Nuclear Energy Systems Economic Evaluations: Uranium Resource Availability Fuel Cycle Cost

Course 22.39, Lecture 19 11/15/06

Professor Neil Todreas

11/15/06 22.39 Lecture 19 1

Profes sor Neil Todreas

Scope of Presentation

• U ranium Resource Availability

• F uel Cycle Costs

11/15/06 22.39 Lecture 19 2

Profes sor Neil Todreas

Background

• Early thinking: Reprocessing followed by recycling of plutonium in breeder reactors

• T he 70’s: Reprocessing followed by recycling of mixed oxide fuel in LWRs

– G eneric Envir onmental Impact Statement on Mixed Oxide Fuel (GESMO)

– C om m e rcial US reprocessing facilities

– C arter Administration’s Decision (1977)

• T he 80’s: Nuclear industry growth does not materialize

– A ny economic incentives vanish as uranium prices fall sharply

• T he 90’s: U ores are cheap

– S upply constraints appear to be far in the future

11/15/06 22.39 Lecture 19 3

A. Machiels, Presentation at Internat. S y m p.: Ret h inking th e Nucl. Fuel C y cle, Ca mbridge, Mass., Oct. 30-31, 2006, Slide 3

Western World Production against Reactor Requirements 1945-2001

Nucle a r Issues Briefing Paper 36, “Ura nium Markets” Ma y 2006. Uranium Inf o rmat ion Cent er, L t d., Melbourne, Australia.

Courtesy of Uranium Information Center, Ltd.

11/15/06 22.39 Lecture 19 4

Profes sor Neil Todreas

Background (continued) - Uranium Prices Historical Trends

Graph removed due to copyright restrictions.

11/15/06 22.39 Lecture 19

A. Machiels, Presentation at Internat. S y m p.: Ret h inking th e Nucl. Fuel C ycle, Ca mbridge, Mass., Oct. 30-31, 2006, Slide 4

5

Uranium

Courtesy of F. Carre, CEA. Used with permission.

Annual d emand and supply o f Uranium (1945  2003)

11/15/06 22.39 Lecture 19 6

F . Carre et a l , Presentati on at Interna t . S y m p.: Re thinking th e Nucl. Fuel C ycle, Ca mbridge, Mass., Oct. 30-31, 2006, Slide 4

Uranium Resource Availability

• 4.7 Million MTU (conventional resources mined < US

$130/kgU)

– 3.3 Million MTU reasonably assured

– 1.4 Million MTU inferred resources

• E nough to feed current world requirements for 80-90 years

• A dditional 22 Million MTU could be recovered from phosphate deposits

• A bout 600,000 MTU equivalent stored in depleted uranium inventories

• C urrently identified resources are sufficient to support growth of 20-40% in nuclear capacity over next two

decades

11/15/06

22.39 Lecture 19

Sourc e : “U ranium 2 0 0 5 : R e source, Production and Dem a nd,” OECD/NEA and IAEA

7

A. Hanson, Presentation at Internat. S y m p.: Rethinking the Nucl. Fuel C y cle, Ca mbri dge, Mass., Oct. 30-31, 2006, Slide 15

Uranium consumption (whithout engaged u ranium in installed reactors) : IIASA

40

35

30

25

20

15

10

5

0

2000 20 10 2 020 20 30 2040 2 050 2060 2 070 208 0 20 90 2100

Y ear

11/15/06 22.39 Lecture 19

Courtesy of M. Delpech, CEA. Used with permission.

8

Uranium Resource vs. Needs

Uranium Consumption (2.1 % Growth, 1000 GWe b y 2050)

25 , 0 00

20 , 0 00

15 , 0 00

Potentially Additionally Available:

• EAR II ~ 6000 Million pounds

• Speculative Resources ~25,700 Million pounds

10 , 0 00

Kn o w n Re s o u r c e s ( RAR a n d EAR- I ) ( < $50/ l b U 3 O 8 )

5, 00 0

0

200 0 201 0 2 0 2 0 2 0 3 0 2 040 2 050 2060

11/15/06 22.39 Lecture 19 9

N.E. Todrea s, MIT Study on the F u ture of Nuclear Power, Seabrook Stati on, Amer ic a n Nucl. Soc., 18 Dec. 2003, Slide 15

Useful Conversion Factors

*Taken as 100% U-238

Example:

Reasonabl y assure d ( < 13 0 $/k g extractio n cost ) Bouchard 20 x 10 6 MT nat U

Hanson 3.3 x 10 6 MT nat U

Todreas* 10 to 16 x 10 3 x 10 6 lbs U 3 O 8  3.8 to 6.5 x 10 6 MT nat U

*Including EAR II Potentia lly Av ailable Reserves

11/15/06 22.39 Lecture 19 10

Profes sor Neil Todreas

Fallacy of the Traditional Economic Resource Model*

Classical economic theory suggests that the price of non-renewable resources should rise over time, as the fixed available stock grows scarcer and m o re and more costly resources have to be used. 218 Forecasters relying on this m o del have routinely predicted that th e uranium price would im minently begin a steady rise as resources began to becom e scarce, and these forecasters have just as routinely been proved wrong.

218 F o r a usef ul discussion of the logical flaw s of this classical m odel – s till am azingl y wi del y used, es peciall y in projections of f u ture uran ium prices – s ee M.A. Adelm an, “M y E d ucation in Mineral (Especia l l y Oil) Econom ics,” Annual Review of Energy and Environment, Vol.

22, 1997, pp. 13-46. Another excellent critique of the standard model (drawing on exa m ples rela ted to uranium resources) is Thom as L. N e f f , “ A re Energ y R e sources Inexhaustible?” presentation to the “Gl o bal Energ y P r ospect s: Suppl y -S ide Issues,” L o ndon School of Econo m i cs and P o litical Science, N o ve m b er 11, 19 85. N e f f’s basic answ er is close to “ y es, ” and with respect to uranium , he concludes “ w e we re not so m u ch captiv e of nature’s limits as of our own in thinking about uraniu m res e rves and resources.”

*M. Bunn, S . Fetter, J.P. Holdren, B. van der Z waan, “The Ec onomics of Reproc essing vs. Direct Di sposal of Spent Nucle a r Fuel,” J.F. Kenned y School of Gove rnment, Harvard Universit y , Dec. 2003, p. 107

11/15/06 22.39 Lecture 19 11

Profes sor Neil Todreas

Sustainability: uranium resources

• U resources recoverable at prices below those at which recycling would be justified are likely to be sufficient to fuel an expanding nuclear energy enterprise for many decades

• “ Red Book” estim ates of U resources rose significantly in last decade, even with little uranium exploration – m ore will be found now that high prices are motivating exploration

• C urrent price run-up has nothing to do with lack of U in the ground, everything to do with constraints on rapidly bringing additional production on-line; but over time, profits to be made will mo tivate additional production

• R eliance on recycling is not a path to energy security – a s unforeseen events across the globe (or at home) can play havoc with a country’s plutonium programs

11/15/06 22.39 Lecture 19 12

M. Bunn, Presentat i on at Internat. S y mp.: Re thinking the Nu cl. Fuel C y cle, Ca mbridge, Mass., O c t. 30-31, 2006, Slide 29

Fuel Cycle Cost Calculation

 1 F o  

yT plant 

  24

 Bu d  

 1  

 2 

Sum for Fuel Cycle Co st for Existing LW R Plant 5-6 mills/kWe-hr

Driscoll, M.J., Chapt er 5 f r om “ Su stainable Energy - C hoosing A m ong Option s " b y J ef f erson W . Tester, Elisabeth M. Drake, Mic h ael W . Gola y , Michael J. Driscoll, and W illiam A. Pe ters. M IT Pres s, June 2005

Courtesy of MIT Press. Used with permission.

11/15/06 22.39 Lecture 19 13

Profes sor Neil Todreas

Economic Assessment of Open vs.

Closed Fuel Cycles

1) Are the options being compared comparable in requirements and experience to date?

2) Who is asking the question?

3) How is the question being asked?

4) What should you listen for in the answer?

11/15/06 22.39 Lecture 19 14

Profes sor Neil Todreas

Economic comparison: Recycling vs Once-Through

• C haracteristics o f the options (E. Proust, CEA) – t he two options do not provide the same

overall services : recycling responds to more

extended requirements than bare spent fuel management

– f or the power companies, the cost of R&R is well established (commercial practice and prices), while spent fuel conditioning for direct disposal is still under development and associated costs are forecasted with more uncertainty

11/15/06 22.39 Lecture 19 15

E. Proust, P r esentat i on at Internat. S y mp.: Re thinking the Nucl. Fuel C y cle, Ca mbridge, Mass., O c t. 30-31, 2006, Slide 7

2) Who is Asking the Question?

The retail price for elec tric it y vari es widel y b y r e gion and b y season. Nu mber above is range f o r the national average.

Sou r ce: A. Hanson, ARE VA, personal comm unication wit h N. Todreas, 11/3/06

*Courtesy of Nuclear Energy Institute

11/15/06 22.39 Lecture 19 16

Profes sor Neil Todreas

2) Who is Asking the Question? (cont.) Recycling is Cost Effective if:

Cost of recycling (treatment and fabrication)

Value of recovered products

(U + Pu)

Cost of recycling Value of recovered Value of cost

< products savings to the

(treatment and fabrication)

(U + Pu)

+ repository due to

recycling

Cost o f recy clin g

< Value of recovered +

Value of cost +

Av oi de d c o sts of

(treatment and fabrication)

products

savings to the

utility settlemen t s

repository due due to earl y receipt

(U + Pu) to recy cling of used fuel

11/15/06 22.39 Lecture 19 17

A. Hanson, Presentation at Internat. S y m p.: Rethinking the Nucl. Fuel C y cle, Ca mbri dge, Mass., Oct. 30-31, 2006, Slide 16

Economic Assessment of Open vs.

Closed Fuel Cycles

3) “How is the question being asked?”

• H arvard: What is the cost of disposing of a kg of spent fuel? (closed cycle cost is >80% of open cycle cost)

• M IT (2003): What is the cost of producing a kg of fresh fuel? (4.5x for the closed cycle versus the open cycle)

• O ECD/NEA (1994):

• F rench: Charpin D essus P ellat R eport (2000): “a study concerning the economic data of the entire nuclear industry and in particular the later stages of the nuclear fuel cycle, including reprocessing.”

11/15/06 22.39 Lecture 19 18

Profes sor Neil Todreas

4) What should you listen for in the Answer?

Once-Through vs Single MOX Recycle

1. Single Owner Cost [MIT 7/03]

Once Through ( U OX) 0.515¢/kWh (e) [0.643 O E CD/NEA (1994) ] Single MOX Recycle 2.24¢/k Wh(e) [0.680 OECD/NEA (1994)]

∆ F C C% = 335% MIT [5% OEC D /N E A ]

∆ COE% = 43% MIT [0.9% OEC D / N EA]

where COE UOX 4¢/kWh(e)

2. World (Entire Fleet) Cost [MIT 7/03]

FCC FLEET = FC C UOX [% F l eet UOX] + FCC MO X [% Fleet MOX]

0.791 ¢/kWh(e)  0.515 [0.84] + 2.24 [0.16]

∆ FCC% = 53 %

∆ COE% = 6.9%

11/15/06 22.39 Lecture 19 19

N.E. Todrea s, “Perspecti v es on the Economi cs of Nucle a r Power f r om the MIT Stud y , ” N E ANS S y m posium , Tro y , NY 3/30/2006, p.16

4) What should you listen for in the Answer? (cont.)

Fuel Cycle Cost [MIT 7/03]

Assume: C OE UOX 4¢/kWh(e)

FLEET 1500 MWe ( operating on single MOX recycle)

N.E. Todrea s, “Perspecti v es on the Economi cs of Nucle a r Power f r om the MIT Stud y , ” N E ANS S y m posium , Tro y , NY 3/30/2006, p.17

The MIT Cost Comparison

See Appendix Chapter 5.D,

pp. 145-148 of MIT Study

11/15/06 22.39 Lecture 19 21

Profes sor Neil Todreas

Comparison of Cost for Once-Through and Recycle Process Steps (MIT 7/03)

[1] O E CD /NEA, “ A cce le ra to r - d r iven Syste m s and Fast Reac to rs in Ad vanced Nuc l ear Fue l C y c l es ” , 200 2

[2] D O E, “ G en eration 4 Roadmap - R eport of the Fuel C y c l e C r osscut Group” , 20 01

[3] F e tter , Bun n , Ho ld ren, “ T he Econo mics o f Rep r ocess i ng vs . D i r e ct D i sposa l o f Spent Nuc l ear F u e l ” , 1999

11/15/06 22.39 Lecture 19 22

N.E. Todrea s, “Perspecti v es on the Economi cs of Nucle a r Power f r om the MIT Stud y , ” N E ANS S y m posium , Tro y , NY 3/30/2006, p.18

Converting YM costs to $/kg HM

$50B/70,000 MT HM = $300/kg HM

11/15/06 22.39 Lecture 19 23

Profes sor Neil Todreas

Reprocessing costs: The impact of financing

Assume: Capital, operating costs = reported costs for THORP, (similar to UP3), continuous operation for 30 years at 800 tHM/yr. What is revenue requirement?

 Government-financed (4% real): $1350/kgHM

 Utility-financed: >$2000/kgHM

 Private venture financed: >$3100/kgHM

 Hence, achieving our $1000/kgHM illustrative figure would already require governm ent financing, dramatic technological im provement, or a com b ination of both

11/15/06 22.39 Lecture 19 24

M. Bunn, Presentat i on at Internat. S y mp.: Re thinking the Nu cl. Fuel C y cle, Ca mbridge, Mass., O c t. 30-31, 2006, Slide 4

Conditions for Competitiveness of the MOX Option

The Future of Nuclear Power: An Interdisciplinary MIT St udy. MIT, 20 03, pp. 148-149

11/15/06 22.39 Lecture 19 25

Profes sor Neil Todreas

COST OF RECYCLING AND ONCE-THROUGH STRATEGIES COMPARABLE IN A GREENFIELD APPROACH (BCG)

Especially G iven Uncertainty on Yucca Mountain Costs and Future Uranium Price

Graph removed due to copyright restrictions.

11/15/06 22.39 Lecture 19

Boston Consultin g G r ou p, “Economi c Asses s m e nt of U sed Nuclea r Fuel Manage me nt in the Uni t ed Stat es,” July 25, 200 6, p. 18

26

Problems with the BCG study

 Esti m a tes unit cost of $620/kgHM for both reprocessing and MOX fab – much less than real plants have achieved for either process

• A chieves this by:

– U sing low 3% government rate (OMB insist s on 7% for such projects)

– A ssumi ng large increase in capa city at m i nor addi tional cost

– A ssumi ng never has an y contract or technical delays, so dramatic increase in throughput – u nrealistic

• V ariety of other unrealistic assumptions

• B y contrast, real experience of using Areva t echnology in

U.S. (SRS MOX plant) has resulted in costs m a ny ti mes

higher than in France – u nm entioned by BCG

11/15/06 22.39 Lecture 19 27

M. Bunn, Presentat i on at Internat. S y mp.: Re thinking the Nu cl. Fuel C y cle, Ca mbridge, Mass., O c t. 30-31, 2006, Slide 8

References

• H arvard Study: http://www.publicpolicy.umd.edu/Fetter/publications.htm

• E PRI: Report NP-7261 (March 1991) “An Evaluation of the Concept of Transuranic B urning Using Liquid Metal Reactors”

• “ The U.S. Advanced Reactor Development Program: A Report by The U.S. Electric Utility Industry ’ s Advanced Reactor Corporation ” (1995)

• T he National Academy of Sciences: “Nuclear Wastes: Technologies for Separations and Transm utation” (1996)

• B oston Consulting Group, Economic Assessment of Used Nuclear Fuel Managem e nt in the United States, July 25, 2006

11/15/06 22.39 Lecture 19 28

Profes sor Neil Todreas

Intentionally conservative

 These estim ates of breakeven U price and  COE are low, because of assum p tions favorable to reprocessing :

– C entral reprocessing cost esti mate far below cost that wo uld pertain in privatel y financed fac ilities with costs comparable to those demonstrated at existing plants

– M OX fuel fabrication esti mate well below many recent prices

– N o charge for Pu storage, Am re moval, licensing or security for MOX use

– H igh cost dry cask storage required for all fuel for direct disposal option – t hough most new plants designed with lifeti m e pools

– H LW disposal cost advantage hi gher than most current esti mat e s

– E qual disposal costs for spent MOX and LEU, despite much higher MOX heat

11/15/06 22.39 Lecture 19 29

M. Bunn, Presentat i on at Internat. S y mp.: Re thinking the Nu cl. Fuel C y cle, Ca mbridge, Mass., O c t. 30-31, 2006, Slide 7