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Effect of Depreciation Method for Long-Term Tangible Assets on Sustainable Management: From a Nuclear Power Generation Cost Perspective under the Nuclear Phase-Out Policy

Author

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  • SungSig Bang

    (Department of Business and Technology Management, Korea Advanced Institute of Science and Technology, 291 Daehak-ro, Yuseong-gu, Daejeon 34141, Korea)

  • SangYun Park

    (Department of Business Administration, Pai Chai University, 155-40 Baejae-ro, Seo-Gu, Daejeon 35345, Korea)

Abstract

The Korean Government has been implementing a nuclear phase-out policy since 2017. Nuclear power plants accounted for 30.0% of the total power generation in 2016; this figure fell to 25.9% at the end of 2019, and the average Capacity Factor (CF) of a nuclear power plant approximately dropped from 89.1% to 69.2%. The nuclear phase-out policy presents severe consequences for the sustainable management of the nuclear power industry. Accordingly, the purpose of this study is to analyze the effect of a decrease in the nuclear capacity factor under the nuclear phase-out policy on the depreciation cost per unit using the Straight-Line Method (SLM) and Decelerated Depreciation Method (DDM) and to provide recommendations from a sustainable management perspective. The results show that the decrease in CF of nuclear power plants has a negative impact on sustainable development of the nuclear power industry. DDM is more beneficial than the SLM during this initial stage of depreciation under the nuclear phase-out policy. In addition, in the early stages of projects or immediately after attracting large-scale investments, DDM can offer more positive signs for stockholders by calculating a smaller net loss or a higher net profit.

Suggested Citation

  • SungSig Bang & SangYun Park, 2021. "Effect of Depreciation Method for Long-Term Tangible Assets on Sustainable Management: From a Nuclear Power Generation Cost Perspective under the Nuclear Phase-Out Policy," Sustainability, MDPI, vol. 13(9), pages 1-15, May.
    • Handle: RePEc:gam:jsusta:v:13:y:2021:i:9:p:5270-:d:550740
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    References listed on IDEAS

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    1. Sungki Kim & Wonil Ko & Sungsig Bang, 2015. "Analysis of Unit Process Cost for an Engineering-Scale Pyroprocess Facility Using a Process Costing Method in Korea," Energies, MDPI, vol. 8(8), pages 1-23, August.
    2. Kyung-Shin Kim, 2018. "Changes in Risk Perception of Seoul National University Students in Nuclear Power under Opposing Government Policy," Sustainability, MDPI, vol. 10(7), pages 1-14, July.
    3. Nam, Hoseok, 2020. "Impact of nuclear phase-out policy and energy balance in 2029 based on the 8th Basic Plan for long-term electricity supply and demand in South Korea," Renewable and Sustainable Energy Reviews, Elsevier, vol. 122(C).
    4. Sungki Kim & Hong Jang & Ruxing Gao & Chulmin Kim & Yanghon Chung & Sungsig Bang, 2017. "Break-Even Point Analysis of Sodium-Cooled Fast Reactor Capital Investment Cost Comparing the Direct Disposal Option and Pyro-Sodium-Cooled Fast Reactor Nuclear Fuel Cycle Option in Korea," Sustainability, MDPI, vol. 9(9), pages 1-14, August.
    5. Stephen Zeff, 2014. "The IASB and FASB Stumble over the Annuity Method of Depreciation," Accounting in Europe, Taylor & Francis Journals, vol. 11(1), pages 55-57, June.
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    Cited by:

    1. Alvaro Rodríguez-Prieto & Ana María Camacho & Carlos Mendoza & John Kickhofel & Guglielmo Lomonaco, 2021. "Evolution of Standardized Specifications on Materials, Manufacturing and In-Service Inspection of Nuclear Reactor Vessels," Sustainability, MDPI, vol. 13(19), pages 1-25, September.

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