The Economics of the Russian Nuclear Power Industry - Bellona

39the expenses on decommissioning four VVER‐1000 reactors of Balakovo NPP at $942.1 million, 111 whichlooks like an underestimation. For instance, the general view accepted in the Belarusian nuclear circles isthat the costs of taking a nuclear power plant our of operation equal those of commissioning one inabsolute values.A wide variety of assumptions can be found in studies done on the economics of nuclear powerwith regard to decommissioning costs – estimates ranging between $250 million to over $2 billion.Experts from the International Atomic Energy Agency (IAEA), for instance, hold to a more conservativeassessment of between $250 million to $500 million, but the very limited global experience in carryingout the full cycle of decommissioning works at a nuclear industry site has already demonstrated that theactual costs incurred tend to exceed noticeably those anticipated in forecast estimates or projectdocumentation.Costs of decommissioning a nuclear power plant are high, but they do not play a major role inthe formal calculation of profitability of this or that investment project, since, being deferred farahead into the future, they decrease significantly when discounted.The issue of the particular discount rate to be applied is another one that leaves much room forspeculation. A low discount rate is normally used to calculate the necessary financial reserves todecommission a nuclear power plant with regard to which the main expenses will be effected some 100or 140 years after its closure. This is a markedly lower rate than the required cost of capital calculated inthe estimates of an investment project. This has to do with the gigantic time horizon and thecorresponding uncertainty of estimates, as well as the overall risks of investing into the nuclear energyindustry.We shall take for our calculations an assumed site with a typical 1,000‐megawatt reactor and aninterest rate at 3 percent; the total decommissioning costs calculated based on these parameters andsplit between decommissioning phases, with the last one envisioned 100 years after closure, 112 areshown in Table 11.coverage, for instance, here: http://bellona.org/articles/articles_2010/ignalina_leak andhttp://bellona.org/articles/articles_2010/ignalina_shut_down. – Translator.110 See Footnote 92.111 See Footnote 16.112 NPP decommissioning strategies vary depending on a particular approach to decommissioning time frames. Forinstance, a choice between an immediate start of dismantlement operations at the shutdown site, mothballing thesite until radioactivity levels subside enough to allow for the desired safety level of dismantlement works, and anentombment option is offered in the US to power companies envisioning closure of a nuclear power plant (see theUS Nuclear Regulatory Commission’s Fact Sheet on Decommissioning Nuclear Power Plants,http://www.nrc.gov/reading‐rm/doc‐collections/fact‐sheets/decommissioning.html). In the case of Magnox plantsat Berkley (Gloucestershire, shut down in 1989) and Oldbury (South Gloucestershire, scheduled for shutdown inJune 2011), for instance, a 25‐year and a 100‐year decommissioning strategies were discussed in November 2006(http://www.sitestakeholdergroups.org.uk/oldbury/upload/oldbury_and_berkeley_joint_meeting_minutes_01_nov_06.pdf#page=7). Thomas (see Footnote 59) writes that conventionally, decommissioning is split into threephases: Under Phase I, fuel is removed and the reactor is secured; this mostly represents a continuation of theoperations that were under way while the plant was in operation. In the second phase, the uncontaminated orlightly contaminated structures are demolished and removed. (In economic terms, the incentive is to delay it aslong as possible to minimise the amount that needs to be collected from consumers to pay for it—the longer thedelay, the more interest the decommissioning fund will accumulate. The limiting point is when the integrity of thebuildings can no longer be assured and there is a risk they might collapse, leading to a release of radioactivematerial. In Britain, it is planned to delay Phase II until 40 years after plant closure, Thomas writes). Phase III is theremoval of the reactor core and is the most expensive and most technologically challenging, requiring remoterobotic handling of materials. As with Phase II, the economic incentive is to delay the work until it is no longer safeto do so and in Britain, this is expected to result in a delay of 135 years. Accordingly, Thomas estimates the totalcost of decommissioning a Magnox plant ($1.8 billion) as split between phases as above – Phase I carried outimmediately after closure, Phase II after 40 years, and Phase III after 135 years. – Translator.