Economics (Sustainability Assessment)

INPRO Economic Basic Principle (BP) - Energy and related products and services from nuclear energy systems shall be affordable and available.

UR1 (Cost of energy)

The definition of UR1 is: The cost of energy supplied by nuclear energy systems, taking all relevant costs and credits into account, C_N, must be competitive with that of alternative energy sources, C_A, that are available for a given application in the same time frame and geographic region/jurisdiction.
This UR relates to the cost competitiveness of different energy sources available in a country, region, or globally. In comparing the costs of electricity (or other energy products) from a NES, C_N, and competing alternatives, C_A, discounted costs (LUEC) are used. In this comparison all relevant costs are to be included.
Depending on the jurisdiction in a country, one energy source may be burdened with costs, e.g. for waste management, while another may not. In a number of Member States, the external costs of nuclear power that are not accounted for are small, since producers are required by law to make provisions for the costs of waste management, including disposal, and decommissioning, whereas the external costs of competing (non-nuclear) energy sources that are not accounted for may be significant, e.g. CO₂ emission from fossil power plants. Ideally, all external costs should be considered and, where possible, internalized, when comparing a NES with competing energy systems, but only costs that are internalized (in the price to the consumer) should be taken into account, and other external costs should be ignored.

CR1.1: Cost competitiveness

Indicator IN1.1: Cost of energy 

The value of indicator IN1.1, i.e. costs of energy (C_N and C_A) of competing energy supply options to be deployed, is determined using a discounted cost (LUEC) model[8], taking into account all relevant cost determinants for both the NES and the competing energy technology.
C_N is, in principle, the LUEC for a complete NES, excluding FOAK cost but including external costs and credits if they are fully included in the price setting mechanism, and using contingency allowances and a discount rate that reflects the economic decision making investment environment. In practice, a technology user would compare the cost of electricity from the NPP, which would include an allowance for the back end costs for waste management and decommissioning for the NPP, with that of the alternative energy source. Costs of other components of the NES, including costs for decommissioning and managing wastes from these components, would be reflected in the cost of fuel.

C_A is the LUEC for the (strongest) competitor A (for power generation investment), excluding FOAK cost but including external costs and credits if they are fully included in the price setting mechanism, and using contingency allowances and the same discount rate as applied for calculating C_N . Further, the competing alternative energy source is to be available for the same application in the same time frame and geographic region/jurisdiction. This is an important limitation since an NPP is usually operated at high load factors, primarily for meeting base load demand. So, usually, the competing alternative will be a fossil fuelled plant, e.g., coal, oil or a combined cycle gas turbine plant or, in some jurisdictions, a hydro plant. Further, the cost comparison should be based on costs for the relevant region/market and the time frame for the deployment of the NES.

	[ + ] Assessment Methodology
Areas of INPRO Sustainability Assessment Overview • Economics • Safety (Nuclear Reactors) • Safety (NFCF) • Waste management • Environmental Impact on Stressors • Environmental Impact from Depletion of Resources • Infrastructure Requirements Basic Principle • User requirements • Criteria