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Nuclear reactors' construction costs: The role of lead-time, standardization and technological progress

Author

Listed:
  • Michel Berthélemy

    (CERNA i3 - Centre d'économie industrielle i3 - Mines Paris - PSL (École nationale supérieure des mines de Paris) - PSL - Université Paris Sciences et Lettres - I3 - Institut interdisciplinaire de l’innovation - CNRS - Centre National de la Recherche Scientifique)

  • Lina Escobar Rangel

    (CERNA i3 - Centre d'économie industrielle i3 - Mines Paris - PSL (École nationale supérieure des mines de Paris) - PSL - Université Paris Sciences et Lettres - I3 - Institut interdisciplinaire de l’innovation - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper provides an econometric analysis of nuclear reactor construction costs in France and the United States based on overnight costs data. We build a simultaneous system of equations for overnight costs and construction time (lead-time) to control for endogeneity, using change in expected electricity demand as instrument We argue that the construction of nuclear reactors can benefit from standardization gains through two channels. First, short term coordination benefits can arise when the diversity of nuclear reactors' designs under construction is low. Second, long term benefits can occur due to learning spillovers from past constructions of similar reactors. We find that construction costs benefit directly from learning spillovers but that these spillovers are only significant for nuclear models built by the same Architect-Engineer. In addition, we show that the standardization of nuclear reactors under construction has an indirect and positive effect on construction costs through a reduction in lead-time, the latter being one of the main drivers of construction costs. Conversely, we also explore the possibility of learning by searching and find that, contrary to other energy technologies, innovation leads to construction costs increases

Suggested Citation

  • Michel Berthélemy & Lina Escobar Rangel, 2015. "Nuclear reactors' construction costs: The role of lead-time, standardization and technological progress," Post-Print hal-01523016, HAL.
    • Handle: RePEc:hal:journl:hal-01523016
    DOI: 10.1016/j.enpol.2015.03.015
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    Citations

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    Cited by:

    1. Jeong, Minsoo & You, Jung S., 2022. "Estimating the economic costs of nuclear power plant outages in a regulated market using a latent factor model," Renewable and Sustainable Energy Reviews, Elsevier, vol. 166(C).
    2. Batini, Nicoletta & Di Serio, Mario & Fragetta, Matteo & Melina, Giovanni & Waldron, Anthony, 2022. "Building back better: How big are green spending multipliers?," Ecological Economics, Elsevier, vol. 193(C).
    3. Portugal-Pereira, J. & Ferreira, P. & Cunha, J. & Szklo, A. & Schaeffer, R. & Araújo, M., 2018. "Better late than never, but never late is better: Risk assessment of nuclear power construction projects," Energy Policy, Elsevier, vol. 120(C), pages 158-166.
    4. Lovering, Jessica R. & Nordhaus, Ted & Yip, Arthur, 2017. "Apples and oranges: Comparing nuclear construction costs across nations, time periods, and technologies," Energy Policy, Elsevier, vol. 102(C), pages 650-654.
    5. Knapp, Vladimir & Pevec, Dubravko, 2018. "Promises and limitations of nuclear fission energy in combating climate change," Energy Policy, Elsevier, vol. 120(C), pages 94-99.
    6. Sascha Samadi, 2016. "A Review of Factors Influencing the Cost Development of Electricity Generation Technologies," Energies, MDPI, vol. 9(11), pages 1-25, November.
    7. Samadi, Sascha, 2018. "The experience curve theory and its application in the field of electricity generation technologies – A literature review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 82(P3), pages 2346-2364.
    8. Levi, Peter G. & Pollitt, Michael G., 2015. "Cost trajectories of low carbon electricity generation technologies in the UK: A study of cost uncertainty," Energy Policy, Elsevier, vol. 87(C), pages 48-59.
    9. Perrier, Quentin, 2018. "The second French nuclear bet," Energy Economics, Elsevier, vol. 74(C), pages 858-877.
    10. Gangyang, Zheng & Xianke, Peng & Xiaozhen, Li & Yexi, Kang & Xiangeng, Zhao, 2021. "Research on the standardization strategy of China's nuclear industry," Energy Policy, Elsevier, vol. 155(C).
    11. Xoubi, Ned, 2019. "Economic assessment of nuclear electricity from VVER-1000 reactor deployment in a developing country," Energy, Elsevier, vol. 175(C), pages 14-22.
    12. Steigerwald, Björn & Weibezahn, Jens & Slowik, Martin & von Hirschhausen, Christian, 2023. "Uncertainties in estimating production costs of future nuclear technologies: A model-based analysis of small modular reactors," Energy, Elsevier, vol. 281(C).
    13. Elia, A. & Kamidelivand, M. & Rogan, F. & Ó Gallachóir, B., 2021. "Impacts of innovation on renewable energy technology cost reductions," Renewable and Sustainable Energy Reviews, Elsevier, vol. 138(C).
    14. Wyman-Pain, Heather & Bian, Yuankai & Thomas, Cain & Li, Furong, 2018. "The economics of different generation technologies for frequency response provision," Applied Energy, Elsevier, vol. 222(C), pages 554-563.

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    Keywords

    Nuclear energy;

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