The Economics of Nuclear Power

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.  In assessing the economics of nuclear power, decommissioning and waste disposal costs are fully taken into account.

Assessing the relative costs of new generating plants utilising different technologies is a complex matter and the results depend crucially on location. Coal is, and will probably remain, economically attractive in countries such as China, the USA and Australia with abundant and accessible domestic coal resources as long as carbon emissions are cost-free. Gas is also competitive for base-load power in many places, particularly using combined-cycle plants, though rising gas prices have removed much of the advantage.
Nuclear energy is, in many places, competitive with fossil fuels for electricity generation, despite relatively high capital costs and the need to internalise all waste disposal and decommissioning costs. If the social, health and environmental costs of fossil fuels are also taken into account, the economics of nuclear power are outstanding.

The cost of fuel
From the outset the basic attraction of nuclear energy has been its low fuel costs compared with coal, oil and gas-fired plants. Uranium, however, has to be processed, enriched and fabricated into fuel elements, and about half of the cost is due to enrichment and fabrication. In the assessment of the economics of nuclear power allowances must also be made for the management of radioactive used fuel and the ultimate disposal of this used fuel or the wastes separated from it. But even with these included, the total fuel costs of a nuclear power plant in the OECD are typically about a third of those for a coal-fired plant and between a quarter and a fifth of those for a gas combined-cycle plant.

In March 2011, the approx. US $ cost to get 1 kg of uranium as UO2 reactor fuel (at current spot uranium price):

Uranium:	8.9 kg U3O8 x $146	US$ 1299
Conversion:	7.5 kg U x $13	US$ 98
Enrichment:	7.3 SWU x $155	US$ 1132
Fuel fabrication:	per kg	US$ 240
Total, approx:		US$ 2769

At 45,000 MWd/t burn-up this gives 360,000 kWh electrical per kg, hence fuel cost: 0.77 c/kWh. 

Fuel costs are one area of steadily increasing efficiency and cost reduction. For instance, in Spain the nuclear electricity cost was reduced by 29% over 1995-2001. This involved boosting enrichment levels and burn-up to achieve 40% fuel cost reduction. Prospectively, a further 8% increase in burn-up will give another 5% reduction in fuel cost.

Uranium has the advantage of being a highly concentrated source of energy which 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.

The fuel's contribution to the overall cost of the electricity produced is relatively small, so even a large fuel price escalation will have relatively little effect (see below). Uranium is abundant.There are other possible savings. For example, 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.