A probabilistic comparison of the investment risks of nuclear power and natural gas-based electricity generating plants has been carried out using a total-lifecycle power plant model. Although the cost of the gas plant (with carbon tax) is found to be slightly cheaper, that choice of fuel carries a far greater cost uncertainty, suggesting a greater long-term investment risk than nuclear power.
An innovative use of real options analysis to capture the value of the substantial flexibility associated with a nuclear plant construction project. This value, which is not uncovered in a standard NPV analysis, arises when the nuclear plant project is seen as a sequence of options. Most important, seen in this way, a nuclear plant project can begin without the need for future power market price and total plant investment certainty, as long as the early project costs do not exceed the “option cost”.
Reprinted with the permission of AACE International, 209 Prairie Ave., Suite 100, Morgantown, WV 25601 USA.
>> NP2010 Texas Gulf Coast Nuclear Feasibility Study
Password to open report is “2010″
As prime contractor to the Texas Institute for the Advancement of Chemical Technology (TIACT), EnergyPath provided the intellectual foundation for this unique and timely project.
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