The OECD Nuclear Energy Agency (NEA) and the
International Energy Agency (IEA) recently published the latest
of its "Projected Costs of Generating Electricity" studies.
While the cost estimates highlighted are not intended as a substitute
for the detailed economic analysis that investors need to carry
out on an country-by-country basis, the study provides a very
useful point of reference for economists and energy policy-makers.
This study, the seventh of
its kind since 1983, has been published at a particularly
opportune moment, with energy at the top of the political
agenda in many countries. It was carried out by an ad hoc
group of officially appointed national experts in 19 OECD
member countries and 3 non-member countries. Their main
brief was to calculate the estimated generation costs of
electricity produced by 130 power plants, including coal-fired,
gas-fired, nuclear, hydro, solar and wind plants. The technologies
analysed are either those used today or those considered
by the participating countries to be likely candidates for
commissioning by 2010-2015. Thirteen of the plants in question
were nuclear plants.
The calculations are based on the same reference
methodology used in the six previous studies, i.e. the "levelised
lifetime cost" approach. The main costs analysed were the
"overnight construction cost" (which is defined as the
total cost for building the plant as if it were all paid in one
go), the "operational and maintenance costs" and the
For the 13 nuclear plants included in the study,
the overnight construction cost varied between $1000 and $2000
per kWe, which is the same as the estimated cost for most wind
plants. This compares with between $1000 and $1,500 per kWe for
most coal-fired plants. After analysing the cost ratios for different
types of power plants the study concludes that nuclear is cheaper
than coal by 10% or more in 7 countries and cheaper than gas by
10% in nine countries.
Among the wealth of data provided is a comparative
analysis of the cost ratios for coal, gas and nuclear at discount
rates of 5% and 10%. Ten countries (Canada, the Czech Republic,
France, Germany, Japan, the Republic of Korea, South Africa, Slovakia,
Turkey and the US) submitted data for coal and gas power plants.
Ten countries (Canada, the Czech Republic, Finland, France, Germany,
Japan, the Republic of Korea, Romania, Slovakia and the US) provided
data for coal and nuclear power plants. Finally, 10 countries
(Canada, the Czech Republic, France, Germany, Japan, the Republic
of Korea, the Netherlands, Slovakia, Switzerland and the US) provided
data for gas and nuclear power plants. At the 5% discount rate
nuclear is 10% (or more) cheaper than coal in 7 out of 10 countries,
and 10% (or more) cheaper than gas in 9 out of the ten countries.
At the 10% discount rate, nuclear is more than
10% cheaper than coal in Canada, the Czech Republic, France, Slovakia
and in two pants in Germany. In Canada, the Czech Republic, France,
Germany, the Netherlands, Slovakia, the Republic of Korea and
in two plants in Switzerland nuclear is more than 10% cheaper
The study shows that there is no clear-cut winner among alternative
generation sources. However, nuclear is very competitive because
of its decreasing fuel cycle costs and low operation and maintenance
Clearly, decision-makers and potential investors
will need to take other factors into consideration too before
assessing overall cost. Security of energy supply, for example,
remains a major concern for most governments and private investors.
It is likely to influence future governments'
energy investment policies. Similarly, environmental policy is
playing an increasingly important role. This will probably influence
fossil fuel prices and force investors to act accordingly. Both
economically and environmentally, nuclear scores well and offers
a cost-effective option.
The study concludes by saying that "...on
a global scale there is room and opportunity for all efficient
The study, which includes an appendix with comparative country
statements, can be ordered online at http://www.iaea.org.