REPORT NO. T.O. 109 [ILL W& I This report is not to be published nor mnay | i be quoted as representing the Bank's vliews. TMI'WrD?JA IATVA T. BANK ? FIOR vrREGONScrTjRUTIONV A?DJ r VT DV DkALO MNT' ECONOMICS OF NUCLEAR POWER March 14, 1956 Department of Technical Operations Prepared by: Corbin Allardice ._ / R F tA)<15Ybt Sh5t''a LS" L is (4~~~ ~~ -ta. If) : I4t 2 - xi/.U WLA J_to . .~~~~~~~~~~l ECOITO11C !,JLC.rEAI PON1 =. TODAY: WFR3E ATMD 17TD3E WMAT CIRCULiSTAITCES ? A Stutr by Corb-in Alllardice Ac rse-r on At r-om.i c Enprr I.nternati on-Ial 3ank for - econ struction and Development Washl-ington, D. C. Author's Note This stuc' has been prepared in an attempt to establish benchmmarks avainst which can be assessed the economic feasibility of a 75-100 I.w electric capacity nuclear reactor based on essential2y todayls tecthnologr. Such reference points are necessary in the deterrination of the Jank's role in nuclear power development and application, and in the evaluation of pro- posals for financing such an installation. The need for such a stucy was pointed out by It. S. Aldzwereld, and his contributions to its inception and its execution are gratefully acknowledged. 1fr.1 M. Rosen also pro- vided invaluable guidance, as did Dr. W. Rembert, r 1. A. Wenzell, Mr. S. Upkowitz and Ir. B. Walstedt. Dr. v. Mayer, of the Stanford Research Institute, and NMessrs. F. Quackenboss and H. Ilollister, of the United States Atomic Energy Comnission also provided helpful assistance. TAB3E OF CONTENTS Page Introduction . . ...................................... . 1 -4 Plan of Otudy .......................................- 5 YTuclear Energy Pesources . . . - 7 Nuclear Power Facilities ................................ 7 -13 Cost of Ikuclear Power Facilities .............................., 13 - 18 The Estimated Ccst of Niaclear Power ., 18 - 19 Cpnrating and Maintenance Costs ............................. , 19 - 21 Fuel Costs ............ I.... ... .. .. . ... *,, ..... 21 - 26 Amount and Pattern of Use .......... 26 - 27 Depreciation ......... ...... , 27 - 29 Generating Costs for I-Cuclear Power, excluding Financial Char-es 29 - 31 Total Cost Includi.rg 'Return on Irrvestment. 31 Comparative Costs of Iluclear and Conventional Thennal Power 33 - 34 Conclusions ......... 34 - 35 Aep,-nrI I = T Ten+. Propiyl c4Pr., anr. Apilln Pm1ye? iiu Innv *S.4UL .. *'A - hi * WI,J - - __ S 4 c Reactors .... ............-.......1 5 Charts (1 to 8) 1. World energy demands are increasing at such a rate as to require the full exploitation of both fossil and hrdroelectric energy resources. Even more importantly, world energy demand forecasts for the year 2000 indicate the absolute need for development of nonconventional resources. The non- conventional resource most likely of early practical application is nuclear energy. 2. W1hile world-wide energy needs can be estinated over a relatively long term with considerable reliance, estimation of the short term enerpr needs of individual countries is a far more difficult task. flevertheless, various studies that have been made -indicate that except in those countries possessed of great untapoed hyvdroelectric resources or plentiful resources of coal or oil. there is a general need for the dPvePonmePt of IInconventi onal energr resources to meet r-si-ngr nower needs in the next one or two dePCdpe.s/ Th1.S r-i+ t. eans th i uclea" p1rer, Yin . 1- 'Al *t can Se poued .Ar1n rl a p rie comptltie wih oner-iy aner-.-^ soem"nas, TVrIll play ar. -importan.t role Jin th.e econo-mic rdevrelopm-IrYe-nht of' annwr nti ons. 3. Besides the need to develop nuclear power to meet rising energy requirements, other factors operate in some countries to speed mnuclear power development and early application. Industrial pressures to develop markets for nuclear fuels and for nuclear power equipment act T'Mumerous papers on world energy needs, the energy requirements of inuaividual nations, and the possible role of nuclear and other non- conveentional energ sovrces are contained in Volume I, Proceedings of the International Conference on the Peacefui uses of Ato-rdc Energy. - 2 - as stimuli in the more highly developed nations. Fear of "atomic colo:nialism" spurs other srmaller rations to develop technical competence in the field. To the underdeveloped countries, nuclear power offers unioue attraction because of its transnortation independence, flowing from its nighl eiierL content per unit weight. These and economic, social and -political forces tend to place a high premium on nuclear development, even where economic need for a new source of energy is not urgent. 4. The Ban1's interest in nuclear energr is primarily in facilities for the generation of electricity or heat from nuclear fuels, and the related production and processing facilities. Important other anplications of nuclear eneru to researcIl and development, therapy, radioisotope work, food preservation and sterilization, and so forth, in general require small in- vestrment with consequeat srmall foreign exchange requirements. WhPnile the Barnc may become involved in loans for such aoplicatiors, the individual amoLnts would be relative\. sm,iall. In the case of pow%er, process or space heat or propulsion reactors, the capital requirements are large, with vary- ing needs for foreign e:x:change. The remainder of this paper will deal only with nuclear power p'Lants.Yi 5. isJNo m-ians ',,as been f'Lownd t1-o use the yonez-wr of fission to produce eecbr c@y- dir^e c8^Y- r, presser.tAVy co.c4vd nula rectr ar Ws;m.ply mnac'rjires Jn -Whv1-1g t-he energy cor.tair.edA 4n 1,h nuls Iof aton oP fisil material ('U23, UY233" anAd Pluton4ik) is released to become available in the form of heat -which Inust be removed from. thle reactor by a coolanrt in order to Process or space heat, propulsion, and small power nuclear reactors are oiscussed in Appendix I. make steam for heating or to drive a turbo-generator. The turbo-generator portion can be considered more or less standard. Thus, essentially, nuclear reactors are equivalent to the "fire-boxes" (including in-some cases a portion of the "boilers") of modern thernal electric stations. 6. l'any different specific nuclear reactor systems have been proposed. Those appearing most promising or presently under advanced development or construction are briefly described in paragraph 13 et seq. As of today no one can say whvich of the presently conceived reactor systems will prove ultimately to be the "best" system. Indeed, analysis of statements of pro- ponents of the various reactor systems and stutr of their technical details suggests that no one of them may be so significantlr more attractive than the rest as to be the preferred reactor design. As will be seen in later dis- cussion of the reactors being built in various countries, the choice of reactor design is not purely a technical decision. (See Para.14 et seq.) 7. An.other poinrt to be conidered is that while nuclear powlJer plants are essent'ily ecieivalent to conventionAl therma, l s4atios o n trat "a het kc-t cle 1 A~~~~~~ & 4~~~~~~~J ~. -LP n ! s T' A 1Uff i.s eralte to eer-at e e.,~Jlectric:4vy, t&.ey are h perrps rowr e- clo y ah t 1vdroelec&- -cl statons f or ot'r. - e1 poi.tLL o f vievrx of obsolescence. E)r. A. His veinbuerg, hi rector ofthei- U.S. AJW' s Oakl Ridge "1ation-l Laborato3y, has pointed th-is out and his words are wel1 wortvh bea-ring in mind: 'wiLl one or two reactuors eraerge as un-uii choices? I think every worlcer in reactor design must have wondered whether, in the long run, any one reactor -ype will eme-rge as so distinctly superior to the others that it will render tne rest obsolete. The history of hydro- carbon-burning devices suggests tnat the technologr will develop a succession of "most desirable" types: the reciprocating steam engine was followed iyr the steam turbine - which may ultimately be replaced gy the gas turbine. Within each class - say the steam turbine - there has been a tremendous development and corresponding high rate of obsolescence; for example, the heat rate on the miost modeirn turbines is less than half the heat rate of turbines only 20 years old. "But the main reason for obsolescence of conventional power generat- ing devices - low thermal efficiency will hardly operate to render nuclear power plants obsolete. Rather, nuclear plants ought to be much more like hydroelectric plants: if they have sufficiently low overall operating costs, and this is a sum of costs determined by thermo-dynamic efficiency, material efficiency, maintenance, etc., then it is at least not obvious ,Phy they should become obsolete arnr more than dams become obsolete.s 1I1 Plan of Study 8. IKr. Eugene R. Black, in a statement made in August 1955, pointed out that the development of corarercial applications of atomic energy had important implications for economic development and for the International Balni. He said that at that time "..,.,no one can sasr where or under what circumstances these applications may become practicable...." . The purpose of this stucy is to analJyse the present status of nuclear development as concerns commercial. nuclear power plants, to establish reasonablyr conserva- tive costs for such facilities built on essentially todav'Is technolomr5 and to arrive at operating and maintaiing cost,s and at costs of fae! for such a plant. It will then be necessair to consider hnw the nuclear plant should be depreciated; and at what average plant factor it is 114koely to be operated over its lifetime. The total cost of mnclear nnwor can then be calculated at varioubs percentage returns on iuwresthent, The costs thus established for electricity genPratod in a nu¢clear plant can t--hen be com= pared with those for electri city generated in a conrventional ther,mal plant, at various costs for fossil fiel. ALnalysis of these comparisons will pro- vide the desired bench-.manrks to appraise "o Whlere and under wVhlat circu,stances" ni-Tlear nover m-_ become pract4cable. A f--4-er Cy Con- c deU-sAion2 :g/ Fro,r, P/862 by A.H'Tteriberg, Proceedings of th International Conference on Peaceful Uses of Atomic Energy, Vol.III, P.24. which is not discussed in this paper, is the degree of Bank interest and participation in the technical development "research and development contra economic application) of nuclear enerMr as a useable energy resource. [uclear EnerJ- Resources 9, The primary raw materials for nuclear power are uranium and thorium. A survey of available estimates of economically recoverable uranium and thorium ind[icates sup-lies equivalent to manyr times the enrer,r content of the reserves of oil, gas and coal. Perhaps the most deefinitive statements are contained in a survey paper by Jesse johnson, Director of the U. S. Atonic EnerQr Coilmission's Raw iiaterials Division, ;iven at the Geneva Conference. Pertinent paragraphs are quoted below: "In 1948 the uiranium sLTppy of the 7:estern Nations was almost entirely the product of t7o rines, one in the Celgian Gongo and the other in Northern Canada. In the past, there had been little general ntherest in uranim alid throughout most of the - world there had been no serious search for it. Even now, vast areas promising from a geologi- cal stan1doint are relatirvel- inePlomred "To.day thnerne nare rflajor uran-4A J%1 t-he Beli.an Conao, Canada, South Africa, and the UJnited States. Australia, `ance and Portugal also are p--duC- ng ari u' w;th favaov"able prospects for substantiallJy increased production. "On the basis of present developments and geological evidence, resources of' the producirng natlon4-s o-fe ' h-T'es arc es..-a c,-ated to4-- bea between o-ne and two million tons of uranium. This uraniumn can be produV-c.tl at moderate cost At an average of abcout ,1- .1 a p6ittkd for 1303 .... Cranium oxidjf.... in a high grade concentrate...... ".....Reserves of comniercial phosphate roclk in the U.S. alone are estimated as 5 billion tons and the urarnum contelt at 600,0O0 tons. The U.S. also has an estimated 85 billion tons of marine shale averaging slight2y more than i/iOth of a pound of uranium per ton. This repre- sents a reserve of 5-6 million tons of uranium. "'Known deposits of uraniferous phosphate rock and shale in other parts of the world equal or exceed those of the U.S'. in grade and tonnage, The phosphate deposits of Morocco estimated at 20 billion tons are uranium-bearing. The Scandinavian Peninsula and other Baltic territories contain very large deposits of uraniferous shale. Uranium- bearing coal and lignite also have been found in a number of countries. "The cost of extracting uranium, as a primar-y product, from p bosph;ate and shiale la ebweni0ad,0prpo.d I ~~±1~.t lcL1d Ju u UuvJi .1L ~'; - Lu ; ,)V P%:U . U jJe. U JLLUILL. U- valuable by-products can be recovered the cost may be reduced. Be- ul,Vee.± LL u UIL1±~LJ W.UlJ.WLUI UU.ZjJVLUD V.L bUU4W Y A1U lIC 11L8J~I1U~ . uranium sources for the distant future there are deposits of good s-upply uranium at a cost of between 10 and ;30 a pound. the re- sources in this economic class are not well knrm6ih-ut they must be large, perhaps several million tons of uranium.,... Fxperience gained from the present uranium program has demonstrated that higher prices wili bring in new sources of production and increase available reserves. "This general review of production and reserves indicates that uranium no longer can be considered a rare metal. Fhere are exten- sive deposits throughout the world and there are processes for extract- ing the uranium econordical2y. Uranlium production already developed is sufficient for a maor nuc-lear power prog-ram ofT6rld-ide extent. Additional productlon can be obtained when needed. Vlhen the vast low- grade resources are required, more efficient use of nuclear fuiel through iziproved conversion or "breeding" may offset the higher uranium cOst, nCFRphasis added) 10. It is clear that the nuclear power industry will not be limited by lack of availability of fuel. It is important, hawever, to note that de- posits of uranium presently considered economically recoverable exist in only a few countries. Even for countries having such uraniurn supplies, a large capital iinvestment is required to convert the ores to usea'ele fuels. At present, only 3elgium, Canada, France, U.S. and U.K. (apart from USSR) are produc-ng high purity uranium metal on a coieiiercial scale suitable for nuclear power reactor use. Other countries, either not possessing uranium resources or having resources but lacking plants or necessary capital to conavert the ores into useable fuels, will have to execute political agree- ments with nations having nuclear fue'ls in useable form in order to support a nuclear power industr-y toclay or in the immediate future. In this regard, the U.S. has recently announced its willingness to make available 20,000 kilograms of U235 for nmclear poTer reactor uses outside the IJ.S. All of the nations listed as presently producing uranium metal have indicated J~~Cqeop r,J f-g '" txt 7#?u ~~~~~~~ ~h -1p 1 ~,k 04 J~ ~ ~ ~~~~~~~~~~~~~~~ wili'ngness to provide su-olies to others for power uses. However, in the case of the U.S., and undoubted2y in all other cases, some sort of political agreement will be required between the buyer and the seller nation. 11. This fact has obvious and important implications to the Bank since without fuel a nuclear plant is useless. In addition to all other factors entering into the evaluation of a project for a poTer plant, thle Bank must assure itself that the necessary intergovernmental agreements for the supply of' fuel, the reprocessing of used fuel elerents, and the recovery of plutonium, uranium 235 and uranium 233 are made and that there is a reason- able likelihood that the agreements will continue in effcct for the full period covered by the loan. 1MIu c en PV-Ter Facllities '°. I>, le the~ ge.ea rconcept of produc irl nucea ,cro- is q;.lj TnA- nn_ volvlng as it u dAoes e of anz reato imlr as heat- sor-rce in lieu of a VO U.LV C- LU.I1U ±A..V ~-t'4JLL1tLIiIJ' J iL., ~- - ciU.-veri. . .,.c.' LV f~J cici -bo'er, tU.Ve ciJ6-.i'eJ Or a sp.l44,4 V eco 6001/ Fall 1956 U.S.Atomic Enery IPressurized Conmission Water 60 630 1957 Consumers Public PownJer Dist. 50diiii GraphiLte 7e 320 l9250/Kw. It should be noted that the re- actors upon wlich this range of estimated costs is based are being built in Canada, the United Kingdom and the United States. hii s estimate is conserva- tive and actual capital costs may well be less.!;/ 1*hether the same costs would obtain elsewhere would depend on local conditions. At least a portion of the added capital costs £or export reactors (transportation, imported ex- pert labor, etc.) might be partly balanced in some cases by lower general labor costs reflected in somewhat lower costs of standard construction such as buildings, excavation, and perhaps lower costs for turbine generators or other standard equipment obtainable locally. Ihe 2stirnated Cost of. Nclear Powver 25. Ha-ving deter.ined on a conservativ-e basis a reasonable capital cost ' Chart prepar-ed b-y Jlis A. 'r-,, Oa ,+e,Ttoa he fuel costs could become zero, and even may show as a credit. For thermal reactors in which irradiations of 8-10,000 17fiD/ton can be achieved, the fuel and inventory cost can be perhaps as low as 005 mill/KM.fhr. These latter systems are, how- ever, not achievable with present technology; they may be expected In third or later generation plants. 36. It should be noted that the calculation of 2.85 mills/Kwhr as the fu'el component of Dower costs assumes essentially present technology, and no increase in efficiencv of use of nuclear fuel over the whole life of the power plant. Tt is more reasonable to expect some increase in efficiency, or decrease in in'lnat costs; as experience further is gained.2/ If a modest all'wance of 10 to 15 perc-ent oP the- calculated cost is taken. the fuel cost corpone,nt would be about 2.50 mills /Kwhr. 37. In s-xmiary, a reasonable and conservative value to assign fuel and inventory cost appears to be about 2.5 rills per kilowatt hour, with the possibility that costs of perlhaps 1 mill/YKwh might be obtained in later loadings of t'he early reactors. It is difficult to see why fuel costs should be substantially higher than 2.5 mills/Kwh over the life of the early power plants. It must be emphasized that the reasonable value suggested above is a generalised value. For arn specific reactor system, a specific fuel and inventor: cost must be calculated using the specific parameters of 1/ In the fotegoing, calculations; a thermal efficiency of 20 percent has been used. ilr. Philip Sporn, President of Amrericanr Gas and Electric, has reported that the iPG Boiling lWater Power Reactor is expected to achieve a thermal efficiency of 203 percent. _ 26 - the spec-fic system. 38. The foregoing estimate of 2.50 mills/Kwh includes approximately 0.9 mills/Kwh to cover inventory charges on the immobilized capital represent- ed by the fissionable and fertile material coiranitted to the nuclear power re- actor, including not only all the nuclear material in the reactor, but also that being fabricated into fuel elements, being stored for cooling after irradiation, and being chemically processed. The amount of material so cormitted will depend upon the specific reactor. According to DZ- W. K. Davis, Director of the U. S. Atomic EnerMr Commission's Division of Reactor Development, the total value of the inventory of nuclear fue'l may be as Ihigh as $50 per electrical kila-att for some reactors, and in tvypical heterogeneous reactors the value will be in the range of "20 to $e40 per dlcowatt. In homoreneous reactors the value mav be aoprec4ablv less ' AccnntTing the higher valuLe, i.e. $50 per kciowatt. a 100 MNJ reaclor Tnilht. re-nuire somn t¾ing likie 00,0 o;000 worth of nuclear fiiel in invprentor. t- The allowance of 0 9 mills/Kwh. which has heen inc1iurpt in t.he f_epl -nr- nv-±rnto ch-g C'f79 mialsrwlnjwould- in a 100r T--*T. plant. operatednr at+ a 50 percent p'na fctr ~~~7-- - -- - _- -…'_ - - c. - - Drovide about IM9q. 0o npr ypar- an anointil-. whiob r honii be hal cove r^rn- financial charLws on cary-ving n even rreater fuel inven.tor. Amount and Pattern of Use 39. Since the capital costs for a nuclear power station are higher than for a comparable thermal station the amounts charged in the selling price to cover return on that capital investment and depreciation are larger than g/ P/477 - "Capital Tnvestmnent Required for Tuclear Energy" oy W.K.Davis; Proceedings International Conference on Peaceful uses ofT Atomic rneram. - 27 - would be required in the case of a thermal plant. In order to bring those charges within reasonable limits, it is necessary to spread them over as large a nurmber of units of production -- kilotatt hours -- as possible. This indicates the need to operate nuclear power plants at as high a plant factor as possible, or, in other words, to use them as base load stations, 40. Since we have also seen that the capital investment would probably be sharply higher for plants of less than 75 to 100 IN capacit7,, we must be suLre that the system into which the niuclear plant is to be inte-cxated is capable of acceptingz a 75-l0O Thr plant as a base load installation with a high plant factor. 41e. Whether the miclear plant can be operated with a high plant factor is essentially a function of system demand. (Je assume that operational shutdowns will be no greater in a nluclear plant than 4n a thermal plant.) Tlherefore, in assessinig the feasibility of a 75-l00 -w nuclear plant from arn economical point of view, it is paramount that we make sure the electrical system, of whinich it is to be a part, is such as to allow the nuclear plant t,o be operated at a high plant factor throughout the year. 1h2. For a conventionarl therm".al planst, the plan.t l4fe -w ll be taken as 33 y1/3 yrs and the depreciation rate will be 3, of the cap tal cost per -Y ' j -- s-$ - V- V a.JL U. .J 1 ,.J LU/ pt V.L aLnn.x. on a straigh>t iiebsi9 Fo +. r-4a ~.t about ,0If or 4Gr --P the capi4tal cost 4ie rep-- er.teA 1-r -o.e.--4- 4 -- -I --4, --4 wl- ch- 'Iw hv tl. sam 't as ir, aJJ. ...'L.Lv er.io plrt i. . 3 l/3 .) rs * e ±LI er,-i±iH-r-g 6n<~~~~~~~~~~~" toZA 70Vd-Wlc If th ai otc,naxe o,sada-,seilzdivemsl -W:h VW I piu WJ. VI'- fe JQL of AJD 2 years JJ. .VO I-.rJ be as-Oed. T V o dpm L appear toIfi be a whi-"chLJ a plant "lif ofL 20 years -wiJll be assareume. This b would appear to bue -a - 28 - conservative esiMate; shle ear±lr large aL--e rxuu±lea- reacUU--s al, ramlurud, Washington which began operation about tuelve years ago, are stiil performing satisfactorily as is the smaller air cooled reactor at Oak i'ddge, which began operation somewhat earlMier. The combined overall plant life of the nuclear plant will therefore be taken as 25 years, and the plant will be depreciated at 4$ of its capital cost per annum on a straight line basis. 43. The amount of money allocated each year to cover depreciation (four percent of the capital cost) would, if placed in a sinking fuld at, say, 4075 percent interest, actually permit the complete writing off of the plalnt in 17 years, or about 8 years before the technically determined life of the plant had expired. The use of a 4 percent, straight line depreciation schedule is considered prudent from a banking point of view. 44. The question of obsolescence of a nuclear power plant should be mentioned at this point. in a conventional thermal plant the primary reason for obsolescence is that new plants display a consistently higher thermal efficiency, and since the cost of fuel is the most significant portion of selling price of electric power at the bus bar in conventional thermal plants, the new plants are able to make power cheaper than old ones. It is to be expected that later nuclear plants will undoubtedly be able to produce electricity at lower fuel costs than the earlier plants, However, the older plant will also benefit from advancing technology and in maniy, if not most, cases will be able to show comparable decreases in fuel costs in later loadings, as new alloys or new methods of faorication enable a larger burnup of the fissionable material in the core. As was pointed out earlier, the fuel component of cost of electricity generated in a nuclear paower station is significantly less than the fuel component of cost of electricity - 29 _ generated in a conventiorCa± ti.erma; statiO11, Tnus3 as a. Mi'. ±Jirb±h noted (see Para.7) the problem of obsohescence of a nuclear power plant is more comparable to that of a hydroelectric station than to a corve:.tional thermal station, 45. As was mentioned earlier, the number of hours per year that the nuclear plant will generate power (i.e. the pLant factor at which it -ill operate) has an important bearing on the cost of power generated. A study conducted by the General Electric Company of modern conventional thermal power stations in the United States revealed that over the li-fe of these plants a plant factor of 43% was achieved. The G. E. study suggests that nuclear stations, because of lower fuel costs, should achieve a lifetime plant factor of 50g. However, because the nuclear plant is depreciated faster than the thermal plant, and because the fuel and operating component of cost of the nuclear plant will be lover than such costs in a thermal plant, it is not unreasonable to expect that the nuclear plant, in competition with thermal plants, will be operated in later years of its life at a much higher rate than would a thermal plant of equivalent age (See corments on obsolescenc Para.A4). In the opinion of the writer, a nuclear plant "competing" with conventional thermal plants may achieve an overall lifetime plant factor of over 6nf - rhin in comnetition with newmer ruclear ilAnts. the older nuclear plant nmayr e expected to he onerated at a plant factnr of qolmt 5n,/L Generating Costs for TNclear Pmwer, excluding Financial Charges 46. Table 5 contains calculations of the cost of generating nuclear power (including depreciation) in a 75-100 Nhw nuclear plant costing $250/Kw of electric capacity operated at various plant factors. It represents generation costs in a nuclear plant that might be constructed on essentially - 30 - uouays ' tu Ao ogy. The ±uNe an' r - cost iucear rueleo in Table 5) is that pre-vioUUSLy Comn -p-uted as c ErvZative, anu maW in practice de- crease u-ver the if-e of the plant to about 1.0 i ills/i.wh. It is maintained as a constant in Table 5 regardless of plant factor, since the only effect of increasing the plant factor is a slight decrease in the inventory component of the charge. The operation and -aintenance cost used in Table 5 is two to four times tnat experienced in conventional thermal stations in the Uirted States, Over the life of tlhe nuclear plant, it is expected that this cost might decrease to perhaps 1.0 mill/Kwh. Also, this cost will in fact de- crease with an increase in plant factor. However, the 2.0 mills/Kwh cost is maintained as a constant in these calculations in order to introduce again a conservative bias. The depreciation costs sho m in Table 5 are calculated on a straight line basis at 4 percent per annum, based upon a plant life of 25 years. However, as was pointed out in paragraph 43, if the depreciation allocation each year is invested at, say, 4.75 percent interest, the plant will in fact be completely written off in 17 years, Once again, this gives a conservative bias to the calculations. - 31 - Table 5 Cost of Generating Nquclear Powrer at Various Plant Factors (E.xclucbLng Return on investment) I Expressed in U.S.1i1{1s per Kilariatt Hour Plant Factor _ I fo5 i 6O; 7o%i 8g 1 90% | uclear Fuel !2.5 2.5 2.5 2.5 j.5 | O peration and 11aintenance As2.0 |2.0 2.0 |2.0 2.0i | Depreciation 2,3 1.9 1| t 6 |1.4 j1.3| I _ - ' .! 1 t Generating Cost (excluding - Return on Investment) ,.8 6 .4 o.± i # Total Cost Including Return on Investment 47. In view of the larger capital investment required for a nuclear power plant as compared with a conventional thermal station the burden of financial charges is of major irportance in evaluating "where and under what circumstances" nuclear power may be econormically attractive. As was pointed out earlier, the average lifetime plant factor at which the power plant will be operated also substantially affects the cost of electricity generated. Table 6 shows estimated cost of electricity generated in a nuclear plant at various financial charges and at various plant factors. Table 6 Total Cost of Generating Nuclear Powver at Various Plant Factors and at Various Returns on IEnvestment (Expressed in U.S.Mil]Ls per K-im.hw-t ]our) Plant Re`.,.7r on Iavesttment Factor --t- -;-- bT T T" ' -w !~3 - -- I I~~~~~~7 :, -u--17 5C% Generating Cost 6 .8 6. 8 6. 8 6. 8 6c8 | 6 8 6.8 6.8 6.8 6.8 6.8 6.8 6. 8 Financial Cost 1.7 2.3 2.9 3 4. O -,.1 5,7 6.3 6. 8 74 8.0 8.6 _ __ . 7 _ _ 1 __ _ 7 _ _ Total 8.5 9.1. c9.7 10.2 l0.8 U T9 ~ 12.5 :13.1 13.6 14.2 14.8 )-SAi |Gene6rating C.ost I4 6.4h 6.4 6.4 6.4 6.4 6 .4 6. 41 6.4 65.4 6.4 6.4 6.4 Financial Cost 1.4 1.9 2-4 2.95 3.3 3.13 1 4.3 4. | 5.2 5.7 6.2 6.7 7.1 Total 7.8 8.3 8.8 9.3 10 2 10 7 li c 2 11o6 12-1 12-6 9*7 ~1. 071. 16 1. 26 13.1 13.5 =- =~~~~~~~~~~~ _ -= = =__ -_ = __= : === = 70% : Generating Cest 6.1 6.1 c 6.1 6.1 6.1 6.1 6.1 6.21 6.1 6).1 6.1 6.. 6.1 Financial Cost 1.2 1.6 2.0 2.4 2 .9 3. 3 3.7 4.1L 4.5 4.9 5.3 5.7 6.1 Total | 7.3 7.7 8.1 8.5 9. 0 9.4 9.8 10.2 :LO.6 Il.0 11.4 11.8 12.2 I = ===_ T GeineatnciaCost L1 4 L 2. 2 c36 5 5Generati.ng Cost | 5.9 | 5595 ';.9 5.9 .9 5.9 5 .9 5..9 8 Financial Ccct 1.| 1.4 1.8 2.]. "? 5 2'3 | 3-2 3ct$ 3.9 14.3 |4.6 5:o 5.4. Total 7.0 7.3 7.7 8.0 8.4 8.83 9.1 9.15 9.8 10.2 10.5 10.9 11.3 90% Generating Cost | I,,:8 |58 E| ',.8 |5.8 El 5 5.18 . 8 5'3|5.8 .58 |5.8 5.8 |5.8i Financial Cost lO10 1.3 1.6 1.9 2.2 2.5 | 29 | 32 35 53.8 4.1 4.4 4.8 Tc_ta68 7 7-4 7 -i ;3. o 8_7 9II _--D 139. 9.14.2 40.8 Total |6.8 1| 7.1 |7.4 7.7 j 8.0 |8.23 i 8,7 |9.0 i9.3 |9.6 |9.9 |10.2 |10.6 I I - 33 - ,~~~~~Vlujjcu -''-U'...DU .44.-2..2 ..A-.. J 0 Co 4-4 4- - - -oz of -ul5 -al -4.vc1to.a T-or.r.a oPV;Te - --- epe lose ao faw 'r a posit UUo U.- tLLU OU. 0 eleciicViy generatedina- thermal station. The conventiol ther.al stat0ion has the aU'vantage of low ea- operat1ing and maintenance costs -- about u.O mIfL s/±-Owl on tne average -in thne U. K. and U. S. -- in contrast with the 2,0 mi-ls Kmh cost used in this paper for the nuclear plant. Since the capital investment for a conventional thermal station has been taicen as $-120/raw as compared with the $250/Kw used in this paper for the nuclear pLant, and since depreciation has been set at a more rapid rate for the nuclear plant (4 percent per annum, straight line, as contrasted vith 3 percen-t per annum, straight line, for the conventional thermal station), depreciation and financial charges will also be higher for the nuiclear plant than for the conventional thermal station. On thie other hand, the fuel component of cost of electricity generated in a nuclear power plant will be considerably less than the ccost of fuel mI3d i-: a Cnrentional ther-ial station, except in extremely low-cost fossil Tuel areas; 49. The relative attractiveness of the nuclear plant vis-a-vi3 the conventional thermal station is largely dependent upon the cost of fuel for the conventional station and upon the rate of financial charges appropriate in the specific location. Charts 4 to 8 compare the cost of electricity generated in a nuclear power plant of 75-100 Mw electric capacity built on essentially today's technologr, wTith thae cost of electricityr generated in a conventional thermal station of similar capacity, at various fuel costs for a conventional plant. Chart L (at a 50; plant factor) shows that wherever 1/ Conventional thermal stations of 75-1OC Irw are estimated to ran-e from $120/Kw to $160/Kw. The el912O/K:w Tigure used in these calculations favors the conventional thermal stations. COMPARATIVE COST OF E LECTRICITTY INUCLEAR AND CONVENTrIONAL THERMAL AT VARYING CO'STS OF FOSSIL FUEL. (50% PLANT FACTOR) 2 0 - --_ _ _= _ _4_ _FUE ,_ _ _s ___ -_ __ __ 15~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~11 NUCLEARw 0 - - 7.5 FUEL - -. ~~~~~CONVENITIONiAL o -- - -, - - - - - r 6.5 FUEL ~~~~0000THERMAL AT - - - ~~~~~~~~5.5 IFUEL VARIOUS FUEL - - - - -- - ~~~~~~~~~~~COSTS iv-- --- -- 4.5 FUEL LLI -appolo~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~------ -- LL -0~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ .--- o .; 0~~~~~~~~~~~~~~~~~~~~~~~~~~ %RETURN ON INVESTMENT IBRD- Econiomic Staff 'COMPARATrlVE COST OF ELECTRICITY INUCLEAR ANCI CONVENT'IONIAL THIERMAL AT VAIRYING COSiTS OF FOSSIL. FUIEL ( 60 V. PLANT FACTOR) 20 _ _____ -J 15 ____ ___ _ _ -J 5 I ~~~~~~~~~~~~~~~~~~~~~~~NUCLEAR%..,, I.- -, ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~7.5 FUEL ) -. -> - - - 6.5 FUEL CONVENTIONAL E _ _ _ ___. . s ~~~~~~~~~~~~~~~~~~~~THERMASL AT _____________________ - - - - - O ._- -' - ____ _. _.--- _ ,_ 5.5 FUEL VARIOU!; FUEL 4- - , e-- X --- - - .5 FUEL T 0 - -- cr- 5 cn In 01 - -1 5__ _ _ Ot 5 10 15 % RETURN ON INVESTMENT IBRCD - Economic Staff M 1119 COMPARATIVE COST OF ELECTRICITY NUCLEAR AN[) CONVENTIrONAL THERMAL AT VARYING CO'STS OF FOSSIL FIUEL i( 70% PLANT FACTOR) 20- ---, - - -J 15- -- -___ NUCLEAR _ _ 7.5 FUEL - -- 6 5 FU ~~~~~CONVENTIONAL -- - -. ~.5 FEL TIHERMAkL AT' w 1.0 . . _ 5.5 FUEL VARIOUS FUE'L O- - _- ----- COSTS - - -- - - - -. -- - - - -- - -- - - - - - - -- -f * 4.5 FUEL 8r. - 10 15 4 CD) 0 - - _ _ _ _ _ _ _ _ _ ___ _ _ _ _ 0i 5 10 1 5 % RETURIN ON INVESTMEINT IBRt) - Economic Sloff COMPARATrIVE cosr OF ELECTRICIT Y NUCLEAR AND CONVENTIONIAL THEIRMIAL AT VARYING COSTS OF FOS;SIL. FlJEL 180c% Pl ANTr FACTOR) 2 0 ---- _ _ _ _ _ _ o,- -J 15 _NUCLEARN LJ OX --57.5 FUEL o - - .in-~~~~~~~~~~~~~~~ - - -. - ~~~~~~~65 U L CONVENITIONAkL w 10 ~__ _ _ _ _ _ --- _ _ . UL THERMAkL AT Wi -- _ - - - ,___,_ S.5 FUEL VARIOU'S FUEL O -_ -- .----- ------ - 4.5 FUEL C r 5 _ 5 co 0 0 15 % RETURNI ONI INVESTMENT o IBRD-Economic Staff _ 1121 -4 COMPARATIVE COST OF ELECTIRICITY NUCLEAR AND CONVENT-IONAL THERMAL AT VAIRYIING COSTS OF FOSSIL FUEL (90% PL-ANT FACTOR) 20 -J 15L XI I-~~1 _ NUCLEAF?%I., cr- ~~~~~~~~~~~~~~~~7.5 IFUEL -1 CONVENTIONAL tl ~ ~ ~ ~ ________ i i_A___,_____ _ ____ _____ ,_,_____ 5 5 FUE J ONV ENIO NAiFUL w 10 -- -- 5 __ _ _ _- _- - ~FUEL THERMAL6AT - - -. - -~~~~~~~~~~~ - - - - -. - - ~~~~~~~~~~~~~VARIOUS FUE'L t DI . i 11 ) 11! 5~~~~- --. %~~~~~~~~~~~~~~~~~~~. FUELI\ ONSTSSlEfl U. 4 . --5 -a I UEL 5 CD CD 01 5 1 0 115 %RET-URNI ON1 INVIESTMENiT IBRO-Economic Staff F _ _D1122 C - 34 - fossil £Lue_l cos 1s ., >1:18AS_ pVrU 4',.Lis o'es(qwaeto ,per rIle Ul o f.Lt.; LUjU BLLpe.L- V - p .d coal ur in a -In+ ha-dr' na 35,^- e!-ci ency), a conXventi Wnal the,.zl stationV, isU muoreLC VVonmVI al t'^.a a rucea station, irrespective of' what rate of' re--L-Urr is'.;. aQtW, tot e"4-,,v,-UJ,-r in tne plant. U-n t'nle lotbie r 1-haInd,I -UP ti ±t,he . ilWfe UUiU -LO II -"Q per i'Kwh (-7(00 per metric ton ±U' 1L0j0UV DIU p poundu - coUaL1% .L4 in aplant having a 357 thermal effficiency) a -nuclear plaLt could afford to pay up to 7'2!^ return (after depreciation) on tne investmVnt and still prouuce eld±Ui±-iC- ity more economically than a conventional thermai plant. 50. At a 90% plant factor (Chart 8), again a nuclear station could not compete with 4.5 mills/'Kwh fossil fuel. It could compete with 5.5 mills/Kwh ($?12 .35 per metric toii for 10,000 BTU per pound coal b-rned at a thermal efficiency of 35Z), fuel at a 6?f return or less. If cost of fuel were 6.5 rills/Kwh (C)14.77 per metric ton for 10,000 BTU per po-.uid ccal burned in a plant having a 35% thermal efficiency) a nuclear plant could aiford up to 12, on investnent and still be more econorLical. CO9LTCYLUSIOITS 51. It is concluded that a nuclear power station having an electrical capacity of 75-100 t41, or 1ara-ger, could be designed and built on essentially present technologr. In certain locations such a plant would have a high degree of probability of producing eiectricity at costs competitive with those of electricity produced from fossil fuels. It appears possible to establish circumstances that would have to be met in order for it to do so today: (a) The generation and distribution system inlto which the nuclear plant is to be integrated must be large, capable of 'I^ f. ' -U1j -i4- -1± - -,'..LL --4 - - J.L acce-ot-ng a6 -lOC .;X: p'iani t a. aL Li-' Zpl 8 faJo., (b) The nmuclea- pav WUUld ihvt UV Lto .be.loated inL a oAsY witn relat+ively 'high fossil fuel costs, and writh sufficient availabiuity ofi capital so +aI rLe re-- on investment in tne planZ couid bte irioueravely- 'wo (c) The country must nave executed whatever polit cal agreements that are necessary to assure a continuing supply of fuel at prices consistent with those used in tlhis paper, reprocessing, and, if necessary, the import of components. (d) The country must have a degree of econor.ic stability so t'hat if the nuclear plant should cost more than expected or should not perform as anticipated, the excess cost could be absorbed without a sigaificant adverse effect. (e) Until further operational experience has been (ota½eie1/ it would not be prudent to establisl the nuclear p.anvf in a system where it would represent a corinsideable proportion of the total systdm generating capacity. l{r A . ,e, ;. > i ¢ f i71t4.~~~-~ -, , e'- - t+ - u APPEIDIX I I,A m rJ o! -,-T /T T , T,' PE -Dr t_ ,2i, ,ZC Heat Reactors 1. The considerations that have been discussed relative to power reactors apply to the process or space heat reactors, and to propulsion reactors with some modification. The capital cost of a process heat reactor would probably be less - perhaps as much as 20 or 30 percent less -- than for an electric power reactor, since the turbo-gererator side of the plant would be essentially el:iinated. On the other hand, the problem of findirg a suitable system or plant to utilize tne large amount of heat produced is limiting. Also, while the nuclear power plant would have an overall thermal efficiency of perhaps 20 (in other words, a 100 11w electric capacity nauclear plant would have close to 500 SNw of heat capacity), the process heat plant would have a thermal efficiency of perhaps 90 percent. 2. TUile the effect of size on process heat reac cr cozts woulud not be the srame as was noted in the case of the nuclear power reactor, it will be felt, and there will be a size below wfhich the process heat reactor will steeply risa in cost per unit output, Just wihat that range of size will be is yet to be determined. In sum, as concerns process or space heat reactors, no calculations or analyses of their economics have been ioublished; thus, while that application is of interest to the Dank,, it appears premature to attempt to arrive at judgements as to its economic feasibilityr. It should be noted that Sweden is planning an experimental space heating reactor of about 90 Nw thermal capacity to be completed around 1960. This reactor is planned to provide space heating to portions of the City of Vasteras (population about 65,000). :iorway is also considering an experimental industrial heat reactor for use in conjunction with a wood processing plant - 2 - at Halden, This reactor would have a tneriial capacity of 10-12 Ja and wou-ld begin operation in about t1hree years. It is expected to proviude a±o-au 20_25,; of the plant's hourly steam requirements. Detai2led information on threse reactors, and the estimated economics of their operation, should begin to be available for analysis soon. Propulsion Reactors 3. As for propulsion reactors, again the field looks interesting from an economic point of view; the information on it published today is not sufficient to form the base of any judgements on its practicability. The first application of a reactor to propel a velhicle is in the atomic submarine 1"Nautilus". The Nautilus is powered by a pressurized water reactor and because the reactor needs no oxygen to support "combustion", she has in effect an unlimited range at very high speed submerged at great depth. Cor.entionally powered submarines, on the other hand, are severely Limited in such a situation, being capable of onlyr about an hour's operation at high speed when deeply submerged. In comparison, the U. S. Navy has announced th1-qt the NJaut ilus cmi sed over 1600 miles at an average speed of 16 knots submerged at depth. The relatively unlimited range underwater of the Nait linis has been likened in significance to the development of ironclad naval vessels in that it will demand a revolutionarv chanee in naval tactics botlh defensive and offensive. 4. The application of nuclear power to the propulsion of naval vessels is only in its infancy, but alreacdr a half dozen nuclear submarines are being built and the Navy and AEC are beginning work on a land-based prototype of a large surface ship reactor. In these naval applications, however, the cost of propulsion is secondary to performance and displacement. A higher cost -3- per mile or per hour can be tolerated because of the unique performance of the nuclear propelled ship, 5. In the case of commercial snlp izropulsion, however, costs must be considered. The higher mnclear costs tend to iake commercial ship propulsion unattractive at least insofar as the U.S. is concerned. Work is woing on both in the U.S - the U.K.. and Norway, however. to develop a practical and eeor'cnrrf icntmr rqtem fnr merrhant shin nropulsion= Such applications. howevrer, are i-ch farther tProm realizat-ion thnn the nrnnoll inon of' militarv slipis *W^.here eost isc a mlnoreosiern.o Small Power Reactors 6 mThe discussion that has preceded has concerned the feasibility of building 75_100 I.w and larger nuclear power reactors wThich might produce electricity at costs competitive wTith conventionally fuelled thermal power stations in some situations. The development of small. nuclear paxwer stations, suitable for use in remote locations such as the Arctic or in under- developed countries where the demand for electricity occurs in relatively small units, has not progressed as far as has the development of larger central station units. Work is going on, particularly in the United States and Canada, to develop reactor systems for such smaller, specialized uses. As a rough estimate, if nuclear power can be produced for 20 to 30 mills/Kwh in plants having capacities of 3 to 5 Nw electric, there would be a demand for such reactors in the remote areas of Canada, for example, in some areas of Africa, and undoubtedly in Asia and South Amxerica. To malke 20-30 mills/ Kwh nuclear power, the capital cost for the reactor would probably have to be no more than $600/Kw. This implies a production rather than a custom scale manufacture. As of today, however, it is not possible to evaluate the - h - econonic feasibility of building a reactor in the 3-5 I'.w range. 7. For reactors in the 10 l.w range, some estimates have been made. There, the capi-tal costs might be aboutt h400t/Hw, and the fuel and irwentory costs perhaps 9 mills/Kwh, The operating and maintenance costs might be about 2 mills/Kwh. If a lO5 return on investment is assumed, and a plant factor of 805, such a plant miRht produce power which could be sold at the bus bar for under 20 mills/Kwh. It is to be exoected that the fuel cost and tlh canital cost will lower as the technoloL-,r develops. Tt is not unreasonable to exoect plants of this size to oroduce power wh-ich could be so'd at the bip bsr at. aholrt 15 H"s,,~/hr Pt a nTlhnt. f-ctnr nf RO', nrd npr- haps lrwer depenirng upon financ-ial chrnges. The +h ret ing con- Sirqtnr, 'hyr A'TgaJriavi oJevr PoervT fo-r -ii;7+.n11n+n in+- S-out A -nenca fall *n +h;A es r.+at...r T+ T.T_1 he ' osshe + n 4 - a ;,-a a4+ a ,,a,nA-1-- - -a ann,.,-, el nP -ha pATP.r,. p . 41- ,rr' .a p4 rvc 4,+ln-r +1 a nA ,.,rra a 4-,- bidsn for., the- three .AuP *v,ap.4-rs,, havea been,- a,,h.,.4 4-+ and ths, desg.. m-na ,- 8. In the medium size reactor range, the problems of development are much like those for the larger central power plants, and their introduction will follow, rather than precede, the commercial entryr of the larger plants which are already nder developmernt. It is to be expected that the capital cost of such reactors will be higher per kilowatt of capacity than for the larger stations, since the cost of turbo-generator equipment and the cost of the reactor are affected more exponential2y than linear2y by a decrease in electric capacity. However, the fuel costs of suclh reactors should not be significantly different than for the larger central station nuclear plants. Decause the cost of electricity from conventional stations in this size rangr is usually higher than electricity for larger thernmal stations, the nuclear plant will undoubtedly be able to compete in the size range also. 1owever, as of today, it is not possible to develop a detailed analrsis of what cost to expect since little developmental interest has so far been directed towar such a reactor. The United States is planning to design and constrvct seve: reactors in this size range, but no estinates of cost or of performance are yet available.