International light water nuclear fuel fabrication supply: Are fabrication services assured?
This paper examines the cost structure of fabricating light water reactor (LWR) fuel with low-enriched uranium (LEU, with less than 5% enrichment). The LWR-LEU fuel industry is decades old, and (except for the high entry cost of designing and licensing a fuel fabrication facility and its fuel), labor and additional fabrication lines can be added at Nth-of-a-Kind cost to the maximum capacity allowed by a site license. The industry appears to be competitive: nuclear fuel fabrication capacity is assured with many competitors and reasonable prices. However, nuclear fuel assurance has become an important issue for nations now to considering new nuclear power plants. To provide this assurance many proposals equate "nuclear fuel banks" (which would require fuel for specific reactors) with "LEU banks" (where LEU could be blended into nuclear fuel with the proper enrichment) with local fuel fabrication. The policy issues (which are presented, but not answered in this paper) become (1) whether the construction of new nuclear fuel fabrication facilities in new nuclear power nations could lead to the proliferation of nuclear weapons, and (2) whether nuclear fuel quality can be guaranteed under current industry arrangements, given that fuel failure at one reactor can lead to forced shutdowns at many others.
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- Jensen, J. Bradford & Rothwell, Geoffrey S., 1998. "Transaction costs, regulation, and subcontracting at nuclear power plants," Journal of Economic Behavior & Organization, Elsevier, vol. 36(3), pages 369-381, August.
- Geoffrey Rothwell, 2009. "Market Power in Uranium Enrichment," Discussion Papers 08-032, Stanford Institute for Economic Policy Research.
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