rc115shepherd's comment history

rc115shepherd said...

Nuclear power plants have enormous sunk (i.e., non-recoverable) investment costs, which are accumulated from their initial conception, and; are accounted against them, for the average of a decade to decade and a half, between their accountable conception (when the money clock starts running), to the first day they begin to deliver their useful kilowatt-hour (kwh) output.

This creates an inherent diseconomy of scale in this form of an electric generating enterprise. Each kwh of electric output has enormous sunk costs associated with it, that in a fully allocated cost accounting scheme forces each generated kwh to recover those sunk costs in addition to the higher unit operating costs (in higher skilled operators, greater plant security required, and nuclear waste handling) incurred. Multi-purpose hydroelectric dams have this same feature in their economic analyses. They have huge sunk costs in land, and infrastructure and the electric power they produce is thereby inherently diseconomic.

The only counter to this inherent dis-economic situation is to increase to a maximum the quantity of output (in kwh) these plants generate per available hour of operation; so as to spread these irreducible sunk costs across as many generated kwh as possible, thereby transforming the diseconomy of scale into an economy of scale.

Small scale nuclear power plants attempt to counter this basic theorem of econometrics. The smaller plant is less costly to build but it is not simpler to secure or operate. It is not less costly to regulate. The nuclear wastes that are generated in the operation of the plant, are not less dangerous because in mass there is a smaller annual quantity to be handled. The engineering of such a plant will not be the subject of less regulatory scrutiny. The plant may cost the builder less in design, engineering, manufacture and installation. And the builder may recoup his costs by selling more units to achieve for his customers the same kWh output, thereby making the plants profitable to sell to customers. But the full allocation of the costs to the plants’ operators to generate and delivery that power to consumers will be much higher.

The unit overhead costs of generating 10.3 billion kwh per year from five plants (4 – 250 megawatt units), and (1 – 200 megawatt unit) would as a minimum be four times the unit overhead cost of generating 10.3 billion kwh per year from a single 1200 megawatt nuclear plant, and the cost per kwh of the electricity generated in that manner would have to be much higher per kwh consumed, as a result.

July 20, 2009 at 1:01 p.m.

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