A report by the UK’s National Audit Office (NAO) says nuclear construction in the UK is expensive and slow in comparison to other countries, in part because the UK has not built any nuclear plants since the 1990s and lacks a proven supply chain. It puts the cost of building new NPPs in the UK at $60-140 per MWh. This compares with $30-55/MWh in South Korea; $50- 120/MWh in France, $45-125/MWh in Finland; and $58-100/MWh in the US. The estimates are based on discount rates of 3% and 10%. The discount rate is an estimate of the cost of capital for a given project.
“The UK lacks a proven, skilled supply chain to support the construction of a new power station. The costs to build ‘first-of-a-kind’ power stations will be much higher than in countries that have rolled out new facilities, where learning and expertise can be shared,” NAO said.
While government policy is that new nuclear generation should be privately-financed, there are very few private companies able to risk such large upfront investments with such a long payback period. Many companies in the European utility sector, which would be potential investors, have faced financial pressures in recent years, partly due to falls in wholesale electricity prices.
NPPs have very high upfront costs and take a long time to build, the report says. Costs have increased in recent years given the extra safety considerations following the Fukushima-Daiichi accident and increasing terrorist threats. These are offset to some extent by low running costs, which are not linked to the price of fuel in the way that gas, coal and oil power plants are. This means investments in nuclear power have a very long payback period.