Nuclear and Coal: Rebirth on the Horizon?
in Figure 1, with high efficiency scrubbers for SO 2 removal.
With regard to environmental requirements, this study assumes that extensive NO x emissions controls will be required everywhere within the EPA "SIP Call" regions. Most existing generators and all new generators are assumed to have NOx emission controls, most often selective catalytic reduction or SCR for major units.
Outside the "SIP Call" regions, it was assumed that NO x emissions controls are not required for either existing or new units. This may well be unrealistic, but tends to maintain competitiveness of new coal-fired merchant plants relative to existing coal-fired units. Unlike nuclear, fuel costs for coal plants vary significantly from region to region.
Each new merchant coal plant was assumed to utilize coals, and see coal prices, that are typical of existing units in that region. In our modeling, each coal-fired generator is assigned its specific coal price and sulfur content based on recent historic data. Obviously, a new unit should seek the best coal prices available because this will directly affect competitiveness. Our study does not assume that these new plants can achieve coal prices below what has been typical for their market areas. This may be important for a new coal unit in MAIN in particular. We assumed it would utilize local coal rather than perhaps cheaper coal from the Powder River Basin, which might enhance its competitiveness.
The fixed operation and maintenance costs for coal units shown in Figure 1 are taken from Table 43, 3 escalated to 2001 dollars. The nuclear plant fixed O&M costs are shown in Figure 1. 7 This $65 per kilowatt-year is reasonably representative of 1997 through 1999 existing plant experience for the best quartile of the existing plant population. The alternative figure used in sensitivity cases, $100 per kilowatt-year, appears reasonably representative of the third quartile experience. Table 433 indicates a fixed O&M cost just under $60 per kilowatt-year in year 2001 dollars. In this study, it is assumed that fixed O&M costs include capital additions. Price projections for SO 2 and NO x allowances were taken from the EIA. 8
This study assumes no requirements for carbon emissions, again a potentially unrealistic assumption. Since coal units would be impacted more heavily by CO 2 emission regulations and allowance costs than natural gas-fired units, this assumption tends to enhance the competitiveness of new coal-fired generation. This assumption also tends to reduce the competitiveness of new nuclear plants relative to either gas-fired or coal-fired generators.
The following sensitivity cases were examined in all three scenarios. Sensitivity case results are summarized in Table 1, page 43.
1. New nuclear plant fixed O&M costs increase from $65 per kilowatt-year to $100 per kilowatt-year, in year 2001 dollars.
2. Financing cost premiums are required. For new coal units, this premium is assumed to be a shift in capitalization from 40 to 50 percent equity, and an increase in debt cost from 8.25 percent to 8.75 percent. For new nuclear units, the shift in capitalization is assumed to be from 40 to 60 percent equity, and the