The FuTure oF nuclear Fuel cycle - MIT Energy Initiative

Chapter 7 Appendix — Economics
deFinition oF the levelized CoSt oF eleCtriCity (lCoe)
The methodology for calculating of the levelized cost of electricity (LCOE) for the Once-
Through Cycle is by now a very familiar standard one. The methodology for fuel cycles with
recycling is less familiar and not yet standardized. The difficulty arises because one output
from one reactor becomes an input to another reactor—either separated plutonium in the
Twice-Through Cycle or separated transuranics in the Fast Reactor Recycle. If there were
an easily observable market price for these separated products, then it would be straightforward
to use the same methodology employed for the Once-Through Cycle, adjusting the
calculation to recognize the different outputs or inputs in a system with recycling and valuing
these new inputs and outputs at this market price. However, since recycling is not yet
a widely used technology, there is not yet a reliably quoted market price for these recycled
products. We can, instead, impute to them a value based on the cost of separating the products
and their value as recycled fuel. How to do this imputation is what has not yet become
familiar or standardized. This appendix lays out the methodology we employed together
with some of the rationale. A fuller case for the methodology and comparison with other
methods used in other studies is provided in an on-line research report. 1
Table 7A.1 provides a list of the key variables used in this Appendix.
The Once-Through Cycle
The LCOE for the traditional, Once-Through Cycle is the formula:
(7A.1)
where C t denotes the full set of realized costs at each date t∈[A,B], Q t denotes the time profile
of electricity produced at each date t∈[A,B], and R denotes the continuously compounded
discount rate. 2 The costs include all costs from the purchase of the raw ore, the
fabrication of the fuel, construction and operation of the nuclear reactor, and finally the
disposal of the spent fuel. 3
appendix to chapter 7: economics 167