Nuclear and Coal: Rebirth on the Horizon?
The Energy Information Administration's "advanced nuclear case" shows a capital cost of about $1735 per kilowatt in 2001 dollars for plants in the 2005 time frame, and about $1560 per kilowatt for plants in the 2010 time frame 3 These figures are quite a bit higher than our parity capital costs. In a recent interview with Entergy executives on nuclear issues, they said it would take a nuclear design whose cost is less than $1000 per kilowatt to stimulate high interest on the part of Entergy. In addition they indicated that there are several designs on the drawing boards that meet this criterion. 4 We hope so, since our parity capital costs suggest that this is the cost range needed for financial competitiveness.
Cost estimates for coal-fired plants of $1082 per kilowatt to $1190 per kilowatt would meet cost requirements if they were constructed with a modular approach. 5 This represents a 10 percent to 15 percent cost reduction relative to stick built plants (IBID). Accordingly, a 2001 capital cost of about $1150 per kilowatt for conventional pulverized coal plants with in-service dates in the 2005 time frame (Footnote 3, Table 43, IBID). These figures appear to be almost competitive with our parity capital costs in the most favorable markets, assuming our reference gas price projection. More comfort is obtained with the 20 percent higher gas prices.
This study assumed a relatively favorable scenario of environmental regulations. Alternative scenarios may significantly reduce the parity capital costs for new coal plants, indicating reduced competitiveness. These scenarios may increase parity capital costs for nuclear. Not surprisingly, new coal and nuclear projects clearly involve bets on gas prices, market selection, and environmental regulations.
Power Markets: Projections For Nuclear and Coal
Competitive generation market context is important to understanding the results of any study of this type. This study looks at the entire Eastern Interconnection plus ERCOT. It assumes that a multi-regional competitive power generation marketplace exists throughout this very large geographic area.
For modeling purposes, this area is divided into about 165 individual markets that are linked together in accordance with today's transmission system.
Think of these markets as bubbles on a bubble chart that are joined by lines representing transmission links. Many of these markets are individual merchant plants with no native load obligations. About 50 of these markets are load regions, most having generation within them as well. Major transmission interfaces may limit power flows and transaction opportunities at various locations and times within this broad geographic area. The model includes 30 such interfaces.
It is assumed that regional transmission organizations (RTOs) form everywhere, but in a relatively Balkanized pattern rather than the very few super-regional entities that the FERC is attempting to promote in its orders of July 2001. These RTOs reduce the pancaking of wheeling charges and greatly increase power transaction opportunities relative to the historic marketplace, but probably not to the level envisioned by the FERC plan.
We expect that most new generation, including the gas-fired, coal-fired, and nuclear plants that are the direct subjects of this study,