BOX 8.4

Comparing the Methodologies Used to Determine Costs of New Nuclear and Fossil-Fuel Power Plants

Nuclear and fossil-fuel-fired power plants provide baseload electricity supply, and a comparison of their potential cost ranges is likely to be helpful in guiding decision making. However, when making these comparisons using the data shown in this report, it should be noted that slightly different (but comparable) methodologies and assumptions have been used to estimate the ranges of potential LCOE from new fossil-fuel-fired power plants (with and without carbon capture and storage [CCS]) and from new nuclear power plants. (A discussion of the LCOE for intermittent renewable electricity sources, as well as of other energy technology options, such as energy efficiency technologies, can be found in Chapter 2.)

The methodologies for estimating the LCOE for nuclear plants and fossil-fuel plants differ, at least in part because different consultants assisted the committee in developing the LCOE estimates.

Although both nuclear and fossil-fuel plants provide baseload electricity and both of them are capital intensive, several of the underlying assumptions needed to calculate the LCOE are not identical. For example, a 20-year financing period was used to estimate the LCOE for new coal plants with CCS, while a 40-year financing period was used for new nuclear plants. A 20-year financing life is appropriate for a new technology such as CCS (whereby the first few plants may not operate for as long as later versions), while evolutionary light-water reactors are a more mature technology and thus more likely to operate for 40 to 60 years or beyond. In addition, the LCOE for coal plants with CCS drops between 2020 and 2035 as more experience is gained in building plants in the United States. The same reasoning has not been applied to nuclear plants, although some vendors expect that construction costs will be reduced over time, as there is more experience in constructing them. The LCOE for new nuclear plants does not change in current-year dollars between 2020 and 2035. Overall, the LCOE ranges for new coal plants with CCS and new evolutionary nuclear power plants appear to be comparable, as shown in Chapter 2 of this report.

IOUs and for IPPs.62 The IPP first-year cost in this case is estimated to be between 7¢/kWh and 9¢/kWh. When the full 80 percent is guaranteed by the federal gov-

62

With the exception of the debt-to-equity ratio (80:20), the value used for return on debt (4 percent), and the addition of the loan guarantee fee required by the DOE, the assumptions are the same for this calculation as for the previous ranges. The details of these calculations can be found in Annex 8.C.



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