World Energy Outlook 2011 - IEA

Our projections of future nuclear power plant construction are based primarily on
assumptions about the capital costs of new plants and the cost of capital. Electricity
generating costs are particularly sensitive to changes to these key parameters. For
example, relative to a base case nuclear plant that generates electricity at a LRMC of
$66/MWh, increasing the overnight capital cost by $1 000/kW, would push up the LRMC by
24% (Figure 12.2). Similarly, an increase of two percentage points in the cost of capital
would push up the LRMC by 19%. Cost increases of such a magnitude could certainly switch
investment to other forms of electricity generation, especially in liberalised markets.
Figure 12.2 Sensitivity of long-run marginal cost of nuclear generation
to various parameters
Overnight cost
$3 500/kW : ±$1 000/kW
Cost of capital
7% : ±2%
Capacity factor
85% : ±10%
Construcon me
6 years : ±2 years
Fuel cost
$10/MWh : ±$2/MWh
Economic lifeme
40 years : ±5 years
Base case LRMC $66/MWh
-30% -20% -10% 0% 10% 20% 30%
Change in LRMC relave to base case
Source: IEA analysis.
© OECD/IEA, 2011
Lifetime extensions often provide a means of maintaining nuclear power capacity at
relatively low cost. When first built, most of today’s nuclear power plants were expected
to operate for between 25 and 40 years. However, licence renewals to extend operating
lifetimes have become commonplace. For example, of the 104 reactors in the United
States, 66 have had their operating lives extended from the original 40 years to 60 years
(WNA, 2011). In France, three of the country’s reactors have received lifetime extensions
over the last decade, from 30 to 40 years, and many are now seeking extensions to 50 years.
Experience of lifetime extensions in the emerging economies is more limited, as fewer
reactors have yet come to the end of their design life. Extending the life of a nuclear plant
or modifying it to increase output is usually more economic than building a new facility, as
the upfront capital costs have already been depreciated and output increases can often
be achieved at relatively low marginal cost, even though utilities typically have to make
significant investments to upgrade plant safety and replace worn equipment to secure
lifetime extensions. In the United States, for example, between 2000 and 2008 nuclear
output increased 5%, although no new reactors entered service. But such extensions may
become uneconomic if regulators make them contingent on very stringent conditions.
Chapter 12 - The implications of less nuclear power 457
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