts In September 2012 there were: 433 reactors operating in countries generating about 13.5% of the world s electricity from GW installed (over 7 times Australia s 50GW) and reactors under construction (another 65GW) reactors planned (178 GW more) and reactors proposed (another 366 GW) Source: World Nuclear Association (WNA) website

9 Nuclear the bad news for Australia Technology still costly ~ 5,000-6,000$/kW Australian regulatory environment inadequate Shortage of suitably qualified Australian engineers and scientists Significant water demand for cooling (but can use dry cooling ie fan cooled radiators) Australian public still has concerns on: Safety of spent fuel disposal, Weapons proliferation, and NIMBY siting issues

10 Nuclear - the good news for Australia (1) Vast Australian uranium resources (~31% of world s low cost supplies) ANSTO Lucas Heights research reactor and nuclear medicine experience Technologies (mining, enrichment, reactors, spent fuel management and permanent disposal) internationally proven Australia a world leader in hard rock mining and minerals processing Australia geologically stable with vast regions of minimal population for safe waste disposal

11 Nuclear - the good news for Australia (2) Good base load generation - cap factors >90% LCOE ~ $/MWh - includes waste disposal and decommissioning costs Generation III and III+ reactors improved safe Generation IV reactors inherently safe - 60 times energy recovery from uranium fuel Worldwide RD&D program promises further gains Strong Australian engineering capability Small footprint Strong safety record compared with alternatives Longer term (30y) potential for thorium fuel

12 Evolution of nuclear power plant designs - current technologies Generation I 1950s to 60s - Early prototypes (eg UK Magnox) now nearly all decommissioned Generation II Mid 1960s Commercial power reactors (eg LWR, PWR (eg Fukushima), BWR, CANDU, RBMK (eg Chernobyl) many installed - designs now superseded Generation III Mid 1990s Advanced pressurised water reactors (PWRs) (eg ABWR, System 80+, AP-600 and AP- 1000, EPR) high safety - current generation of new reactors worldwide

13 Evolution of nuclear power plant designs - future technologies Generation III onwards Advanced pressurised water reactors (PWRs) (eg ABWR, System 80+, AP-600 and AP-1000, EPR) being installed now for generation this decade Generation IV 2020 at earliest Very advanced fast neutron technologies - highly economical (60 times energy from enriched uranium minimal waste (much is burnt ) inherently safe (shut down on fault) proliferation resistant - (the golf ball for life!) Fusion reactors say 2050+? Physics complex, deuterium fuel, theoretically possible, no radiation, no wastes Engineers Australia - Nuclear Engineering Panel - 26 Sep 12

14 Generation I Dungeness A Nuclear Power station - 2 X 219MW Magnox Reactors

15 Generation II - Cruas Meysse Nuclear Power Station, Montelimar, France 4 X 900MW PWRs

16 Generation II & III Olkiluoto Nuclear Power Station, Finland 2 X 880MW BWRs and 1 X 1600MW EPR

17 Generation III+ - Westinghouse AP-1000 PWR Engineers Australia - Nuclear Engineering Panel - 26 Sep 12

18 Generation IV Small Modular Reactors (SMRs) Hyperion Power Module (HPM) The HPM is a fast neutron LMR Gen IV reactor small enough to be transported by shipping container Power: Fuel: Weight: Fuel Cycle: Cost (est): 70MWt 25MWe/module 20% enriched uranium nitride pellets 50 tonnes 10 years USD$50M Size: 2.5m x 1.5m Steam: Coolant: Emissions: 520 o c Lead-bismuth Near zero

19 Fusion is this the nuclear future? ITER - Cadarache, France

20 Economics of nuclear power the big picture (1) Nuclear power between 20 and 50% more costly in Australia than coal and gas due very low coal and gas prices (UMPNER 2006) Gap closes if carbon priced in range $15 40/t CO 2 equivalent (around $15-40/MWh for black coal generation) Private investment in Australia s first nuclear reactors could require initial government support or directive In many countries nuclear now competitive with other baseload technologies

21 Economics of nuclear power the big picture (2) Nuclear characterised by high up front capital costs and very low fuel costs Later costs (eg waste storage and plant decommissioning) are internalised as minor additions to electricity cost Final plant cost dependent on capex discount rate and project duration Comparison with competing LETs depends on assumed construction time, capital financing, discount rate, economic treatment of externalities (eg carbon) and evaluation commercial, technological and social risks Key to cost reduction is engineering standardisation and uniform regulation (and a centrally planned economy!) Costs reduce dramatically (~40%) after FOAK plant

22 Capital costs ($kwe) what do we mean? Two most common indices are: Final capital cost all generation and ancillary plant, land purchase, licence costs and regulatory fees, capital raising including interest during construction (IDC), associated plant infrastructure (eg plant cooling, stores and offices and (sometimes) initial fuel load. Transmission to customers excluded. Overnight capital cost notional cost of project if no interest incurred during construction (IDC), ie as if project completed overnight. Alternatively: present value of lump sum paid up front to pay completely for project. Engineers Australia - Nuclear Engineering Panel - 26 Sep 12

23 Issues impacting nuclear plant construction costs Tables following (next two slides) gleaned from publicly available data from many reliable sources with consistent trends. Cost ranges attributed to essentially similar designs are hugely variable. Why is this so? USA prices have trended higher due to: industry move from state corporation ownership towards private (ie utility) financing with higher financing costs; lower risk appetite of private financiers arising from intrusive political and regulatory interference and well published massive time and cost overruns; undoubted impacts of Chernobyl and Fukushima on risk perceptions and insurance costs unexpected changes in plant licensing, inspection and certification arrangements, adding to delays and construction costs. (Note USA regulatory processes (eg siting, licensing and construction) now increasingly standardised) In contrast China prices falling due to: centrally planned and managed economy establishment of national PWR Major Program based on proven AP1000 design technological and plant standardisation to develop CAP1400 then CAP1700. strong commitment to independent indigenous nuclear power industry. more compliant labour force

24 Some typical specific capital costs ($/kwe) (1) Plant location and date of data Plant type Moody s Investor Services Various USA designs reviewed Moody s Investor Services Various USA cost June 2008 projections Florida Power & Light 2 AP1000 Turkey Point Feb MW PWRs Florida Progress Energy USA 2 AP1000 March MW PWRs South Carolina Virgil Summer 2 AP1000 USA May MW PWRs Duke Energy Carolinas 2 AP1000 USA Nov MW PWRs TVA Bellefonte 2 AP1000 USA Nov MW PWRs Georgia Power Vogtle 2 AP1000 USA Apr MW PWRs First two AP1000 units 2 AP1000 China MW PWRs Four AP1000 units 4 AP1000 China MW PWRs Darlington Point 4 CANDU totalling Canada ,512MWe Overnight Final approx Comments $/kwe $/kwe 2,950 5,000-6,000 Average of many plants 3,108 4,540 5,780 8,071 7,000+ Due to commodity price rises 5,144-3,376 If built 18 months apart 4,387 Unlikely to be built due cheap shale gas 4,924 2,516 4,649 6,266 2,372 1,791 5,187 Engineers Australia - Nuclear Engineering Panel - 26 Sep 12

25 Some typical specific capital costs ($/kwe) (2) Plant location and date of data Plant type Overnight $/kwe Final approx $/kwe Comments Olkiluoto Finland EPR MW PWR 4,000 Flamanville France EPR MW PWR 2,638 Taishan China EPR MW PWR 2,343 First CAP 1400 China CAP MW PWR ~1,500 CAP = China Advanced Passive First CAP 1400 China CAP MW PWR ~1,000 CAP = China Advanced Passive Generation IV Hyperion Power Module HPM 25MWe SMR ~5,000 Based on preliminary feasibility study New Generation III AP MW PWR ~5,500 ATSE Burgess Report Appendix A Fig A.1 New Generation III AP MW PWR ~4,500 ATSE Burgess Report Appendix A Fig A.2 New Generation III AP MW PWR ~4,000 ATSE Burgess Report Appendix A Fig A.3 Engineers Australia - Nuclear Engineering Panel - 26 Sep 12

26 Operating costs Uranium fuel Uranium costs very low compared with coal, oil and gas due abundance, ease of mining and processing and extraordinarily high specific energy, some 20,000 times higher per kg than high quality black coal. Fuel costs 1kg uranium oxide reactor fuel, enriched from around 9kg yellowcake (U 3 O 8 ), costs around $2,700-$2,800 and generates some 360MWh electricity, worth around $36,000 at an average power station sent out price of $100/MWh. Loaded fuel cost only $/MWh ( c/kWh). Fuel price sensitivity Fuel a very small portion of electricity cost; sensitivity to price escalation thus low. Reactor efficiencies - Spain reduced nuclear electricity costs 29% in late 1990 s boosting enrichment and burn-up to achieve 40% fuel cost reduction. Further efficiencies projected in Generation III+ designs. Generation IV promises 60 times higher efficiencies as more plentiful U238 used up and wastes burned. Uranium prices - can vary widely, especially on spot market, but most utility operators write long term contracts. With new mines opening worldwide uranium contract prices are likely to stabilise. Comparisons with fossil fuels OECD claims enriched, fabricated and treated fuel costs of Generation III+ plants are typically 30-35% of those for black coal and 20-25% of gas combined cycle. US Nuclear Energy Institute claims that 78% of coal fired sent out electricity cost is fuel alone; for gas combined cycle 89%. For Generation III+ plants equivalent fuel cost is 25-30%

27 Operating costs Operation and maintenance Operation and maintenance (O&M) costs are the annual recurrent costs associated with operation, maintenance, administration and support of a nuclear power plant including: Management and operational staff Operator training including simulators Maintenance staff, resources and consumable spares Contractor services, vehicles, etc Licensing and regulatory fees Consumable utilities The USA s Nuclear Energy Institute reports average 2011 O&M cost for nuclear power plants was 10.51$/MWh (say c/kWh)

28 Operating costs Spent fuel disposal and plant decommissioning Spent fuel disposal A 1,000MWe reactor produces around 12m³/a high level waste. Permanent safe disposal costs are a very long way into the future and can be dealt with economically by a modest levy or sinking fund of about 1.0$/MWh (say c/kWh) on electricity sold. Plant decommissioning - Plant decommissioning costs after a year life are estimated at 9-15% of plant capital cost but again lie very far in the future (60 years). Again a modest levy or sinking fund of around 1-2/$MWh ( c/kWh) on electricity sold will provide adequate funds. The nuclear industry is one of only few offering this holistic approach to meeting whole of life internal and external costs.

29 Operating costs (c/kwh) summary Cost item Typical minimum Typical maximum Uranium fuel (the true marginal cost of generation) Operation and maintenance Spent fuel disposal Plant decommissioning Totals

30 Levelised Cost of Electricity (LCOE) The Levelised Cost of Electricity (LCOE), usually expressed in $/MWh, is defined as that cost of electricity that enables the owner (generating company) to earn the lifetime cost of its capital and to cover its risk management and all operating costs including permanent waste disposal, plant decommissioning and site rehabilitation. It does not include profit on the equity investment.

31 Relative levelised cost ranges ($/MWh) (Source: EPRI for UMPNER 2006) Engineers Australia - Nuclear Engineering Panel - 26 Sep 12

32 LCOE ($/MWh) Levelised Cost of Electricity (LCOE) , 2030 and 2040 ($/MWh) $300 $250 $200 $150 $100 $ $0 ATSE Model with AEMO data; includes CO 2 costs and RECs; ranked in By kind permission of the Australian Academy of Technological Sciences and Engineering (ATSE) and author Dr John Burgess FTSE of Low-Carbon Energy Evaluation of New Energy Technology Choices for Electric Power Generation on Australia November 2010

33 LCOE ($/MWh) Levelised Cost of Electricity (LCOE) ($/MWh) AEMO Reference Group Data $200 Treasury Model Electricity Price $150 $100 $ $0 By kind permission of the Australian Academy of Technological Sciences and Engineering (ATSE) and author Dr John Burgess FTSE of Low-Carbon Energy Evaluation of New Energy Technology Choices for Electric Power Generation on Australia November 2010

34 My generation portfolio guesses for Australia? At 2010 (~50GW) By 2020 (60GW) By 2050 (100GW) Coal 76% Gas 16% Nuclear 0% Geothermal 0% Hydro 5% Wind 2% Solar <1% Coal 65% Gas 23% Nuclear 0% Geothermal 2% Hydro 4% Wind 4% Solar <2% Coal 30% Gas 25% Nuclear 20% Geothermal 10% Hydro 3% Wind 7% Solar 5%

35 What s yours? Thank-you for your kind attention!