Decision-support tool for assessing future nuclear reactor generation portfolios
Energy Economics , Volume 44 p. 99- 112
Capital costs, fuel, operation and maintenance (O&M) costs, and electricity prices play a key role in the economics of nuclear power plants. Often standardized reactor designs are required to be locally adapted, which often impacts the project plans and the supply chain. It then becomes difficult to ascertain how these changes will eventually reflect in costs,which makes the capital costs component of nuclear power plants uncertain. Different nuclear reactor types compete economically by having either lower and less uncertain construction costs, increased efficiencies, lower and less uncertain fuel cycles and O&M costs etc. The decision making process related to nuclear power plants requires a holistic approach that takes into account the key economic factors and their uncertainties. We here present a decision-support tool that satisfactorily takes into account the major uncertainties in the cost elements of a nuclear power plant, to provide an optimal portfolio of nuclear reactors. The portfolio so obtained, under our model assumptions and the constraints considered, maximizes the combined returns for a given level of risk or uncertainty. These decisions are made using a combination of real option theory and mean–variance portfolio optimization.
Jain, S., Roelofs, F., & Oosterlee, K. (2014). Decision-support tool for assessing future nuclear reactor generation portfolios. Energy Economics, 44, 99–112. doi:10.1016/j.eneco.2014.03.021