Projected Costs of Generating Electricity - OECD Nuclear Energy ...

Values in 10-8
3.0
Figure A6.2 – Distribution of discounted net present values:
output uncertain and all operating costs variable
Note: Standard deviation is USD 15.5 million.
2.5
2.0
1.5
1.0
0.5
0
180 215 250 285 320
Net present values (Million of USD)
Values in 10-9
7
Figure A6.3 – Distribution of discounted net present values:
output uncertain and all operating costs fixed
Note: Standard deviation is USD 59.7 million.
6
5
4
3
2
1
0
0 125 250 375 500
Net present values (Million of USD)
In other words, the ability to alter costs in a world where output is uncertain decreases losses when output
must be reduced, and conversely, decreases profits when output is increased relative to the case when
all costs are fixed. In finance this is called operating leverage. (Operating leverage increases as the fraction
of the costs that are fixed increases.) The point here is that operating leverage magnified the variations
in profits/losses – i.e. increases risk – caused by a given change in output.
187