Anthonie Cilliers: Cost of nuclear vs other energy sources

Sep 21 2017 07:40
Anthonie Cilliers

When a value of electricity generation comparison is done, we tend to end up at similar costs all the time. Dr Anthonie Cilliers does his sums to explain why...

I CONTINUALLY read news articles claiming that nuclear power is much more expensive than other energy sources such as the one in Beeld on 14 August 2017, "Kernplan is ‘om werk te skep’”, amongst others.

I thought it prudent to share the following insights and facts from an academic perspective as a way to put some perspective on the matter and also lay to rest the claims that nuclear is unaffordable and more expensive than other energy sources.

As a principal statement, every energy source has its own value, therefore it is unnecessary to play one against another as they all have their benefits and challenges. As a developing country, our decision-making process should be pinned on more than just energy, but have the ethos of a developmental state which needs jobs and complies with current climate change agreements as a part of the global community.

This becomes even more important as we look to the UN General assembly currently taking place in New York, where the issue of clean energy is on the Agenda.

You see that the context of these discussions is beyond financial modelling, but also flexibility to meet the needs of the people on the ground with the least cost and max output possible on a long-term basis. There are only two completely inflexible power sources in use today, solar PV and wind. If you promote flexible power sources you are promoting natural gas and certainly not clean energy (SA has no natural gas).

We often see models, plans and projections of what the future will look like. In many cases, especially with other motives, these are not reflective of reality as assumptions and varying scenarios prevent an “apple to apple” comparison.

For example, the CSIR integrated resource plan model uses reverse engineered unbuilt IPP bid window prices for renewable energy, whilst it uses proven project overnight capital costs for nuclear energy.

The 20 year IPP power purchase agreements have annual inflation built in, which is not taken into account in the modelling (arguing we use the 2015 money value. On the other hand, estimated overnight capital costs for nuclear are used over 40 or 60 years that have a fixed cost over time.

Both calculations are correct to calculate cost, but not accurate when doing comparisons. In this article, I will compare costs on a level playing field basis. More on this, later in the article.

I prefer to look at actual current real-world examples in these comparisons. So, I have found two good examples of zero emission electricity generation projects, to be completed in 2017 with available costs to do a “sanity check” on all the claims being made. Both these projects are stories of success: built on schedule and on budget.

The one is the 5MW Rosh Pinah power plant using photovoltaic panels in a square array in Namibia, whilst the other is the 1 400 MW APR-1400 Barakah-1 nuclear power plant scheduled for commissioning in early 2018.

The actual contracted costs for these projects are (all costs converted from USD to R at R13,50: $1  exchange rate):

Rosh Pinah PV – R152 000 000 – R 30 400 per installed kW.
Barakah-1 Nuclear – R 75 465 000 000 – R 53 903 per installed kW.

We have to remember that nuclear plants produce electricity all day long with an annual capacity factor of 90% internationally. This means that 90% of the installed capacity is available over a year, as compared to solar, which is typically available at a capacity factor of less than 40%.

On this basis, the Barakah-1 1400MW nuclear plant will produce 11 037 600 MWh of electricity per year.


Figure 1: 5MW Rosh Pinah PV square array.

Solar PV plants produce electricity when the sun shines, and depending on where it is installed the capacity factor varies.

According the Rosh Pinah project developers, this 5MW plant is expected to produce 18 354 MWh per year at Standard Test Conditions (STC) (40%) efficiency (this is very high for a PV plant).


Figure 2: The completion ceremony for the Korean-built Barakah-1 nuclear reactor in the UAE on May 2014 with the 1 400 MW reactor vessel in the back before installation.

This means that 601 of these PV plants would be required to produce the same amount of electricity units annually as the nuclear power plant. (Note the size comparison of the 5MW PV plant compared to the reactor vessel of 1400MW in the figures).

In other words, the overnight capital cost of an equivalent solar plant would be R152 000 000 x 601 = R91 135 200 000 placing it slightly higher than an equivalent nuclear plant.

We should not forget in this case, that the power from PV is only supplied during the day and for this reason, some sort of storage capacity is required, to spread the supply out. At the STC efficiency, the plant would require battery storage (or other zero emission storage) of 20 160MWh.

According to the “Economic Analysis Case Studies of Battery Energy Storage with SAM” prices batteries at $300 per kWh (R 4 050 per kWh) + system costs (R 33075/kW), this amounts to an additional R 81 689 674 500.

The total capital for these electricity supplies producing the same amount of energy units are:

Solar PV = R 91 135 200 000
Solar PV with storage = R 172 824 874 500
Nuclear = R 75 465 000 000

Thus, making nuclear power 1.21 times cheaper to build than solar PV in 2017 in electricity units comparison and 2.3 times cheaper than always available reliable solar PV with storage.

For interest sake, if 9 600MW was installed at the Barakah-1 price, the total cost amounts to R517 468 800 000, and not R1trn as widely reported.

Now, when taking the operating costs and lifespan into account we find nuclear power to be substantially more than that of solar PV as the fuel costs (all costs from mining to enrichment) are taken into account. However, for a similar value proposition the battery operating costs also need to be taken into account.

According to the National Renewable Energy Laboratory, operating cost for solar PV amounts to $16/kW-year and for a battery at 20$/kW-year. The total cost contracted for operation and maintenance for the Barakah-1 plant is set at: R1 125 000 000,00 per year.
For this comparison, annual operation and maintenance (O&M) for the two same sized systems are:

Solar PV = R 272 160/yr
Solar PV with storage = R 476 280/yr
Nuclear (including fuel) = R 1 125 000 000/yr

To put all these figures into context we need it is now required to calculate what the electricity would cost to ensure that the capital and operations and maintenance can be covered. This also brings the cost down to a kWh price which is again scalable to the size the installation required.

Using a figure of 8.3% interest on capital and paying off the capital over the economic life of the plant (solar PV – 25 years, nuclear – 60 years) as well as covering the operation and maintenance cost and producing equal units of electricity annually we obtain the following:

Solar PV without storage = 71c per kWh
Solar PV with storage = 150c per kWh
Nuclear (including fuel) = 67c per kWh

This result is important, as investors and planners could opt for various payback periods and interest rates. The above result forms the basis where every unit of electricity ever produced by the plant will contribute to the capital and O&M cost of the plant.

The last addition we should consider is the construction time. Typically, the capital cost is spent over the entire construction time of the project with interest and only paid back once the plant starts operating. The typical construction time of a nuclear plant (as is the case with Barakah-1) is five years. For solar PV and batteries, the construction time is considerably shorter as they can be built in smaller capacity chunks – for these calculations I used 1 year.

This increases the cost of each electricity unit because of the additional interest to:

Solar PV without storage = 77c per kWh (negligible O&M)
Solar PV with storage = 163c per kWh (negligible O&M)
Nuclear (including fuel) = 82c per kWh (9c from O&M and fuel)

Variation of repayments periods depending on the source of capital is always possible.

The question might be posed why are these prices seemingly different to that used in the IRP and the CSIR costing. It is important to know that these rates would be fixed for the next 25 to 60 years (82c, 60 years from now would extremely cheap.)

Well, as mentioned before, if inflation was allowed in the 77c or 82c contract, then it could be reduced to around 60c rising to R1.82 after 20 years.

So, what does all these calculations tell us and what do we do with it? Well, first of all, these calculations do not attempt to build a business case for any electricity source whatsoever. We have to remember that these are figures from real successful projects in other countries. Other projects might have better or worse figures and we should try to replicate the better ones.

A number of additional cost factors has not been taken into account, such as the grid transmission system as well as the decommissioning cost of the two sources. In the case of nuclear the spent fuel over 60 years is small in volume (less than a tennis court, 4m high) but still needs to be managed well, this cost is included in the fuel cost.

In the case of the solar PV plants and batteries, the volume of chemicals is substantially more and also need to be protected from contaminating the environment (this cost is not included).

The fact remains, whichever side of the fence you are on supporting any specific energy source, when a value of electricity generation comparison is done, we tend to end up at similar costs all the time. We could add energy sources to the mix that emit various polluting emission and it might seem that the costs are lower, but when the true costs of managing the emissions, or the effects of it are added, we tend to get back to the same cost again.

Energy is not free. It never will be. What we need to do as a country is to manage our resources (natural and human) to ensure that we extract the maximum value from our own resources. We should back ourselves and our own skills to do the jobs. That is ultimately what will end up providing us with the “least cost” to the country and the “maximum value” as well as “least risk.”

When it comes to nuclear power, a narrative has been created in the media that nuclear is very expensive compared to other energy sources. It becomes very easy to believe this because no vendor would be willing to share the costs for a specific country without a thorough study of the specific implementation of the plant as well as the site characteristics. This is why a non-binding Request for Information (RFI) and a Request for Proposals (RFP) are so important.

It is a method of gauging the market and determining the expected cost of the plant. As long as this is not done, detractors can quote any figure in the media (and cross-sight that figure) as has been done over the last couple of years. Any group against an RFP in nuclear, is against certainty, which allows for speculation that is of no use in the energy debate.

South Africa is currently in both a fortunate and unfortunate situation. Our economy has shrunk to such an extent that we have excess electricity capacity. We now have time to plan our energy mix. We should make sure that these decisions are based on facts, and not speculation.

  • Dr Anthonie Cilliers is the National Coordinator: South African Network for Nuclear Education, Science and Technology.

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