The cost of the new reactors for Canada

What will the new reactors proposed for Canada cost? That’s very much of a “how long is a string” type of question but I’ll try to give an answer.

The joke used to be that one should multiply by pi any cost estimate given by project proponents.  This just reflects the time honoured tactic to low ball projects to get them approved.

Increases in the prices of raw materials such as steel (40% higher than last year), concrete (50% increase in last two years) and copper (a factor of four in five years) are driving up the costs of all power plants.  

Reactor vendors in sales mode prefer to talk about two numbers namely the price of the electricity their machine will produce and the capital cost per kW (electrical) both are considered more palatable to buyers than the multi-billion dollar price tags that come up at contract signing. 

Personally I find the projected electricity cost approach to be particularly misleading since it depends on a great many factors including the capital cost and others outside the control of the reactor vendors.  Concepts such as Levelized Unit Electricity Cost (LEUC) may be useful for comparing various energy options but for a nuclear station the capital cost dominates.

The unit of dollars per kW (e) can be somewhat more helpful since they it is a way of expressing capital costs especially in this case since the proposed AREVA unit has higher power than its two rivals.  However, there are fixed costs in reactor construction such as environmental assessments, site preparation, licensing, fuel storage, security arrangements and others that don’t necessarily scale with reactor power. It’s better just to look at the prices for reactors already sold.   

AREVA is already constructing two EPR reactors. The EPR reactor at Olkiluoto, Finland is already 25-50% ($1.4-$2.8 billion) over budget – its initial cost was $5.5 billion (3.7 billion euro).  This over run was severe enough to cause serious financial problems for AREVA particularly in 2006. The price for the second EPR at Flamanville, Normandy was $5 billion (3.3 billion). AREVA has also sold two EPR’s to be installed at Taishan, China for $12 billion (8 billion euro). Therefore, the cost of an EPR is in the $5 to 6 billion range, probably nearer the upper number in the range.     

Westinghouse just sold two AP1000 reactors to South Carolina for $9.8 billion ($4.9 billion each). Two more have been sold to Georgia Power at (I assume) a similar price. Westinghouse has also sold AP1000 technology to China to build four reactors for $5.3 billion total but this is not a contract to construct complete reactors. The AP1000 price looks to be about $5 billion.     

In contrast to AREVA and Westinghouse who are constructing their reactor types, the design of the ACR-1000 is not yet completed and the earliest construction start is estimated to be 2012 even if a firm sale were made tomorrow. Thus, not only will AECL be six years behind AREVA and four years behind Westinghouse before starting construction of its first ACR-1000 but also its price can only be estimated on an incomplete design basis. AECL may have some leeway in setting a price, for example, in the price assigned to the heavy water that’s been in storage at LaPrade for up to two decades.  One can argue about how good their estimates might be but the price of an ACR-1000 is determined by a sale with the real cost only known at the end of construction.

Generally, I feel it’s unlikely that the ACR will cost significantly less than its competitors especially since the balance of plant will be roughly similar for all three reactor types. Therefore, I would guess around $5 billion would be a reasonable ballpark estimate. 

To be realistic we also need to consider the first-of-a-kind costs involved in solving the teething problems of new reactor types, including the first environmental assessment, licensing and construction. AREVA has been going through this process with its first two EPR’s and has experienced 25-50% cost overruns particularly on the Finland project. Therefore, it’s fair to estimate similar “learning” costs for the first AP1000 and the first ACR-1000, meaning costs for the first one of either type in the order of $6 to $7 billion or more can be expected.   The learning process for the AP1000 will occur in the four Chinese and four US reactors Westinghouse has already sold.  However, the first reactor of the ACR type will be constructed in Canada. Perhaps the first, even the first two, will be built in New Brunswick. This is a small province which I hope will not have to bear all the learning costs on its own. 

As I’ve stated before, I’m strongly in favour of nuclear power but hyping it by using unreasonably low costs is asking for future trouble.  We need nuclear electricity but we should reconcile ourselves to accepting that it won’t be cheap.

2 Responses to “The cost of the new reactors for Canada”

  1. Don Jones Says:

    Re The cost of new reactors in Canada.

    It’s impossible to come up with a definitive $/kWe construction cost. Installed cost estimates vary between $3000 and $7000/kWe in the US depending on various factors. These cost estimates are for LWRs but would also apply to ACRs since most of the construction materials, construction methods and equipment necessary to make the plant work are similar.

    However when comparing costs between PWRs and ACRs the design differences should be considered. The PWRs use enriched uranium and expensive reactor pressure vessels while the ACR uses lower enrichment levels with simpler fuel fabrication and a much less expensive calandria but also uses expensive heavy water as a moderator. Reactor pressure vessels without the internals and heads could cost over $100 million and the cost of fuel enrichment will be higher for the PWR. Construction material costs (concrete, copper etc) are a small fraction of overall costs so differences, if any, in say reactor building size would have small impact on the cost comparison.

    Although AREVA is going through the learning curve in Finland and France remember Team CANDU has been building units continuously since the early 1980s in different parts of the world. Also the refurbishment work on the Pickering, Bruce and the CANDU 6 reactors has kept a skilled work force in place familiar with CANDU construction, great hands-on training at all levels.

    The major “equivalent” items, then, that will affect the cost comparison are, for the PWR, the cost of the reactor pressure vessel and fuel enrichment/fabrication and for the ACR the cost of lower levels of enrichment, heavy water and the calandria. New processes for heavy water production should bring $/kg costs down.

    All in all the ACR could cost less than a PWR but no figures to prove it. Whatever the cost the method of financing and guarantees will be more important than any small cost differences.

  2. Don Jones Says:

    Re The cost of the new reactors for Canada

    The cost figures for building Generation 3+ nuclear reactors seem to vary between $3,000 and $8,000 per kilowatt electrical. The spread is such that the figures could encompass the first-of-a-kind or the n th build of US style reactors, being built in the US with US dollars. The spread on these figures may not necessarily apply to a Canadian design at the Darlington site.

    The overnight cost (assumes plant is built overnight with no interest charges) can be estimated fairly accurately and it may, or may not, include things like new transmission lines, cooling towers, switchyard, land, and contingency. Thus there could be a wide variation in the cost estimate. The real construction cost depends to a large extent on the interest rate and the construction time period including delays. It also depends on the availability of designers, skilled trades people and having a well oiled supply chain. Material (cement, steel etc) costs are a small part of the total cost.

    The Darlington site for Ontario’s first new reactors already has transmission links to the grid on land owned by Ontario and does not use cooling towers. If AECL’s new ACR-1000 reactor is chosen, in preference to the US and French designs, it will take advantage of a supply chain that has been busy working on recent CANDU build in South Korea, China and Romania and also on the refurbishment of reactors now taking place at Bruce in Ontario and Point Lepreau in New Brunswick. Selection of the Canadian reactor would avoid time consuming bottlenecks in the supply chain since it does not need the huge reactor pressure vessels of competing designs that can only be manufactured in one or two places in the world. Licensing of the familiar Canadian design would also be much quicker.

    Unlike its rivals in France and the US Canada’s nuclear industry has been continuously involved since the mid 1990s in building CANDU 6s and in refurbishment. The ACR-1000 is largely based on the very successful CANDU 6. The most recent three CANDU 6s in South Korea, one in Romania and two in China were built on or under budget and on or ahead of schedule, so this gives confidence in Canada’s ACR-1000 being built on time and on budget, whatever that budget is.

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