Nuclear Energy: Economics

Authored by: James G. Hewlett

Encyclopedia of Environmental Management

Print publication date:  December  2012
Online publication date:  December  2012

Print ISBN: 9781439829271
eBook ISBN: 9781351235860
Adobe ISBN:


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This entry attempts to answer the following question: Is nuclear power economic? There are two major factors influencing the economics of nuclear power, and since major uncertainties with both of them exist, it is impossible give an unqualified answer. The first factor is the cost of building the nuclear power plant. On average, nuclear overnight capital costs derived from a small number of Public Utility Commission filings were about $4000 per kW of capacity. If these estimates are indicative of realized construction costs, nuclear power would not be economic. The analysis found that costs must fall to about $2500 to $3000 before nuclear power would be economic. The second factor is the environmental cost of the alternative. The economics of nuclear power would be greatly improved if all of the external costs related to global warming were included in the cost of generating electricity from fossil fuel–fired power plants. Nuclear power plants have their own set of environmental costs, but since they are incurred over hundreds of years, their present value “today” is very small. Some have objected to discounting expenses incurred over very long time periods because this procedure represents a strong incentive to impose large costs on future generations. However, such equity considerations are outside the realm of economic analysis.

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