Index

This is a long article.So here is the index for the article.

  1. Abstract
  2. Introduction
  3. Factors affecting the cost of nuclear power
  4. Levelised cost of electricity of Kaiga I and II
  5. Economic analysis of a coal power plant
  6. Ultra Mega power projects and the Carbon credits
  7. Hydro power
  8. Comparison
  9. Conclusion
  10. References

  11. 1.Abstract

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    This article discusses the economic aspects of nuclear power generation in the Indian context and is based on a presentation made on this topic on October 18, 2008 at IIT Kanpur at the NPE-2008 symposium conducted by the Indian Nuclear Society. Data from various sources has been collected and compiled to compare nuclear power generation cost with a coal fired power plant and hydroelectric power plant.

    2.Introduction

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    India depends upon various sources for her power requirements. The break up of the power is as given below

    Total installed nuclear power generation capacity is 4120 MW (source: NPCIL) combining the seven plants located in various parts of the country and is small compared to the coal based plants and hydel plants. India’s power deficit stood at 73,050 million units in 2007-08, during this period 653,172 million units were supplied against a demand of 726,222 million units (source: Deccan Herald, Aug 2008). According to the planning commission of India the optimistic nuclear power scenario is summarised in the following table:

    Items 2006 2016* 2021*
    Total Installed Capacity in GW 134.7 303 425-488
    Nuclear Capacity in GW 4.12 15 30
    Nuclear as a % of total 3.06% 4.95% 6.74%

    * denotes predicted value.
    (Source: Integrated Energy Policy, Planning Commission, August, 2006)

    Current location of power plants is summarised in the following sketch (not to scale) :


    Source: Government of India, Department of Atomic Energy

    We can see that the nuclear power plants are strategically located at a distance greater than 800 km from the coal fields this has been done to make the nuclear power competitive with thermal power in the area it is located.

    3. Factors affecting the cost of nuclear power

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    Parameters (that we have considered) involved in the economics of nuclear power plant or in general any plant.

    1. Capital costs (Overnight Capital cost)
    2. O & M costs
    3. Fuel cost
    4. Construction time
    5. Levelized cost of generation (assessment parameter)
    6. Economic life time of the project.
    7. Discount Rate
    8. Decommissioning costs

    4. Levelised cost of electricity of Kaiga I and II

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    The approach of levelised cost of electricity is one of the most popular approaches to compare the cost of power.First the present value of the plant is calculated by discounting all the future expenses to the present and then deciding at what price of electricity one can recover all the expenses that will be incurred during the construction, operation and decommissioning periods.

    Present value is calculated by using the following mathematical expression

    Where
    C1 = capital cost in year 1.
    M = total number of years of construction before reactor becomes
    commercial.
    i = real discount rate.
    N = number of years in operation
    Ok = O and M costs in Kth year of operation.
    Fk = fuel cost in year K of operation
    Wj = waste disposal cost in year j
    P = cooling time for spent fuel
    Dq = decommissioning cost.
    T = time difference in stopping of reactor function and decommissioning.
    And

    Where Ce is the levelised cost of electricity and Ek are the units of electricity sold in year k, i is the real discount rate.Thus we can calculate the LCOE of the plant by equating both the expressions. The values of the symbols for Kaiga I and II are as follows:

    Field Units
    Sum of annual construction costs Rs 1816 Crore
    (Without IDC)
    Capacity 440 MW
    Auxiliary consumption 12 %
    Economic lifetime 40 years
    Uranium fuel price Rs 16450 /kg
    Initial Uranium loading 111.6 tonnes
    Uranium consumption 2.05E-05 kg/kwh
    Heavy water price Rs 24880 / kg
    Initial heavy water loading 420 tonnes
    Heavy water losses 14000 kg/ year
    Transport of spent fuel 878 Rs/ kg
    Decommissioning cost 10% of capital cost
    Operation and Maintenance 2% of the capital cost

    Source Ramanna, D’Sa, Reddy, 2005

    Using the discount rate as 1% and power production to run at 80% of sanctioned capacity we get LCOE for Kaiga I and II= Rs 1.18 /kWh.Plant life was assumed to be 40 years.

    5. Economic analysis of a coal power plant

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    Similar to the nuclear power plant the factors that affect the coal power plant are nearly the same.

    Factors affecting the cost of production
    1. Capital cost
    2. Fuel cost
    3. O & M
    4. Waste disposal
    5. Economic lifetime of power plant

    Field Units
    Sum of Capital Cost during Construction Rs 491.3 Crore
    Capacity 210 MW
    In plant consumption rate 8.5 %
    Economic lifetime 30 years
    Coal cost ( domestic ) Rs 1412 per tonne
    Coal consumption 0.63 kg/kWh
    Heat Rate 2,362.5 kCal/kWh
    Ash disposal cost Rs 174 per tonne
    Furnace oil consumption 2 mL/kWh
    Furnace oil cost Rs 18 per litre
    O & M 2 % of the capital

    Source: et al Ramanna 2005

    We can calculate the LCOE is 1.33 Rs. Economic life of 30 years for a thermal power plant has been assumed.

    We can compare our results now.

    Kaiga I & II RTPS VII(D)
    Capacity cost (including O&M) Rs/kWh 0.65 0.27
    Heavy Water make-up cost Rs/net kWh 0.13 0.00
    Fuel cost Rs/net kWh 0.38 1.01
    LCOE Rs /kWh 1.18 1.33

    The results for different values of discount rate are given below-

    Discount Rate Percentage Kaiga I & II RTPS VII Rs/kWh
    1 1.18 1.33
    2 1.32 1.36
    3 1.48 1.39
    4 1.66 1.42
    5 1.87 1.45
    6 2.10 1.49

    Clearly nuclear power becomes cheaper for realistic values of discount rates greater than 5%. Considering 6% discount rate for 2007 at 5% inflation we get LCOE for Kaiga I and II as 2.68 Rs/kWh and for RTPS VII as 1.90 Rs/kWh.It is to be noted that distance of this nuclear power plant is greater than 1200 km from the coal fields but we find that the cost still fail to compete with that of the coal power plant. Also the waste disposal expenses have not been considered, which are going to be substantial, and are nascent at present. On the other hand ash waste disposal in coal plants is cheaper as establishments are ready to buy it against the assumption that the plant pays for it.

    It is thus impressed that in spite of favorable assumptions nuclear power is found to trail behind the coal fired power at present.

    6. Ultra Mega power projects and the Carbon credits

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    With the UMPP’s on the scene it is expected that certain coal power plants will achieve significant economy of scale which can gain significant carbon credits if implemented. The following figure shows the effect of CER price on the LCOE of the generated electricity. It can be seen that there is a significant economic advantage that these coals fired power plants can expect to get in near future.


    Source: UMPP risk analysis British High Commission

    7. Hydro power

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    Due to less data available the subject has been chosen to be the Nungleiban H.E. Project in the Bishnupur district of Manipur.

    Following is the projected data on this plant which will be constructed in near future-

    Sum of Initial cost of constrction without IDC Rs 841.99 crore
    Capacity 105 MW
    Economic Life 35-40 years

    Assuming the O and M costs to be 2.5 % of the inisital cost we get the LCOE as 3.37 Rs/kWh. However such high LCOE is certainly due to the fact of the hilly and tough terrain on which the plant is to be constructed and because there is no economy of scale. As there is no fuel cost there are quite a few examples which impress the fact that hydro power is one of the cleanest options whish is cheap and economic.

    8. Comparison

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    Certainly the prices calculated are indicative and can not be very accurate due to lack of data un the public domain, but they certainly indicate that nuclear power seems to be more expensive than coal fired plant. This might also be due to the fact that the economy of scale that exists in coal fired domain is still not there in the nuclear fired power plant. Following is a comparison between average tariff charged for nuclear power and all India average rate of purchase of electricity by State Electricity Boards.


    Source: Thakur et al 2005

    This is clearly indicative of the fact that the current trend indicates that on an average nuclear power is more expensive than other options.Following are the average tariffs of the nuclear power plants in India.

    Tarapur I and II 0.93 Rs/kWh
    Madras I and II 1.81 Rs/kWh
    Narora I and II 1.91 Rs/kWh
    Kakrapar I and II 2.04 Rs/kWh
    Tarapur 3 and IV 2.65 Rs/kWh/td>
    Kaiga I and II 2.79 Rs/kWh
    Rajasthan II, III and IV 2.79 Rs/kWh

    Considering this and that they have been established for quite some time we can compare them with the prices that have been offered by the various UMPP projects that have been awarded recently the tariffs are as follows:

    • Tata Mundra UMPP: 2.26 Rs/kWh
    • RPL Sasan UMPP :1.20 Rs/kWh
    • RPL Krisnapatnam :UMPP 2.33 Rs/kWh

    9. Conclusion

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    It is difficult to estimate exact prices but it is for certain that at present nuclear power is more expensive than traditional sources. Furthermore it is difficult to forecast the situation of the future as the geopolitical issues that are associated with nuclear fuel are  quite complex and sensitive.There are other issues related to the mining of nuclear fuel and there has been quite an unrest in areas in Meghalaya where mining is proposed which seems quite justified if conditions of Jaduguda mines in Andhra Pradesh are considered an example.The disposal of nuclear waste is another issue that needs to be looked upon. Until we close the nuclear fuel cycle in practice, some way of disposing the spent fuel has to be thought of as there are serious security issues related to this. This problem is bound to get bigger as there are a large number of power plants that are about to come up.


    References

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    • MV Ramanna. Economics of Nuclear energy from heavy water reactors
    • British Council UMPP- risk analysis report
    • National Hydropower Corporation
    • Ministry of Coal
    • Department of Atomic Energy
    • Ministry of Power
    • Central Electric Authority
    • Solar Energy Centre
    • International Energy Agency, Projected Cost of Electricity 2005 update.
    • Winds of Change MS Srinivasan, RB Grover, Sb Bhardwaj
    • University of Chicago, Economic future of Nuclear Energy
    • Levelized Cost of electricity version 2.0, Lazard
    • September 2, 2007 People’s Democracy, Prabir Purkayastha
    • MV Ramanna, Economics of Nuclear Power subsidies and competitiveness.

    Author:Anand Vardhan Mishra