Who Pays? The Economics of Nuclear Energy

Abstract

The cost of nuclear power has been identified as one of the determining factors for the future of nuclear energy development and expansion. Some argue that it does not make economic sense to build NPPs, given that the required capital investment is much higher than for other forms of electricity generation, that it takes much longer to build NPPs, and their financing is subject to far more uncertainties. Others argue that the intensive capital investment can be compensated by low fuel and operating costs. New NPPs can be competitive when fossil-fuel prices rise and potential external costs are taken into consideration. These external costs could include air pollution, greenhouse gas emissions, import dependence, the uncertainties of fuel costs and the comparative risks of different alternatives. To some, ‘it is clear that nuclear power has been unusually difficult to assess in economic terms’¹ because national or even local conditions vary, including the costs of capital, labour and materials, the regulatory environment, and the availability and costs of alternative generating technologies. More importantly, political acceptance of, and public opinion on, nuclear energy can throw any economic calculation off balance.