Nuclear power produces a significant amount of energy compared to coal, offering a more efficient and environmentally conscious option. At COMPARE.EDU.VN, we help you understand the energy yield comparison, enabling informed decisions about electricity generation. By comparing nuclear energy and coal, we shed light on their energy output, costs, and environmental impacts, helping you to evaluate the benefits and drawbacks of each energy source.
1. What is the Levelized Cost of Electricity (LCOE) for Nuclear Power Compared to Coal?
The levelized cost of electricity (LCOE) is the total cost to build and operate a power plant over its lifetime divided by the total electricity output dispatched from the plant over that period. Nuclear power plants, while expensive to build, are relatively cheap to run. In many places, nuclear energy is competitive with fossil fuels as a means of electricity generation. Waste disposal and decommissioning costs are usually fully included in the operating costs.
According to the OECD Nuclear Energy Agency’s (NEA’s) calculation, the overnight cost for a nuclear power plant built in the OECD rose from about $1900/kWe at the end of the 1990s to $3850/kWe in 2009. In the 2020 edition of the Projected Costs of Generating Electricity joint report by the International Energy Agency (IEA) and the NEA, the overnight costs ranged from $2157/kWe in South Korea to $6920/kWe in Slovakia. For China, the figure was $2500/kWe. LCOE figures assuming an 85% capacity factor ranged from $27/MWh in Russia to $61/MWh in Japan at a 3% discount rate, from $42/MWh (Russia) to $102/MWh (Slovakia) at a 7% discount rate, and from $57/MWh (Russia) to $146/MWh (Slovakia) at a 10% discount rate.
2. How Do Fuel Costs Affect the Economics of Nuclear Power and Coal?
Fuel costs for nuclear plants are a minor proportion of total generating costs, though capital costs are greater than those for coal-fired plants and much greater than those for gas-fired plants. The share of fuel expenditures on total costs varies largely between technologies: whereas nuclear plants are characterized by high investment but relatively low fuel costs, this ratio is typically reversed in the case of natural gas plants.
Low fuel costs have from the outset given nuclear energy an advantage compared with coal and gas-fired plants. Uranium, however, has to be processed, enriched, and fabricated into fuel elements, accounting for about half of the total fuel cost.
The OECD-NEA has calculated that the LCOE of nuclear plants is only slightly affected by a 50% change in fuel costs (in either direction) due to their high fixed-to-variable cost ratio. Comparatively, the economics of natural gas (CCGT) and coal plants are more sensitive to changes in fuel cost, with LCOEs changing by about 7% and 4% respectively for every 10% change of fuel price.
3. What are the System Costs Associated with Nuclear Power and Coal Compared to Intermittent Renewables?
System costs for nuclear power (as well as coal and gas-fired generation) are very much lower than for intermittent renewables. The system cost is minimal with dispatchable sources such as nuclear, but becomes a factor for intermittent renewables whose output depends on occasional wind or solar inputs.
The integration of intermittent renewable supply on a preferential basis despite higher unit cost creates significant diseconomies for dispatchable supply, compromising security of supply and escalating costs. At anything approaching a 40% share of electricity being from intermittent renewable energy, the capital cost component of power from conventional thermal generation sources increases substantially as their capacity factor decreases – the utilization effect.
A 2019 OECD Nuclear Energy Agency study found that the integration of large shares of intermittent renewable electricity is a major challenge for the electricity systems of OECD countries and for dispatchable generators such as nuclear. Grid-level system costs for intermittent renewables are large ($8-$50/MWh) but depend on country, context, and technology (onshore wind < offshore wind < solar PV). Nuclear system costs are $1-3/MWh.
4. How Do External Costs Influence the Competitiveness of Nuclear Power Compared to Coal?
External costs are not included in the building and operation of any power plant, and are not paid by the electricity consumer, but by the community generally. The external costs are defined as those actually incurred in relation to health and the environment, and which are quantifiable but not built into the cost of the electricity.
Unlike nuclear energy, some energy sources dispose of wastes to the environment or have health effects which are not costed into the product. These implicit subsidies, or external costs as they are generally called, are nevertheless real and usually quantifiable and are borne by society at large. Their quantification is necessary to enable rational choices between energy sources. Nuclear energy provides for waste management, disposal, and decommissioning costs in the actual cost of electricity (i.e., it has internalized them), so that external costs are minimized.
The European Commission launched a project, ExternE, in 1991 in collaboration with the US Department of Energy to put plausible financial figures against damage resulting from different forms of electricity production for the entire EU. With nuclear energy, the risk of accidents is factored in along with high estimates of radiological impacts from mine tailings (waste management and decommissioning being already within the cost to the consumer). Nuclear energy averages 0.4 euro ¢/kWh, much the same as hydro; coal is over 4.0 ¢/kWh, and gas ranges 1.3-2.3 ¢/kWh. If these costs were in fact included, the EU price of electricity from coal would double and that from gas would increase 30%. These are without attempting to include the external costs of global warming.
5. What is the Role of Nuclear-Specific Taxes in the Economics of Nuclear Power?
Nuclear-specific taxes are levied in several EU countries. These taxes can impact the economic viability of nuclear power plants, especially in deregulated markets where operators cannot pass on the increased costs to consumers.
For example, in 2014 Belgium raised some €479 million from a €0.005/kWh tax. In July 2015, Electrabel agreed to pay €130 million tax for the year 2016, alongside a fee for the operating lifetime extension of Doel 1&2 (€20 million/yr). From 2017 onwards, a formula applies for calculating tax contributions, with a minimum of €150 million per year.
In 2000 Sweden introduced a nuclear-specific tax on installed capacity, which gradually increased over time; in 2015, the tax raised about €435 million. In June 2016, the Swedish government, amid growing concerns over the continued viability of existing plants, agreed to phase out the tax on nuclear power from 2017 onwards.
6. How Do Electricity Markets Affect the Economic Viability of Nuclear Power Compared to Coal?
Electricity markets rely on direct or private costs at the plant to dispatch generators to meet varying real-time demand for power. Those costs determine the merit order of dispatch. However, this may not reflect the externalities of the generators participating in the market and may result in market failure.
Nuclear power plants provide a range of benefits to society that are not compensated in the commodity electricity market revenue stream. These public benefits include emission-free electricity, long-term reliable operation, system stability, system fuel diversity and fuel price hedging, as well as economic benefits from employment.
Some US states make zero-emission credit (ZEC) payments to nuclear generation to reward the positive externalities. ZECs are similar to the production tax credits applying to wind power, though lower, but are based directly on estimated emission benefits. They mean that the value of nuclear electricity can be greater than the LCOE cost of producing it in markets strongly influenced by low gas prices and subsidies on intermittent wind generation which has market priority. Without the ZEC payments, nuclear operation may not be viable in this situation.
7. What are the Projected Costs of Generating Electricity from Nuclear Power and Coal?
The 2020 edition of the OECD study on Projected Costs of Generating Electricity showed that the range for the levelized cost of electricity (LCOE) varied much more for nuclear than coal or CCGT with different discount rates, due to it being capital-intensive. The nuclear LCOE is largely driven by capital costs. At a 3% discount rate, nuclear was substantially cheaper than the alternatives in all countries, at 7% it was comparable with coal and still cheaper than CCGT, and at 10% it was comparable with both.
Projected nuclear LCOE costs for ‘nth-of-a-kind’ plants completed from 2025, $/MWh
| Country | At 3% discount rate | At 7% discount rate | At 10% discount rate |
|---|---|---|---|
| France | 45.3 | 71.1 | 96.9 |
| Japan | 61.2 | 86.7 | 112.1 |
| South Korea | 39.4 | 53.3 | 67.2 |
| Slovakia | 57.6 | 101.8 | 146.1 |
| USA | 43.9 | 71.3 | 98.6 |
| China | 49.9 | 66.0 | 82.1 |
| Russia | 27.4 | 42.0 | 56.6 |
| India | 48.2 | 66.0 | 83.9 |
8. How Do Advanced Reactors Impact the Future Cost Competitiveness of Nuclear Power?
Advanced nuclear technologies represent a dramatic evolution from conventional reactors in terms of safety and non-proliferation. A peer-reviewed study in 2017 compiled extensive data from eight advanced nuclear companies that are actively pursuing commercialization of plants of at least 250 MWe in size. At the lower end of the potential cost range, these plants could present the lowest cost generation options available, making nuclear power effectively competitive with any other option for power generation. LCOE ranged from $36/MWh to $90/MWh, with an average of $60/MWh.
The companies included in the study were Elysium Industries, GE Hitachi (using only publicly available information), Moltex Energy, NuScale Power, Terrestrial Energy, ThorCon Power, Transatomic Power, and X‐energy.
9. What Financing Options are Available for New Nuclear Power Plants?
There are a range of possibilities for financing, from direct government funding with ongoing ownership, vendor financing (often with government assistance), utility financing, and the Finnish Mankala model for cooperative equity. Some of the cost is usually debt financed. The models used will depend on whether the electricity market is regulated or liberalized.
Apart from centrally-planned economies, many projects have some combination of government financial incentives, private equity, and long-term power purchase arrangements. The increasing involvement of reactor vendors is a recent development.
10. What are the Economic Implications of Operating Specific Nuclear Power Plants?
Studies on the economics of particular generating plants in their local context provide valuable insights. For example, a study on the R.E. Ginna Nuclear Power Plant in the US analyzed the impact of the 580 MWe PWR plant’s operations through the end of its 60-year operating license in 2029. It generates an average annual economic output of over $350 million in western New York State and an impact on the U.S. economy of about $450 million per year. Ginna employs about 700 people directly, adding another 800 to 1,000 periodic jobs during reactor refueling and maintenance outages every 18 months.
Similarly, a study on the Economic Impacts of the Indian Point Energy Center showed that it annually generated an estimated $1.6 billion in the state and $2.5 billion across the nation as a whole. This included about $1.3 billion per year in the local counties around the plant.
11. How Do System Costs Affect the Future Cost Competitiveness of Nuclear Power?
A 2019 report from the OECD’s Nuclear Energy Agency probes the system cost question more fully. It works within a very tight 50g CO2 per kWh emission constraint for electricity, as required to achieve the targets to combat climate change under the 2016 Paris Agreement. Nuclear power is the mainstay meeting base-load demand in the 98 GWe base case model system. The report points out that the variability of wind and solar PV production imposes costly adjustments on the residual system, and these system costs are currently not properly recognized in any electricity market.
System costs rise from less than $10/MWh for 10% wind and solar to more than $50/MWh for a 75% wind/solar share, or a 50% share under some circumstances. The most important categories of system costs of VREs are increased outlays for distribution and transmission due to their small unit size and distance from load centers, balancing costs to prepare for unpredictable changes in wind speed and solar radiation and, perhaps, most importantly, technologies and costs for organizing reliable supplies through the residual system during the hours when wind and sun are not fully available or not available at all.
12. What is the Role of Government Support in the Economics of Nuclear Power?
Government support plays a crucial role in the economics of nuclear power, particularly in mitigating the risks associated with high capital costs and long construction periods. Government support can take various forms, including direct funding, vendor financing, and long-term power purchase agreements. In regulated markets, governments can ensure cost recovery and provide incentives for nuclear power plants, while in deregulated markets, government support can help level the playing field and make nuclear power more competitive with other energy sources.
For instance, some US states offer zero-emission credits (ZECs) to nuclear generators to reward the positive externalities of emission-free electricity. These ZECs help nuclear plants remain economically viable in markets where low gas prices and subsidized intermittent renewable energy sources dominate.
13. How Does the Consideration of Decommissioning and Waste Disposal Costs Impact Nuclear Power’s Economic Assessment?
In assessing the economics of nuclear power, decommissioning and waste disposal costs are fully taken into account. These costs are typically included in the operating costs of nuclear power plants, ensuring that they are factored into the overall cost of electricity. Decommissioning costs are about 9-15% of the initial capital cost of a nuclear power plant. When discounted over the lifetime of the plant, they contribute only a few percent to the investment cost and even less to the generation cost.
The inclusion of these costs demonstrates that nuclear energy internalizes its long-term environmental liabilities, unlike some other energy sources that may not fully account for the external costs of waste disposal.
14. What is the Impact of Varying Uranium Prices on the Fuel Costs of Nuclear Power?
Uranium has the advantage of being a highly concentrated source of energy that is easily and cheaply transportable. The quantities needed are very much less than for coal or oil. One kilogram of natural uranium will yield about 20,000 times as much energy as the same amount of coal. It is therefore intrinsically a very portable and tradeable commodity.
Doubling the uranium price (say from $25 to $50 per lb U3O8) takes the fuel cost up from 0.50 to 0.62 ¢/kWh, an increase of one-quarter, and the expected cost of generation of the best US plants from 1.3 ¢/kWh to 1.42 ¢/kWh (an increase of almost 10%). So while there is some impact, it is minor, especially in comparison with the impact of gas prices on the economics of gas generating plants. In these, 90% of the marginal costs can be fuel.
15. How Does Nuclear Power Contribute to Energy Security and Reliability Compared to Coal?
Nuclear power plants provide a reliable, base-load source of electricity, contributing to energy security by reducing dependence on fossil fuels. Nuclear power plants have high capacity factors and can operate continuously for extended periods, unlike intermittent renewable sources such as wind and solar.
Providing incentives for long-term, high-capital investment in deregulated markets driven by short-term price signals presents a challenge in securing a diversified and reliable electricity supply system. Nuclear power plants offer a hedge against fuel price volatility and can enhance grid stability. The stability and reliability of nuclear power make it a valuable component of a diversified energy portfolio.
16. What are the Potential Cost Savings with Reprocessing of Used Nuclear Fuel?
If used fuel is reprocessed and the recovered plutonium and uranium is used in mixed oxide (MOX) fuel, more energy can be extracted. The costs of achieving this are large, but are offset by MOX fuel not needing enrichment and particularly by the smaller amount of high-level wastes produced at the end. Seven UO2 fuel assemblies give rise to one MOX assembly plus some vitrified high-level waste, resulting in only about 35% of the volume, mass, and cost of disposal.
The ‘back end’ of the fuel cycle, including used fuel storage or disposal in a waste repository, contributes up to 10% of the overall costs per kWh, or less if there is direct disposal of used fuel rather than reprocessing.
17. How Do Historical Construction Costs of Nuclear Power Reactors Compare Across Different Countries?
A 2016 study by The Breakthrough Institute on Historical construction costs of global nuclear power reactors presented new data for overnight nuclear construction costs across seven countries. While several countries, notably the USA, show increasing costs over time, other countries show more stable costs in the longer term, and cost declines over specific periods in their technological history.
One country, South Korea, experiences sustained construction cost reductions throughout its nuclear power experience. The variations in trends show that the pioneering experiences of the USA or even France are not necessarily the best or most relevant examples of nuclear cost history. These results showed that there is no single or intrinsic learning rate expected for nuclear power technology, nor any expected cost trend. How costs evolve appears to be dependent on several different factors.
18. What are the Key Components of Plant Operating Costs for Nuclear Power?
Operating costs include the cost of fuel and of operation and maintenance (O&M). Fuel cost figures include used fuel management and final waste disposal. O&M costs account for about 66% of the total operating cost. O&M may be divided into ‘fixed costs’, which are incurred whether or not the plant is generating electricity, and ‘variable costs’, which vary in relation to the output.
Decommissioning costs are about 9-15% of the initial capital cost of a nuclear power plant, but when discounted over the lifetime of the plant, they contribute only a few percent to the investment cost and even less to the generation cost.
19. How Do Carbon Emission Costs Affect the Competitiveness of Nuclear Power Compared to Coal?
As fossil fuel generators begin to incur real costs associated with their impact on the climate, through carbon taxes or emissions trading regimes, the competitiveness of new nuclear plants will improve. This is particularly so where the comparison is being made with coal-fired plants, but it also applies, to a lesser extent, to gas-fired equivalents.
The likely extent of charges for carbon emissions has become an important factor in the economic evaluation of new nuclear plants, particularly in the EU where an emissions trading regime has been introduced but which is yet to reflect the true costs of carbon emissions.
20. What Role Do Capacity Mechanisms Play in Supporting Nuclear Power’s Economic Viability?
As the scale of intermittent generating capacity increases, more significant measures will be required. The establishment and extension of capacity mechanisms, which offer payments to generators prepared to guarantee supply for defined periods, are now under serious consideration within the EU. Capacity mechanisms can in theory provide security of supply to desired levels but at a price that might be high.
Investors in conventional plants designed to operate intermittently will face low and uncertain load factors and will therefore demand significant capacity payments in return for the investment decision. Challenges for EU power market integration are expected to result from differences between member state capacity mechanisms.
Making an informed decision about energy sources requires a detailed and objective comparison. At COMPARE.EDU.VN, we provide comprehensive comparisons of various energy production methods, including nuclear power and coal. Our analyses cover energy output, costs, environmental impact, and more, empowering you to make decisions that align with your energy needs and environmental values. Explore our resources at compare.edu.vn and gain the insights you need to navigate the complex energy landscape. Contact us at 333 Comparison Plaza, Choice City, CA 90210, United States or Whatsapp: +1 (626) 555-9090.
