The Role of Nuclear Power in the New Competitive Era

Abstract

As power generators around the world grapple with the challenges of deregulation and competition, there are those who suggest that ownership of an operating nuclear power plant may prove to be a liability. This is not the case for most plants. On the contrary, nuclear facilities that perform well will be important assets in competitive markets, whether as sources of competitively priced electricity, or as strategic factors in mergers and acquisitions. And, as the world focuses renewed attention on global climate change and the reduction of greenhouse gas emissions, nuclear power's significant environmental benefits further enhances its continued viability.

The emergence of competitive markets will create a period of tremendous opportunity and enhanced value for nuclear plants. Nuclear plants, large coal plants, and hydro are the only types that can produce power at the bus bar with production costs close to one cent per kilowatt-hour. The challenge for all nuclear plants is to reduce costs and improve performance in order to improve their net earnings stream. Prospects for dramatic reductions are very high. In recent years, average nuclear plant performance figures worldwide have improved rapidly and substantially, and average costs are dropping.

How will nuclear plants compare with alternative energy sources in an era of heightened competition? To evaluate nuclear plants in a competitive environment, this paper will look at three key areas: capital costs; operation and maintenance costs; and fuel costs, including spent fuel issues.

The paper will examine innovative strategies to deal with capital or sunk costs such as write-downs through securitization and regional operating companies, and will also focus on best practices in O&M and fuel where all nuclear plants have the potential to move to best in class.

The lessons that every nuclear plant can learn from other plants can contribute significantly to the performance improvement process. What has been learned in the U.S. applies around the world. This paper will point toward specific areas in which innovative approaches to resource sharing and integration of industry capabilities have universal significance.