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Title: Financing Strategies for Nuclear Fuel Cycle Facility

Abstract

To help meet our nation’s energy needs, reprocessing of spent nuclear fuel is being considered more and more as a necessary step in a future nuclear fuel cycle, but incorporating this step into the fuel cycle will require considerable investment. This report presents an evaluation of financing scenarios for reprocessing facilities integrated into the nuclear fuel cycle. A range of options, from fully government owned to fully private owned, was evaluated using a DPL (Dynamic Programming Language) 6.0 model, which can systematically optimize outcomes based on user-defined criteria (e.g., lowest life-cycle cost, lowest unit cost). Though all business decisions follow similar logic with regard to financing, reprocessing facilities are an exception due to the range of financing options available. The evaluation concludes that lowest unit costs and lifetime costs follow a fully government-owned financing strategy, due to government forgiveness of debt as sunk costs. Other financing arrangements, however, including regulated utility ownership and a hybrid ownership scheme, led to acceptable costs, below the Nuclear Energy Agency published estimates. Overwhelmingly, uncertainty in annual capacity led to the greatest fluctuations in unit costs necessary for recovery of operating and capital expenditures; the ability to determine annual capacity will be a driving factormore » in setting unit costs. For private ventures, the costs of capital, especially equity interest rates, dominate the balance sheet; the annual operating costs dominate the government case. It is concluded that to finance the construction and operation of such a facility without government ownership could be feasible with measures taken to mitigate risk, and that factors besides unit costs should be considered (e.g., legal issues, social effects, proliferation concerns) before making a decision on financing strategy.« less

Authors:
;
Publication Date:
Research Org.:
Idaho National Laboratory (INL)
Sponsoring Org.:
DOE - NE
OSTI Identifier:
911262
Report Number(s):
INL/EXT-05-01021
TRN: US0704499
DOE Contract Number:
DE-AC07-99ID-13727
Resource Type:
Technical Report
Country of Publication:
United States
Language:
English
Subject:
99 - GENERAL AND MISCELLANEOUS//MATHEMATICS, COMPUTING, AND INFORMATION SCIENCE; BUSINESS; CAPITAL; CONSTRUCTION; EXPENDITURES; FINANCING; FLUCTUATIONS; FUEL CYCLE; INTEREST RATE; LIFE-CYCLE COST; LIFETIME; NEA; NUCLEAR FUELS; OPERATING COST; OWNERSHIP; PROGRAMMING LANGUAGES; PROLIFERATION; REPROCESSING; Financing; Fuel Reprocessing

Citation Formats

David Shropshire, and Sharon Chandler. Financing Strategies for Nuclear Fuel Cycle Facility. United States: N. p., 2005. Web. doi:10.2172/911262.
David Shropshire, & Sharon Chandler. Financing Strategies for Nuclear Fuel Cycle Facility. United States. doi:10.2172/911262.
David Shropshire, and Sharon Chandler. Thu . "Financing Strategies for Nuclear Fuel Cycle Facility". United States. doi:10.2172/911262. https://www.osti.gov/servlets/purl/911262.
@article{osti_911262,
title = {Financing Strategies for Nuclear Fuel Cycle Facility},
author = {David Shropshire and Sharon Chandler},
abstractNote = {To help meet our nation’s energy needs, reprocessing of spent nuclear fuel is being considered more and more as a necessary step in a future nuclear fuel cycle, but incorporating this step into the fuel cycle will require considerable investment. This report presents an evaluation of financing scenarios for reprocessing facilities integrated into the nuclear fuel cycle. A range of options, from fully government owned to fully private owned, was evaluated using a DPL (Dynamic Programming Language) 6.0 model, which can systematically optimize outcomes based on user-defined criteria (e.g., lowest life-cycle cost, lowest unit cost). Though all business decisions follow similar logic with regard to financing, reprocessing facilities are an exception due to the range of financing options available. The evaluation concludes that lowest unit costs and lifetime costs follow a fully government-owned financing strategy, due to government forgiveness of debt as sunk costs. Other financing arrangements, however, including regulated utility ownership and a hybrid ownership scheme, led to acceptable costs, below the Nuclear Energy Agency published estimates. Overwhelmingly, uncertainty in annual capacity led to the greatest fluctuations in unit costs necessary for recovery of operating and capital expenditures; the ability to determine annual capacity will be a driving factor in setting unit costs. For private ventures, the costs of capital, especially equity interest rates, dominate the balance sheet; the annual operating costs dominate the government case. It is concluded that to finance the construction and operation of such a facility without government ownership could be feasible with measures taken to mitigate risk, and that factors besides unit costs should be considered (e.g., legal issues, social effects, proliferation concerns) before making a decision on financing strategy.},
doi = {10.2172/911262},
journal = {},
number = ,
volume = ,
place = {United States},
year = {Thu Dec 01 00:00:00 EST 2005},
month = {Thu Dec 01 00:00:00 EST 2005}
}

Technical Report:

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  • To help meet the nation’s energy needs, recycling of partially used nuclear fuel is required to close the nuclear fuel cycle, but implementing this step will require considerable investment. This report evaluates financing scenarios for integrating recycling facilities into the nuclear fuel cycle. A range of options from fully government owned to fully private owned were evaluated using DPL (Decision Programming Language 6.0), which can systematically optimize outcomes based on user-defined criteria (e.g., lowest lifecycle cost, lowest unit cost). This evaluation concludes that the lowest unit costs and lifetime costs are found for a fully government-owned financing strategy, due tomore » government forgiveness of debt as sunk costs. However, this does not mean that the facilities should necessarily be constructed and operated by the government. The costs for hybrid combinations of public and private (commercial) financed options can compete under some circumstances with the costs of the government option. This analysis shows that commercial operations have potential to be economical, but there is presently no incentive for private industry involvement. The Nuclear Waste Policy Act (NWPA) currently establishes government ownership of partially used commercial nuclear fuel. In addition, the recently announced Global Nuclear Energy Partnership (GNEP) suggests fuels from several countries will be recycled in the United States as part of an international governmental agreement; this also assumes government ownership. Overwhelmingly, uncertainty in annual facility capacity led to the greatest variations in unit costs necessary for recovery of operating and capital expenditures; the ability to determine annual capacity will be a driving factor in setting unit costs. For private ventures, the costs of capital, especially equity interest rates, dominate the balance sheet; and the annual operating costs, forgiveness of debt, and overnight costs dominate the costs computed for the government case. The uncertainty in operations, leading to lower than optimal processing rates (or annual plant throughput), is the most detrimental issue to achieving low unit costs. Conversely, lowering debt interest rates and the required return on investments can reduce costs for private industry.« less
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