Wednesday, February 13, 2008

TVA reactor price estimates show reactor economics stiill favorable

TVA senior vice president of nuclear generation development and construction, Ashok Bhatnagar, has estimated that each of the new AP-1000 reactors at Bellefonte would cost between $2.5 billion to $3 billion to design and build. He reported that the application for the reactors “is very thorough and was prepared and submitted on schedule”.

This is good news, because some reports suggested that costs of new nuclear plants might run as high as high as $8 billion. TVA has previously estimated that the cost of the Bellefonte reactors would run between 2.5 to 3.5 billion dollars. Thus TVA has apparently lowered its top estimate by half a billion dollars per reactor. Bellefonteis the sight of a previous TVA reactor building effort. TVA, however has surrendered its licences to build the two 1970's era reactors it originally started to build at Bellefonte. It was not clear how much of the partially completed Bellefonte facility TVA intended to reuse, bet recently released drawing depict new reactor domes and turbine buildings, along with the existing cooling towers. The old reactor domes and turbine structure are shown in the background.

Thus it would appear that the TVA price reflects the cost of new AP-1000 reactors and major set up costs except for cooling towers. Thus it would appear that $3.o billion constitutes the top price for new AP-1000. It might be anticipated that there will be some inflation in the price of parts and materials over the next few years. This winters saw coal fired power plants in China running short of coal due to extreme snow conditions. China is also experiencing increasing coal production shortfalls, necessitating coal importation. It is likely then that china will greatly expand its reactor construction program in the near future. This will, in all probablity set off a round of rapid price increases for reactor parts, as suppliers struggle to keep up with demand. The AP-1000, as well as the GE Economic Simplified Boiling Water Reactor (ESBWR) are at something of an advantage, because of their diminished parts requirement, but neither can expect to entirely escape the inflationary pressures. But it appears that Westinghouse, and quite likely GE have achieved their aim of lowering reactor costs substantially.

Assuming that the the TVA reactors come in at the upward end of their estimated price range, the cost would be around $2.50 per KW of generating capacity. Even assuming a capacity factor of 75% for the reactors and 30% for wind generators, the capitol cost of wind generated electricity would be 50% higher, per actual unit of output. Thus wind has a vary large green premium over nuclear power generated by AP-1000s. Now it might well be that the cost of nuclear installations will rise substantially due to Chinese demand, and the general inflation in the price of steel, concrete and copper. However that inflation will probably affect the price of renewable power sources, and because they require significantly more materials than reactors do, the cost of building new renewable power sources might be subject to even greater inflation that the cost of new nuclear plants. Thus the "green premium" for the cost of wind generated electricity over nuclear generated power is likely to continue for some time to come.


Anonymous said...

$2.50 per KW?

Am I understanding this correctly?

If I pay off 20% of the capital cost (interest and principle) each year this works out to $0.50 per >5000 KWhr or less than $0.0001 per KWhr for capital costs!

What is the fuel cost? Operating cost?

Maybe you mean $2.50 per W not KW? If so, still a good deal.

Charles Barton said...

I should have taken the day off. 3 Billion dollars divided by a 1.2 GW capacity, gives a $2.50 per watt cost. This is before we calculate the cost of money. At 10% the owners will end up owing close to $4 billion before they walk in the door. This is why I like relatively small molten salt reactors. You can build them in factories over a few month period of time. They have smaller materials input, do not require nearly as big containment buildings, you can bury them under ground, so you get the cost advantage of mass production, Any way my brain will still work on big concepts, even if it has gone to sleep on numbers today.

djysrv said...

The TVA cost estimate is a critical rebuttal to a report by Moody's that new reactors will come in at $6,000/kW.

Garry said...

The costs are seriously underestimated. Try 20 billion bucks as a realistic cost for both AP 1000 Reactors.

Charles Barton said...

Considering the inflation which is beginning to grip the American economy and the underlying forces that are and will drive it, you might not be wroing, but by 2015-17 20 billion might seem quite reasonable. TVA is the only electrical utility with reactor construction experience during the last 20 years, and they have a prepared site. Site preparation is a major expense. I would say that TVA TVA's estimate might not have been off in 2007 dollar terms.

Garry said...

I noticed in the last few days there have been press releases that 2 new reactors in Florida will cost 17 Billion.

I've been reading your blog about Thorium as a new fuel for reactors. I only wish TVA would invest in new technology instead of placing all their bucks into refined old technology. As the old adage says, "there's always a better way to build the mouse trap." It seems Thorium fuel reactors would greatly reduce waste storage. I live very close to Bellefonte and have concerns due to omissions in TVA's COL Application. I'm an old retired soldier who finds it bothersome when bureaucrats do not fulfill their responsibilities. It makes me think there may be other short comings in a more critical area. Reliability is an issue for me concerning the TVA and their nuclear program.

I also think TVA should invest in other technologies such as solar and hydrogen for power generation. It's a brave new world out there and TVA needs to move into the 21st century. But our governments policy makers seem to be reluctant to wean all of us off of the "black gold" and traditional nuclear technologies. I suspect some level of personal greed on the part of current politicians contributes to my pessimism over the issue. I'm a fading old soldier thinking about our future and that of my grand children. National financial difficulties, inflation and debt, lend to my concerns. I'm not an expert in nuclear reactor technology, do have a background in military Nuclear Surety/Reliability issues. I find your blog very interesting and very educational. Garry Morgan

Charles Barton said...

Garry, TVA has a wind farm, During November and December of 2007 and January 2008, TVA;s wind farm produced electricity at 1.2% of its rated capacity because of low wind speed. The Tennessee River Valley is frequently cloudy, often for several days at a time. A solar generating facility could not be expected to receive enough sunshine to generate for more than 5.5 hours a day. Hydrogen generation would require heat or power from some source.

Electrical companies rely on manufacturers for generating technology. TVA does have a record of efforts to develop new technology. The Clinch River Breeder Reactor was intended to generate electricity for TVA. But it is limited to viable options. Since Wind power is unproductive, the sun does not shine enugh time, TVA as already damed most of the rivers, and coal and natural gas produce CO2, TVA has little choice but to put its eggs in the nuclear basket, and will continue to use the technology offered it by reactor manufacturers.

Ed Sutherland said...

Sorry for commenting so late on this, but I only stumbled on this today. It would seem to me that, given the peak demand per household averages only around 10-15KW, it could make sense for households to fund a percentage of the new reactors. If you offered homeowners the opportunity to pay, say, $50-100 (i.e. $5-10 per KW of usage), and then get very cheap electricity for the future, many would leap at the chance! These households would then only need to pay for their share of the running costs (plus the costs of running the grid). It would seem to be a logical way of doing things, and provide relatively easy funding for the projects!

The government's energy policies could certainly do with a shake-up, and this would certainly meet that requirement! It would be in everyone's interests to establish not-for-profit corporations to run these. The public would then be able to buy into the scheme, and benefit from the lower electricity prices. The corporations would then set up and run the power stations, and possibly even the power grids in some circumstances.

If a suitable number of these schemes were to be established, then the US could fairly rapidly transform the energy market. These plants would take many years to build, but if the will and the money is there, then a lot can happen. With current energy prices, I suspect that this sort of scheme would prove very popular. Nuclear power only produces around 20% of total electricity currently. Coal generates more than 45%! If nuclear power were to replace much of the coal use, the coal could then be moved into synthetic oil production (Fischer-Tropsch synthesis) and clean-coal power generation. This has the potential to meet a fairly respectable percentage of total US gasoline consumption.

I know all of this may be pie-in-the-sky optimism, but it would genuinely address many of the current energy problems. Nuclear energy production is the only realistic option for the near-term, and this sort of scheme would help a lot. By going for not-for-profit schemes, we also get around some of the worst aspects of government initiatives. It also avoids creating a corporate energy monopoly, hopefully! There would, obviously need to be a lot of public scrutiny, and proper auditing, but overall, the scheme could work!

Charles Barton said...

Better late thn never Ed. Welcome to my blog! I have is a carbon tax is imposed, the funds should be held in escrow for the tax payer to be used for the sole purpose of paying for non-carbon burning energy replacements. Nothing is to be gained by putting the carbon taxinto the general revinue, but a great deal is to be gained by using it to pay for post-carbon energy sources. Aside for that, money that swould be spent on replacement of old, inefficient and wornout fossil fuel energy plants anyway, would go to post carbon replacements.

Finally the shift to nuclear power coupled with the electrification of transportation is going to benefit everyone. The single most significant impact this will have on the economy would be the elimination of the tremendous burden imported oil creates for the economy now. With money freed up,some capitol can flow to new power manufactures.


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