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Developing a range of levelized cost estimates for integral
light water small modular reactors
Ahmed Abdulla and Ins L Azevedo1
Department of Engineering and Public Policy, Carnegie Mellon
University, 5000 Forbes Avenue, Pittsburgh, PA 15213, USA
1 Corresponding author: e-mail: [email protected]; tel.: +1 (412)
268-3754 Abstract The nuclear industry is developing a generation
of small modular reactors (SMRs) with power outputs of up to 300
Megawatts-electric (MWe). To control costs, vendors promise factory
fabrication, shorter construction schedules, and increased use of
modular construction. Their goal is to reduce the size of the
plants initial capital outlay, to accommodate modest grids, and to
allow for deployment in locations where large plants are
infeasible. Interest has grown in incorporating SMRs into a
portfolio of technologies that will reduce emissions from the power
sector, and analysts are keen to assess their economics. Taking
recent expert assessments of the cost of a 1,000MWe plant and two
integral light water SMR designs, we calculate levelized cost of
electricity values for four scenarios. For the large plant, median
levelized cost estimates range from $56 to $120 per MWh. Median
estimates of levelized cost range from $77 to $240 per MWh for a
45MWe SMR, and from $65 to $120 per MWh for a 225MWe unit. We
compare these with other cost estimates from the literature. All
values are in 2012 dollars. Controlling construction duration is
important, and, given the price of electricity in some parts of the
U.S., it is possible to construct an argument for deploying SMRs in
some locations. Keywords: small modular reactors, levelized cost of
electricity, nuclear power economics Classification codes: Q420;
Q470; Q550 1. Introduction 1.1 Background information
Nuclear power faced challenges well before the Fukushima nuclear
accident. The events in Japan have sharpened arguments that have
been in wide circulation throughout the technologys troubled
history. These can be divided into four categories: safety of
reactor operations; spent fuel stockpile management; possible
diversion of fuel for weapons proliferation; and high capital cost.
To address these concerns to differing extents, but especially high
capital cost, the industry is developing a new generation of
commercial small modular reactors (SMRs) that would have a power
output of up to 300 Megawatts-electric (MWe), in contrast to the
Gigawatt scale light water reactors (LWRs) that were favored by the
industry in the nuclear renaissance of the 1960s [1] and continue
to dominate it today [2].
Over the past few years, interest has grown in incorporating
these small modular nuclear reactors into a portfolio of energy
technologies that would reduce the carbon footprint of the power
sector [3].
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Therefore, utilities, energy analysts, and policy makers want to
know how much they will cost. Three major challenges stand in the
way of developing such cost estimates. First, the history of
nuclear cost-estimation is poor. Section 2 below introduces some
metrics used by the industry to assess economic viability (for a
brief outline of nuclear powers record of cost-estimation, please
consult appendix A). Second, SMRs encompass a large number of
reactors that come in a wide range of sizes and employ a number of
technologies. They are also slated for deployment in a variety of
locations and for a number of applications. It is thus
inappropriate to talk of likely SMR cost. One needs to discuss
instead the likely cost of a given reactor design and its
associated systems, as outlined in section 3. Third, given the fact
that the detailed design of these reactors has yet to be completed,
and that the dates of their commercial deployment are as of yet
uncertain, existing approaches to estimating their likely cost are
based on inappropriate or incomplete methodologies; these are
highlighted in section 4. Taking recently published estimates of
the likely cost of a 1,000MWe LWR and two integral light water SMR
designs from a study that acknowledges the limitations noted above
[4], section 5 complements existing estimates of SMR cost by
calculating a range of levelized cost of electricity (LCOE) values
for four proposed plant configurations. Section 6 presents our
conclusions. 1.2. Recent large nuclear power plant cost
estimates
Two metrics of great interest when it comes to nuclear power are
a plants overnight capital cost and its levelized cost of
electricity. The first of these is the cost of constructing a
nuclear plant minus the cost of financing it over the construction
period. The levelized cost of electricity is the price the nuclear
plant must charge per unit of electricity sold for it to break even
over its lifetime. 1.2.1 Overnight capital cost
The emphasis on capital costs in the case of nuclear power stems
from the facts that: construction costs make up a large fraction of
the total cost of nuclear power [5]; their operating costs are low
given the energy density of their fuel; and the dearth of recent
construction experience renders the estimates more uncertain and
the projects financially riskier.
Vendors were optimistic at the turn of the century when
generating estimates of the capital cost of new nuclear power
plants. Initial estimates that the overnight cost of new plants
would range between $1,000 and $2,000 per kW of capacity are
obsolete [6, 7]. Table A1 in appendix A lists some of the capital
cost estimates that have been published in the past. 1.2.2
Levelized Cost of Electricity (LCOE):
Customers, policymakers, and energy analysts are interested in
more than just nuclear powers capital costs. The LCOE is a more
comprehensive measure that takes into account capital costs, both
fixed and variable operating costs, decommissioning costs, the
plants construction duration, its lifetime, capacity factor, heat
rate, and the cost of financing the project. Equation 1 below
depicts one approach to computing the LCOE:
= !!!!"!(!!!)!!!!! !!(!!!)!!!!! (1)
where is plant lifetime ! is the investment cost in year
(initial and incremental capital) ! is the operating and
maintenance cost in year (fixed and variable) is the discount rate
! is the electricity generated in year
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Another approach, described in detail for the case of
concentrated solar power by Wagner and
Rubin [8], is to compute the levelized annual cost (LAC) of a
technology and divide that annual cost by the average annual
electricity generated. These two methods using equation 1 above or
the approach used by Wagner and Rubin give broadly similar results.
For detailed commentary on methods of assessing the cost of
electricity, please consult Kammen and Paca, 2004 [9].
One influential [5] study of nuclear power economics in the
twenty-first century is MITs Future of Nuclear Power [10]. In this
study, MIT constructed a cost schedule for a hypothetical
Gigawatt-scale nuclear plant and, applying the procedure presented
in Equation 1, concluded that the LCOE from this plant would range
from $42 to $67/MWh of electricity generated. In 2009, a team from
MIT updated the figures to take into account changes in the
commodities market, as well as revised estimates of the cost of
nuclear power plants, estimating a LCOE of $84/MWh [11]. Although
it is possible to criticize the structure of the cost schedule
employed in these studies as too academic, the aforementioned lack
of experience with nuclear construction makes studies by academic
outfits important in the case of this technology.
Table 1 lists some of the nuclear power levelized cost estimates
made over the past decade. Generally, these studies depend on a
number of assumptions about plant operating characteristics,
investment parameters, and even government treatment of such
investments for tax purposes. Given these differences in
assumptions, comparisons of LCOE values must be made with care.
Some of the pertinent assumptions made during the calculation of
the LCOEs in table 1 are: first, the plants are assumed to have a
capacity factor of either 85% (studies 1, 2, and 3) or 90% (studies
4, 5, and 6); second, estimates exclude subsidies that would make
nuclear power more economically attractive to utilities; third, all
estimates but the fourth include the cost of decommissioning the
plant.
Table 1. Recent estimates of the LCOE from large nuclear power
plants. No. Year of estimate Source Year of $ LCOE ($/MWh) 1 2003
MIT [10] 2002 42 - 67 2 2004 U Chicago [12] 2004 47 - 71 3 2009 MIT
[11] 2007 84 4 2011 Lazard [13] 2010 77 113
5 2012 EIA [14] 2010 107 119
6 2012 U Utah [5] 2012 88
One column in tables 1 and A1 is reserved for the year in which
the cost figure is reported. Updating the cost to current-year
dollars is not a simple matter of accounting for inflation. Some of
the assumptions (such as the capital cost and the fuel cost) depend
on other indices. Vendors retain a suite of such indicators to
account for changes in the cost of procurement, construction, and
commodities, as well as indices of regional cost variation, when
developing estimates of the cost of proposed new builds.
1.3. SMRs come in a wide range of sizes and technologies
According to the International Atomic Energy Agency (IAEA),
small reactors are reactors that produce less than 300MWe. Nine
IAEA member states are engaged in developing small reactors:
Argentina, Brazil, China, France, Japan, Russia, South Korea, and
the United States. The Agency identifies twenty-five small reactor
designs in development worldwide [15]. A brief description of these
is provided in table B1 in appendix B, along with a description of
two SMRs we are aware of that are not in the IAEA publication
referenced.
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The broadest division that can be made is between light water
SMRs and non-light water SMRs. The worlds existing nuclear power
plant fleet mostly utilizes LWRs: 356 of the worlds 436 nuclear
reactors (80%) are of the light water type [2]. Because of the
dominance of this technology, vendors, operators, and regulators
have great experience with LWRs and, when they became interested in
developing smaller units, established vendors opted to base their
designs on this technology in an effort to leverage their
experience while alleviating both customer and regulator concerns.
These designs make more likely candidates for near- to mid-term
deployment.
More than half of the SMR designs listed in table B1 are of the
light water variety. These can be further subdivided into
conventional light water SMRs and integral light water SMRs. The
former are scaled down version of the Gigawatt-scale reactors
currently in operation, while the latter integrate the components
of the nuclear steam supply system (NSSS) most notably the core,
the steam generator, and the pressurizer into a single pressure
vessel, eliminating much of the nuclear-grade piping. Figure 1
below compares the steam supply systems of conventional and
integral light water reactors.
Figure 1. Compare the nuclear steam supply system of a 1,150MWe,
Gen III+ Westinghouse AP1000 (left) to that of a 225MWe
Westinghouse SMR (right). The NSSS is integrated into one module in
an integral light water SMR [1617].
Vendors claim that these integral light water SMRs would be
manufactured on a factory assembly
line with high levels of quality control, after which they would
be shipped to the site by road, rail, or barge. Other advantages
they promise are shorter construction schedules and the increased
use of modular construction techniques, both of which might control
deployment costs. Because they come in smaller sizes, utilities may
be able to purchase nuclear capacity in smaller increments to match
demand growth, and the absolute cost of the investment would be
lower, opening up the market to those utilities and organizations
that cannot afford to bet the company to acquire a nuclear plant
[18]. Finally, because of their smaller size, they permit novel
approaches to siting, such as the co-siting of many modules [19],
or underground [1921] or underwater [22] deployment, that are
infeasible for large reactors.
Non-light water designs encompass a variety of technologies, all
of which fall under the Generation IV label [23]. In the United
States at least, these designs are destined for deployment only in
the long-term because, among other reasons, they require more
substantial changes to the framework governing deployment than
light water SMRs do. That said, the advanced designs not only
attempt to control costs in the ways light water SMRs do, but also
promise to deal with nuclear powers other disadvantages by being
safer, more resistant to the proliferation of nuclear materials,
and more innovative in managing waste. Some designs even promise to
deliver sealed modules that operate for long lifetimes and are
ultimately disposed of, or sent to the factory to be recharged,
once their fuel is exhausted [24].
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Even the basic summary above shows how difficult answering the
question of likely SMR costs is. There is the issue of reactor
type, reactor size, and the nature of the deployment (a one-module
versus twelve-module plant, for example). The scope of any cost
estimate needs to be carefully defined. 1.4. Existing approaches to
estimating the cost of SMRs
The few economic analyses of SMR cost in the public literature
are problematic. Some of these studies have employed a top-down
approach that estimated SMR cost by scaling down from the cost per
kWe of large reactors (e.g. [25]). As the previous section
emphasizes though, SMR designs are different from their larger
cousins, with the sole arguable exception of small conventional
LWRs. This places them on a different cost curve.
Few studies have employed bottom-up engineering-economic
assessments of SMR capital cost: these decompose an SMR into its
major constituent components (many of which have yet to be
fabricated) and build up a total capital cost estimate using a
combination of authors judgments and consultation with component
vendors (e.g. [26]). SMR vendors are conducting more robust
bottom-up cost analyses, but their data are proprietary. Given that
the size of the operating staff and maintenance plans, among other
things required to deploy SMR plants of various sizes and
configurations, have yet to be determined by vendors, let alone
approved by any regulator, the few existing estimates of operating
and maintenance (O&M) costs are almost entirely based on
conjecture. In table 2 below, we list some existing estimates of
SMR overnight cost from the literature.
Table 2. Some existing estimates of SMR overnight cost, adjusted
to 2012 dollars.
No. Year of estimate Source Overnight cost
($/kWe) 1 2009 IAEA Generic SMR [25] 4,200 2 2010 Energy Policy
Institute: Typical SMR [27] 5,200 3 2010 Electric Power Research
Institute: Generic estimate [28] 5,000 5,400 4 2011 Nuclear Energy
Agency: 4 PWR-335 [29] 4,900 5,300 5 2011 Nuclear Energy Agency: 5
PWR-125 [29] 6,800 8,300 6 2012 American Security Project: 100MW
plant [30] 2,500 7 2012 Energy Policy Institute: Typical SMR [31]
6,100 8 2012 Anadon et al., expert elicitation, SMR cost in 2030
[32] 1,000 16,000
In a previous paper [4], we ran an expert elicitation in order
to improve on the existing estimates of
SMR capital cost. We argued that, when done properly, expert
elicitations can complement [the] approaches [mentioned
earlier].
We sat down with sixteen experts working directly or indirectly
on SMR development, including fifteen experts who worked for
nuclear technology vendors (as employees or contractors) and asked
them for their assessment of the overnight cost of reactor
deployment scenarios that involved a Gigawatt-scale current
generation LWR and two integral light water SMRs. We developed
technical descriptions of the two SMRs, a 45MWe unit and a 225MWe
unit, based on publicly available data. Table 3 below outlines four
of the scenarios we developed for the experts to analyze.
Table 3. Four hypothetical nuclear reactor deployment scenarios
posited to our experts. Number and type of
reactors on the same site Individual reactor
capacity (MWe) Total plant capacity
(MWe) Scenario 1 1 typical Gen III+ PWR 1,000 1,000 Scenario 2 1
light water SMR 45 45 Scenario 3 5 light water SMRs 45 225
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Scenario 4 1 light water SMR 225 225 We defined overnight cost
as the cost in 2012 dollars of engineering, procurement, and
construction (excluding owners cost) and assumed that the plants
in question were Nth-of-a-kind (NOAK). Other assumptions were made
to craft a consistent U.S.-centric scenario; for more details,
please consult [4]. For individual experts estimates of the
overnight cost of each scenario, please consult table C1 in
appendix C.
As well as asking questions about overnight capital cost, we
asked experts to estimate the construction duration of each of the
single-unit plants (scenarios 1, 2, and 4 in Table 4 above).
Construction duration was defined as the length of time from the
pouring of first safety concrete to plant commissioning. There was
consensus that the large reactor plant scenario 1 would require a
construction duration of five years at NOAK. Integral light water
SMRs were generally thought to require three years at NOAK. Table
C2 in appendix C summarizes expert responses to this question. 2.
Materials and methods 2.1. Building a construction schedule for the
four deployment scenarios
We constructed a cost schedule based on the Update on the Cost
of Nuclear Power and, after reproducing the results of the MIT
study [11], we use the data in tables C1 and C2 to generate
estimates of the cost of each of the four scenarios.
Table 4 lists some of the parameters used in constructing the
cost schedules. Note how we retain some of the values used in the
MIT study for the purpose of comparing our results to existing
estimates. This is especially true where no better information on
which to update the existing data exists. For our baseline
scenario, we adopt a weighted average cost of capital (WACC) of
10%, a heat rate of 10,400 BTU/kWh, and a 37% tax rate the same
assumptions made in the MIT report [11]. We change MITs capacity
factor from 85% to 90% and the lifetime of the plant from 40 to 60
years to reflect the fact that Gen III+ builds are designed to
operate at these higher capacity factors and for this extended time
period. The construction duration for the conventional reactor is
modeled as a five-year schedule, with 10% of the construction
performed in each of the first and fifth years, 25% of the
construction completed in each of the second and fourth years, and
30% of the construction completed in year 3. This implies an
S-shaped construction profile. The single-unit SMR plants take
three years to build; the capital spent is spread out evenly among
the years. The multi-module SMR plant (scenario 3) takes five years
to build; the capital is spread out evenly among the years. Table
4. Parameters used to calculate the LCOE for the scenarios under
investigation. See section 5.2 and
the supplementary materials for an analysis of the sensitivity
of LCOE to some of these parameters. Variable (Units) Scenario 1
Scenario 2 Scenario 3 Scenario 4
Capacity (MWe)
1,000 45 225 225
Capacity factor (%)
90 90 90 90
Construction duration (years)
5 3 5 3
Heat rate (BTU/kWh)
10,400 10,400 10,400 10,400
Overnight cost ($/kWe)
Data derived from expert elicitations (table C1)
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Incremental cap. Cost ($/kWe)
1% of overnight cost
Fixed O&M cost ($/kWe/year)
61 61 122 61 122 61 122
Var. O&M cost (mills/kWh)
0.46 0.46 0.92 0.46 0.92 0.46 0.92
Fuel costs ($/mmBTU)
0.68 0.68 0.68 0.68
Waste fee ($/kWh)
0.001 0.001 0.001 0.001
Decommissioning costs ($)
Calculated from Code of Federal Regulations
O&M real escalation (%)
1 1 1 1
Fuel real escalation (%)
0.5 0.5 0.5 0.5
Tax rate (%)
37 37 37 37
WACC (%)
10 10 10 10
Lifetime (years)
60 60 60 60
The overnight capital costs were derived from each individual
experts distribution, and the
incremental capital cost was calculated from the overnight cost.
The resulting incremental capital cost figures, especially for the
single-unit SMR plants, may be too low. However, SMR vendors
promise that these designs will require less maintenance. In any
event, absent more information about how reliable these will be,
there exists no basis on which we can update MITs estimates.
Similarly, because we never asked for O&M cost estimates in our
elicitation procedure, the values used in our model were updated
versions of those used by MIT. The scaling was done using the
consumer price index.
Rounding out our discussion of the remaining parameters in table
4, fuel costs were taken from the Nuclear Energy Institutes 2011
estimate of delivered nuclear fuel cost [33], the waste fee is set
by statute, and the decommissioning costs were calculated using the
Code of Federal Regulations (CFR) current decommissioning funding
allowance (DFA) requirements. 2.2 Computing LCOE We used an
application of Equation 1 shown in section 2.2 to compute an
average cost of electricity, which is the ratio between the
discounted after-tax cash flows (the numerator in equation 2) and
the discounted energy output: = ! + 1 & !!!!"## !!!!"#$%!!!!
!"#$"# !!!!"# ! !!!!"# !!!!"## ! !!!"#$%!!!!!!"#$%! (2)
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Here, is the weighted average cost of capital; !"# is the rate
of inflation; !"# is the expected rate of taxation; (in kWh) is the
annual electricity output, which is computed by multiplying the
plant capacity S (in kWe) by the capacity factor and by 8,760; and
!!"#$%&'!%("# is the construction cost in year (in dollars per
kWe, and is a function of construction duration and schedule).
Since different types of plants have different construction
profiles, we included these explicitly in the LCOE estimate, as
table 4 above shows. While capital costs are incurred in the
initial year, electricity generation only starts once the
construction ends: tconst is the difference between the year in
which construction begins and the first year the plant generates
power. Thus, n+tconst is the last year of plant operation.
!!"#$"%&'(&)* is the depreciation amount in year (in
dollars). Our depreciation schedule follows the Modified
Accelerated Cost Recovery System, as per IRS regulations for large
power plant projects. !!&! is the cost of operating and
maintaining the plant in year (in dollars). This is composed of:
!"" Incremental capital cost (in dollars per kWe per year) !"#$%%
Decommissioning cost (in dollars) when t = n+tconst !"#$&!
Fixed O&M cost (in dollars per kWe per year) !"#$&!
Variable O&M cost (in dollars per kWh) !"#$ Fuel cost (in
dollars per mmBTU) !"#$% Waste fee (in dollars per kWh) All these
costs are subject to inflation and real cost escalations, except
the waste fee, which is fixed by statute. Equation 3 below presents
the components of the O&M cost variable:
(3) !!&! = !"" + !!"#$%% 1+ !"# !+ !"#$&! + !"#$&!
1+ !&! 1+ !"# !+ !"#$% + !"#$ 1+ !"#$ 1+ !"# ! Three of the
variables in Equation 3 were not defined above. These are !&!,
which is the percentage of O&M cost real escalation; , which is
the plants heat rate (in BTU/kWh); and !"#$, which is the
percentage of fuel cost real escalation. 3. Results and
discussion
Figure 2 below shows the levelized cost of electricity for the
four scenarios, using the estimates of individual experts. All
values are in 2012 dollars.
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Figure 2. Using individual experts overnight cost estimates, we
calculate the LCOE in 2012 $/MWh of (1) a 1,000MWe Gen III+ reactor
plant, (2) a 45MWe integral light water SMR plant, (3) a
five-module 45MWe light water SMR plant, and (4) a 225 MWe light
water SMR plant. WACC = 10%. Uncertainty ranges are provided for
each sub-component of total system LCOE.
There is no consensus among our experts regarding the overnight
cost of either the large reactor or the three SMR scenarios.
Naturally, given nuclear powers intensive capital requirements, the
estimates of levelized cost therefore span a wide range. For the
large plant, median levelized cost estimates range from $56 to $120
per MWh. Five of the sixteen estimates (K, M, N, O, and P) suggest
a median LCOE greater than $100 per MWh for the large reactor
plant; only two (A and B) suggest an LCOE less than $80 per MWh.
The capital intensiveness of nuclear power is clear from figure 2:
levelized capital cost accounts for anywhere from around 60% to 80%
of total system levelized cost in scenario 1. Eight of the sixteen
experts have median overnight cost estimates within 10% of the
median overnight cost estimate of the aggregated expert
distributions for this scenario.
The wide range of SMR overnight cost estimates elicited from the
experts leads to a wide range of levelized cost estimates for these
scenarios too. Median estimates of system levelized cost range from
$77 to $240 per MWh for scenario 2, with levelized capital cost
again accounting for around 60% to 80% of system levelized cost.
Twelve of the sixteen median estimates suggest a LCOE greater than
$100 per MWh. Estimates of the median overnight cost vary
considerably, with only one experts median overnight cost estimate
falling within 10% of the median overnight cost estimate of the
aggregated expert distributions for this scenario. When co-locating
five 45MWe SMRs on one site (scenario 3), median estimates of total
levelized cost range from $81 to $230 per MWh. Levelized capital
cost accounts for around 65% to 80% of total system levelized cost
in this scenario, and five of the sixteen experts median overnight
cost estimates fall within 10% of the median overnight cost
estimate of the aggregated expert distributions for this
scenario.
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Although the overnight cost estimates of this scenario are
generally lower than those of scenario 2, we assumed that it takes
five years for the staggered construction of these five co-located
units to be completed, compared with three years for scenario 2.
Under current regulations, it is improbable that modules could be
commissioned while adjacent modules remain under construction.
Innovative construction-operation interfaces, if approved by the
regulator, might change the economics of such deployments. Despite
the longer construction duration, which leads to a delay in the
initiation of the revenue stream, these units still have a LCOE
lower than that of scenario 2, thanks to the economies of scale
associated with the co-location of multiple modules on the same
site, leading to lower overnight cost estimates in our experts
judgment.
The 225MWe SMR in scenario 4 generates estimates of total system
levelized cost that are lower than those of the other SMR
scenarios, and only slightly higher than for the large reactor.
Despite its shorter construction duration (three vs. five years),
its higher overnight cost still puts it at a disadvantage relative
to the large reactor. Median estimates for scenario 4s total system
levelized cost range from $65 to $120 per MWh. Seven of the sixteen
experts have median overnight cost estimates within 10% of the
overnight cost estimate of the aggregated expert distributions for
this scenario.
To generate one estimate for each reactor type, we aggregate the
assessments of the sixteen experts, assigning equal weights to
each. Table 5 below summarizes our results: Table 5. Range of LCOE
estimates for the four nuclear power plant deployment scenarios,
aggregating the judgments of sixteen experts, each of whom is
assigned equal weight.
Scenario Mean
overnight cost ($/kWe)
WACC; lifetime (years)
Levelized cost of energy ($/MWh)
5th perc. 50th perc. 95th perc. 1: 1 1,000MWe 4,900 10%; 60 82
91 99 2: 1 45MWe 8,500 10%; 60 121 138 163 3: 5 45 = 225MWe 6,900
10%; 60 106 124 147 4: 1 225MWe 5,300 10%; 60 82 95 109
The median LCOE estimate for the Gigawatt scale reactor is $91
per MWh. The small SMRs have
a higher levelized cost. Locating one small (45MWe) SMR on a
site will yield an LCOE of $139 per MWh (median estimate), with the
90th confidence interval ranging from $123 to $158 per MWh.
Locating five small units on a site would be less expensive, owing
to the lower overnight cost distribution. This despite the longer
construction duration (five instead of three years) and the
assumption that the plant can only be commissioned once all five
units are in place. Again, scenario 4, a plant consisting of a
single 225MWe SMR, yields only a very slightly higher LCOE estimate
than the large reactor. Although its overnight cost is greater than
the large plant, we assume that it is brought online two years
faster than the large plant, generating a revenue stream sooner.
The shorter construction schedule fails to neutralize the premium
associated with the SMRs higher overnight cost.
We conducted a sensitivity analysis on these results. Please
consult appendices D and F for figures and tables demonstrating the
effects of varying the WACC and the lifetime of the plants on total
system levelized cost, and for a figure comparing these scenarios
to alternative methods of electricity generation (figure F1).
In figure 3, we compare the distribution of total system
levelized costs generated in this paper with a distribution of U.S.
electricity prices in 2011 [34]. All prices are in 2012 dollars.
The distributions for the four plants represent the aggregate of
expert assessments of overnight cost, along with the uncertainties
in other LCOE parameters reported in table 4. The distribution of
U.S. electricity prices takes statewide average prices across all
sectors, weighted by volume of retail sales in each state. Although
the LCOE distributions span a broad range, average electricity
prices in some U.S. states are above the total system levelized
costs for SMRs. Average electricity prices in California, New York,
and Alaska, rounded to two significant figures, are $130, $150, and
$160 per MWh, respectively. Hawaiis
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electricity is the most expensive of any state, with an average
price of almost $290 per MWh. SMRs, even at the high capital costs
envisioned by some of our experts, might yet find viable
applications.
Figure 3. Comparing the distribution of total system levelized
costs generated in this paper with U.S. electricity price in 2011
across all sectors. Even at the upper end of our estimate of SMR
levelized costs, these reactors may find some economically viable
applications in the U.S. All figures are in 2012 dollars.
As figure 3 shows, scenarios involving the smaller SMR already
cater to the tail end of the distribution of electricity prices in
the U.S. Five-sixth of total electricity sales in the U.S. cost
consumers less than $130/MWh. For the median LCOE of the
Gigawatt-scale plant to hit that target price, the median overnight
cost of the aggregated expert distributions would have to reach
$7,600 per kWe as opposed to the current estimate of $4,900, an
increase of more than half. The 225MWe SMR has only a slightly
smaller margin for the LCOE to reach $130/MWh. However, the smaller
SMR has no such margin: if sited as a stand-alone unit, its median
LCOE is already higher than $130/MWh; if five units are co-sited,
the margin is negligible: around 5% ($7,200 per kWe versus
$6,900).
We plug existing estimates of SMR LCOE those shown in table 2
above into our cost schedule to determine where our results stand
relative to the existing literature. Table 6 summarizes the results
of this exercise:
Table 6. Estimates of SMR LCOE generated using overnight cost
estimates from the literature. We assume that the one-unit plants
take 3 years to deploy, similar to scenario 4, while the
multi-module
deployments take 5 years, similar to scenario 3. See table 4 for
other assumptions made in these scenarios.
No. Year of estimate Source LCOE ($/MWh)
[5th, 50th, 95th] 1 2009 IAEA Generic SMR [25] 77, 81, 85 2 2010
Energy Policy Institute: Typical SMR [27] 90, 94, 98 3 2010
Electric Power Research Institute: Generic estimate [28] 87, 94,
101 4 2011 Nuclear Energy Agency: 4 PWR-335 [29] 92, 99, 106 5 2011
Nuclear Energy Agency: 5 PWR-125 [29] 120, 135, 151 6 2012 American
Security Project: 100MW plant [30] 53, 57, 62
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Levelized cost estimates of light water small modular
reactors
12
7 2012 Energy Policy Institute: Typical SMR [31] 102, 107,
111
4. Conclusions
In this paper, we have sought to expand our understanding of
where the economic argument for SMRs stands. We believe that
controlling construction duration, while perhaps important from a
financial risk management perspective, is not as important a factor
as controlling overnight capital cost, given how sensitive the
levelized cost is to changes in this parameter. Given the high
price of electricity in certain locations, it is possible to
construct an economically viable argument for deploying SMRs for
some applications, though their deployment may come at a premium
compared with other technologies.
As appendix G in the supplementary materials argues, however,
there are costs, incurred by both SMRs and alternative energy
technologies, that the LCOE fails to account for, including
potential environmental damage, security of fuel supply, and
various socio-political, geo-political, and institutional
constraints that may tip the decision in favor of one technology or
another. The strategic business case for SMRs rests on factory
fabrication, shorter construction schedules, and, for economies of
volume to materialize, the existence of an international export
market or a large domestic order book. Whether any of these, let
alone all three, will materialize remains to be seen.
Acknowledgements Ahmed Abdulla was supported by the Crown Princes
International Scholarship Program, Bahrain, and by the Steinbrenner
Institute at Carnegie Mellon. Ins Azevedo was supported by the
center for Climate and Energy Decision Making (SES-0949710) through
a cooperative agreement between the National Science Foundation and
Carnegie Mellon University, and by a grant from the John D. and
Catherine T. MacArthur Foundation (12-101167-000-INP). We would
also like to thank the Carnegie Mellon Electricity Industry
Center.
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