In making an economic analysis, the performance of existing units is examined, detailed estimates are made of construction costs, and comparisons with alternatives are made. Allowances are added for contingencies, for the unexpected events that are bound to happen, without knowing just what and when those events might be. However, even if the economics favor nuclear power on paper, the decision might well be negative if there is doubt that the project can be carried through to completion. If that is the case (and it has been the case since 1980), the economic risks become prohibitive. There is huge risk in tying up a large amount of capital without obtaining any return on it. There is risk that state rate commissions might act in a punitive way, disallowing for rate-making purposes investments made in the project. But also there is recognition that delay or cancellation of a nuclear plant leaves the utility without that block of generating capacity; the years lost cannot be recovered, the funds cannot be used to build something else, and even the utility’s financial structure may be hurt to the point where further financing becomes very difficult. The consequences may be expensive purchased power, deterioration of service, and public antagonism, the very things a well-managed utility strives to avoid.
KeywordsNuclear Power Plant Capacity Factor Generation Cost Nuclear Plant Coal Plant
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