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Introduction to Nuclear Energy > Lecture 8: Economics > Flashcards

Lecture 8: Economics Flashcards

1
Q

What is arguably the greatest impediment to adoption of nuclear energy?

A

Cost

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2
Q

What is the general cost trend of renewables and nucelar?

A

Renewables continually reducing in cost, whereas nuclear is rising.

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3
Q

Why is there a greater importance placed on alternatives to fossil fuels?

A

Historically cheap however, large fluctuations due to politics and such high demand.

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4
Q

Define the levelized cost of electricity (LCOE):

A

Net present cost of electricity generation over a generators lifetime.

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5
Q

What is LCOE used for?

A

Investment planning and decisions

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6
Q

Alternative definition of LCOE:

A

The price at which the generated electricity should be sold for the system to break even at the end of its lifetime.

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7
Q

How is LCOE calculated?

A

NPV of costs over lifetime / NPV of electrical energy produced over lifetime

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8
Q

What are the three expenditure contributors to NPV costs over a lifetime?

A

Investments (in year t)
Operation and maintenance (in year t)
Fuel (in year t)

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9
Q

What is a disadvantage to using LCOE for renewables?

A

Does not take into account intermittency of electricity production.

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10
Q

Name five main cost contributors:

A

Capital costs
Borrowing interest on capital cost
Operating cost
External costs
Taxes

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11
Q

What is the most dominant cost contributor for nuclear?

A

Capital cost (61%)

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12
Q

Why is the value of money worth less in the future?

A

Inflation
Missed opportunity to invest and grow funds

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13
Q

What economic contributors should be considered specifically for nuclear power?

A

Decommissioning and waste

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14
Q

Define discounted cash flow (DCF):

A

A valuation method used to estimate the value of an investment based on its expected cash flows.

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15
Q

Define net present value:

A

The present value of a series of future cashflows

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16
Q

What is the equation for present value?

A

Sum of payments (year n) / (1+discount rate)^(year n)

17
Q

Define yield or internal rate of return (IRR):

A

The discount rate at which NPV=0

18
Q

Name three funding models:

A

Direct government investment
Contract for Difference
Regulated asset base

19
Q

What is an advantage of direct government investment?

A

Governments can borrow very cheaply (<2% interest rate)

20
Q

How does a contract for difference (CDF) work?

A

Upfront private investment paid and operator guaranteed a fixed sale price.
If below, government pays operator.
If above, operator pays government.

21
Q

How does a regulated asset base work?

A

Upfront private investment.
Energy companies manage infrastructure project and ownership of assets and operating costs.
In return receive customer bills.
Transfers risk from developers to consumers.

22
Q

Which funding model gives the greatest stability of electricity cost to customers?

A

Contract for difference

23
Q

How does a government ensure electricity prices are not set too high following RAB investment?

A

Regulators or watchdog

24
Q

Why can CFD be potentially risky for investors?

A

Price of electricity is volatile so potential to undersell stake price and pay difference to government.

25
Q

Name four sensitivities:

A

Fuel / Operation and maintenance
Capital cost
Build time
Plant lifetime

26
Q

What is the proportion of fuel and O&M costs compared to capital?

A

Fuel and O&M: 40%
Capital: 60%

27
Q

How does build time affect sensitivity?

A

Extra year of building = Year of lost revenue

28
Q

Name five uncertainties:

A

Capital cost to build
Selling price for electricity
Availability
Fuel cost
Decommissioning cost

29
Q

What is an economic advantage to small nuclear reactors?

A

Cheaper to build over time from experience

30
Q

What is the biggest problem with renewables?

A

unpredictable intermittency of power generation

31
Q

What is a potential solution to the intermittency of renewables?

A

Storage

32
Q

Name four storage methods:

A

Batteries
Hydro
Thermal
Kinetic

33
Q

What defines a ‘small’ reactor?

A

<300 MWe

34
Q

Define modularisation:

A

Factory built components

35
Q

What are three advantages to modularisation?

A

Minimises on-site build.
Improves quality control.
Enables cheaper NOAK production.

36
Q

What are three differences for investment into SMRs?

A

Smaller upfront cost
Revenue brought forward (shorter build time)
Benefit from NOAK

37
Q

How could the efficiency of NPPs be increased?

A

Cogeneration

38
Q

Name two examples of cogeneration:

A

District heating
Desalination

39
Q

Define cogeneration:

A

Making use of low temperature water after its passed through a turbine.

Introduction to Nuclear Energy (16 decks)

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