4 ms·

Assuming electricity cost $110 MWh and OPEX of the reactor on the level of $25 MWh with 90% capacity factor without accounting for interest (since it's near zer

by fuoqi 5y ago

Assuming electricity cost $110 MWh and OPEX of the reactor on the level of $25 MWh with 90% capacity factor without accounting for interest (since it's near zero nowadays), it will take slightly more than 10 years for the reactor to pay for itself. Realistically, with decommissioning I would say it will be 15-20 years. So in addition to positive impact on economy due to lower electricity prices and improved reliability, for at least 40 years it will produce a pure profit. Also in reality it probably will operate for 80-100 years.

Gwypaas 5y ago
That seems like extremely low numbers. From what I've found the range seems to be $123-$204 / MWh, or $0.123 - $0.204 per KWh https://www.lazard.com/perspective/levelized-cost-of-energy-levelized-cost-of-storage-and-levelized-cost-of-hydrogen/ https://www.lazard.com/perspective/levelized-cost-of-energy-... For Hinkley Point C, another EPR we have the following, a guaranteed strike price of $140/MWh. EDF has negotiated a guaranteed fixed price – a "strike price" – for electricity from Hinkley Point C of £92.50/MWh (in 2012 prices),[25][83] which will be adjusted (linked to inflation – £106/MWh by 2021[77]) during the construction period and over the subsequent 35 years tariff period. The base strike price could fall to £89.50/MWh if a new plant at Sizewell is also approved.[25][83] High consumer prices for energy will hit the poorest consumers hardest according to the Public Accounts Committee.[86] In July 2016, the National Audit Office estimated that due to falling energy costs, the additional cost to consumers of 'future top-up payments under the proposed HPC CfD had increased from £6.1 billion in October 2013, when the strike price was agreed, to £29.7 billion'.[87][88] In July 2017, this estimate rose to £50 billion, or 'more than eight times the 2013 estimate'.[9] https://en.wikipedia.org/wiki/Hinkley_Point_C_nuclear_power_station#Cost_to_consumers https://en.wikipedia.org/wiki/Hinkley_Point_C_nuclear_power_...
- fuoqi 5y ago
  Note that in my comment $25 MWh was only about OPEX (fuel cost, personnel, etc.), while your cost includes CAPEX, interest, and probably payments to a decommission fund. The number is based on 2013 estimate of the US Department of Energy (IIRC at the time it was $23 MWh), so it may be indeed different for ERP. Though if it's sufficiently higher than OPEX of the old US reactors, then I would say there is a problem with the ERP design.
  - Gwypaas 5y ago
    Well, no one is going to make an investment calculation on only OPEX. Lazard puts the average marginal cost for fully depreciated reactors at $29/MWh. There in lies the issue, the total cost for newly built solar and wind is lower than the OPEX of existing plants.
    - fuoqi 5y ago
      I was answering the GP question with a rough estimate based on simplistic calculations, not building a full blown business model for the reactor in question.
      - Gwypaas 5y ago
        Well, saying it's an easy profit for 40 years seems like a too certain conclusion then? On a yearly basis these are the average wholesale prices in Finland: 2020 - €28,02 /MWh 2019 - €44,04 /MWh 2018 - €46,80 /MWh 2017 - €33,19 /MWh 2016 - €32,45 /MWh 2015 - €29,66 /MWh From that we can see is that the average price during the years was about equal to the OPEX we've seen from several sources. Other years you might make some back compared to OPEX. https://www.nordpoolgroup.com/services/power-market-data-services/intraday-market-data/ https://www.nordpoolgroup.com/services/power-market-data-ser...
crote 5y ago
That's comparing apples to oranges. In reality, a significant fraction of the cost comes from interest. Sure, the 1-month LIBOR rates may be 0.1% nowadays, but construction started in 2005. The 10-year treasury rate in 2005 was closer to 5%. Nobody would be willing to lend money for the construction of a plant like this for anything less.
- fuoqi 5y ago
  This is why I wrote that realistically it will be closer to 15-20 years. There are other factors which are not considered in my simplistic calculation.
- doikor 5y ago
  The few numbers for the loans that have been public have been somewhere between 2 and 3%
belorn 5y ago
$0.11 kWh seems pretty conservative given current trend in energy prices. Just looking at the cost here in south of Sweden, it is set today at $0.47 kWh. It won't likely stay there for long (temperature/wind conditions, oil/gas prices, water reserves), but if we use the estimated cost for the next few years it is unlikely (according to prices for long term agreements) that the price will be on average below $0.2.
- Gwypaas 5y ago
  Always two sides of the coin. These are the average spot prices the last couple of years in SE3. 2020: $0,024 per kWh. 2019: $0,045 per kWh. 2018: $0,050 per kWh. Nuclear are $0.13 - $0.204 per kWh to build. Therefore, even with these fluctuating prices you would need to make back the average loss of the year during a few short spurts, not looking likely that.
  - doikor 5y ago
    The monthly average spot price in Finland has not been that low during the winter in Finland in any of those years. Also there is no way OL3 actually costs that much to build. Lets say it runs at 90% of max output on average it gets you ~14 000 000 MWh of electricity per year and with 60 year planned lifetime that comes to 840 000 000MWh of electricity produced. With your numbers (the low end $0.13 per kWh) it would come to ~100 billion euros building costs which is roughly an order of magnitude more then reality (somewhere between 5.4 to 12 billion to be paid by TVO once all the lawsuits are settled) At the end of the day with operational and decommissioning costs the overall lifetime costs will go up obviously but I doubt in the tune of over 1 billion per year to reach your estimate costs. Also getting the profitability number of OL3 is really difficult due to TVO not actually selling any electricity directly to the public/pool but instead at cost to the investors of each reactor. Some of it going directly to Fortum or Helen who just sell it to whoever but some of it goes to the big paper companies who use it to run their factories. TVO is a "mankala-periaate" company which I can't really find a good english explanation of but basically it is a company that sells all of its product to its owners at cost allowing multiple players in the field to share a single supplier while stills staying in control of the supply chain.

by fuoqi 5y ago

Gwypaas 5y ago

That seems like extremely low numbers. From what I've found the range seems to be $123-$204 / MWh, or $0.123 - $0.204 per KWh https://www.lazard.com/perspective/levelized-cost-of-energy-levelized-cost-of-storage-and-levelized-cost-of-hydrogen/ https://www.lazard.com/perspective/levelized-cost-of-energy-... For Hinkley Point C, another EPR we have the following, a guaranteed strike price of $140/MWh. EDF has negotiated a guaranteed fixed price – a "strike price" – for electricity from Hinkley Point C of £92.50/MWh (in 2012 prices),[25][83] which will be adjusted (linked to inflation – £106/MWh by 2021[77]) during the construction period and over the subsequent 35 years tariff period. The base strike price could fall to £89.50/MWh if a new plant at Sizewell is also approved.[25][83] High consumer prices for energy will hit the poorest consumers hardest according to the Public Accounts Committee.[86] In July 2016, the National Audit Office estimated that due to falling energy costs, the additional cost to consumers of 'future top-up payments under the proposed HPC CfD had increased from £6.1 billion in October 2013, when the strike price was agreed, to £29.7 billion'.[87][88] In July 2017, this estimate rose to £50 billion, or 'more than eight times the 2013 estimate'.[9] https://en.wikipedia.org/wiki/Hinkley_Point_C_nuclear_power_station#Cost_to_consumers https://en.wikipedia.org/wiki/Hinkley_Point_C_nuclear_power_...

fuoqi 5y ago
Note that in my comment $25 MWh was only about OPEX (fuel cost, personnel, etc.), while your cost includes CAPEX, interest, and probably payments to a decommission fund. The number is based on 2013 estimate of the US Department of Energy (IIRC at the time it was $23 MWh), so it may be indeed different for ERP. Though if it's sufficiently higher than OPEX of the old US reactors, then I would say there is a problem with the ERP design.
- Gwypaas 5y ago
  Well, no one is going to make an investment calculation on only OPEX. Lazard puts the average marginal cost for fully depreciated reactors at $29/MWh. There in lies the issue, the total cost for newly built solar and wind is lower than the OPEX of existing plants.
  - fuoqi 5y ago
    I was answering the GP question with a rough estimate based on simplistic calculations, not building a full blown business model for the reactor in question.
    - Gwypaas 5y ago
      Well, saying it's an easy profit for 40 years seems like a too certain conclusion then? On a yearly basis these are the average wholesale prices in Finland: 2020 - €28,02 /MWh 2019 - €44,04 /MWh 2018 - €46,80 /MWh 2017 - €33,19 /MWh 2016 - €32,45 /MWh 2015 - €29,66 /MWh From that we can see is that the average price during the years was about equal to the OPEX we've seen from several sources. Other years you might make some back compared to OPEX. https://www.nordpoolgroup.com/services/power-market-data-services/intraday-market-data/ https://www.nordpoolgroup.com/services/power-market-data-ser...

crote 5y ago

That's comparing apples to oranges. In reality, a significant fraction of the cost comes from interest. Sure, the 1-month LIBOR rates may be 0.1% nowadays, but construction started in 2005. The 10-year treasury rate in 2005 was closer to 5%. Nobody would be willing to lend money for the construction of a plant like this for anything less.

fuoqi 5y ago
This is why I wrote that realistically it will be closer to 15-20 years. There are other factors which are not considered in my simplistic calculation.
doikor 5y ago
The few numbers for the loans that have been public have been somewhere between 2 and 3%

belorn 5y ago

$0.11 kWh seems pretty conservative given current trend in energy prices. Just looking at the cost here in south of Sweden, it is set today at $0.47 kWh. It won't likely stay there for long (temperature/wind conditions, oil/gas prices, water reserves), but if we use the estimated cost for the next few years it is unlikely (according to prices for long term agreements) that the price will be on average below $0.2.

Gwypaas 5y ago
Always two sides of the coin. These are the average spot prices the last couple of years in SE3. 2020: $0,024 per kWh. 2019: $0,045 per kWh. 2018: $0,050 per kWh. Nuclear are $0.13 - $0.204 per kWh to build. Therefore, even with these fluctuating prices you would need to make back the average loss of the year during a few short spurts, not looking likely that.
- doikor 5y ago
  The monthly average spot price in Finland has not been that low during the winter in Finland in any of those years. Also there is no way OL3 actually costs that much to build. Lets say it runs at 90% of max output on average it gets you ~14 000 000 MWh of electricity per year and with 60 year planned lifetime that comes to 840 000 000MWh of electricity produced. With your numbers (the low end $0.13 per kWh) it would come to ~100 billion euros building costs which is roughly an order of magnitude more then reality (somewhere between 5.4 to 12 billion to be paid by TVO once all the lawsuits are settled) At the end of the day with operational and decommissioning costs the overall lifetime costs will go up obviously but I doubt in the tune of over 1 billion per year to reach your estimate costs. Also getting the profitability number of OL3 is really difficult due to TVO not actually selling any electricity directly to the public/pool but instead at cost to the investors of each reactor. Some of it going directly to Fortum or Helen who just sell it to whoever but some of it goes to the big paper companies who use it to run their factories. TVO is a "mankala-periaate" company which I can't really find a good english explanation of but basically it is a company that sells all of its product to its owners at cost allowing multiple players in the field to share a single supplier while stills staying in control of the supply chain.