Full Title: Will Low Natural Gas Prices Eliminate the Nuclear Option in the US?
Author(s): Rob Graber and Tom Retson
Publisher(s): EnergyPath Corporation
Publication Date: January 1, 2013
Full Text: Download Resource
Description (excerpt):
This study is intended to compare the cost of electricity from natural gas and nuclear power taking each technology’s inherent risks into account. There is investment risk inherent in both technologies, but from different sources. The risk of nuclear power resides in uncertain capital costs. For natural gas, the risks are from the uncertain forward cost of natural gas and the potential for environmental compliance costs, primarily from the emissions of greenhouse gases (principally CO2). Because of these uncertainties it is more revealing to use risk‐adjusted (probabilistic or stochastic) forecasts of the comparative costs of electricity. These estimates show the probable range of costs for both technologies, given the uncertainties described above. The costs used are the levelized costs of generating electricity (LCOE). The results were obtained using the EnergyPath Market Model (EPMM), which simulates the operation of electric generating plants, in part, to calculate the LCOE (see Appendix A for a description of EPMM). Since the newest technology nuclear plants are designed to be licensed for 60‐year lifetimes, and natural gas generating plants have 30‐year lifetimes, it was necessary to assume that the first gas unit (Unit 1) was retired after 30 years and a second unit (Unit 2) was constructed.