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FAQ on Economic Modelling Working Group (EMWG)

· on 10/8/19 at 2:06 PM

  1. What are the economic goals for Generation IV systems?
  2. What is the total capital investment cost?
  3. What is levelised unit energy cost of electricity?
  4. What are the tools available for economic evaluation?
  5. Can these tools be used for any type of nuclear system?
  6. Where can I obtain G4ECONS or the Cost Estimating Guidelines?
  7. At what stage of development should the economic assessment be performed?
  8. Are Generation IV systems assessed using the GIF economic methodology?
  9. Are there other methodologies available for performing economic assessment of nuclear systems?
  10. How does GIF methodology differ from that developed by IAEA?
  11. What external factors affect the economic viability of nuclear plant?
  12. What is the difference between levelised cost and systems cost?
  13. What are the flexibility requirements for nuclear plant for integration in the grid with significant share of variable renewable resources?
  14. What considerations are required during the development of nuclear systems for flexible operation?
  15. What can Generation IV reactors offer to improve economic competitiveness?
  16. What are the options for economic viability of nuclear plants in the emerging low-carbon economy?
  17. How can co-generation applications be used to improve a reactors economic competitiveness?
  18. What is energy arbitrage? How can energy storage be used to improve a reactors economic competitiveness?
  19. What unique economic considerations are there for Small Modular Reactors?
  20. What are the benefits of performing an economic analysis early in the design process?
  21. Are there Generation IV Reactors that are SMRs ?
  22. Where can I find more information?

1. What are the economic goals for Generation IV systems?

The economic goals of Generation IV nuclear energy systems, as adopted by the Generation IV International Forum (GIF), are: • to have a life cycle cost advantage over other energy sources (i.e., to have a lower levelised unit cost of energy over their lifetime) • to have a level of financial risk comparable to other energy projects (i.e., to involve similar total capital investment and capital at risk).


2. What is the total capital investment cost?

The total capital investment cost (TCIC) formula is used to determine if the financial risk of the advanced nuclear energy system is comparable to other energy projects. The cost of first fuel core is included in the TCIC.

EMWG FAQ

Where, Direct Cost: all costs to construct a permanent plant, excluding indirect costs Indirect Costs: All costs not directly associated with a specific permanent plant, such as field construction supervision, design services, and project management or construction management services First Fuel Core: Cost of the first fuel loading which is usually supplied as part of a nuclear plant as it is necessary to commission the reactor prior to handover


3. What is levelised unit energy cost of electricity?

For a standard plant, the costs associated with non-generic licensing, capital investment, operation and maintenance of the energy plant, owner’s costs, ongoing refurbishment, fuel, waste disposal, and decommissioning the plant at the end of life, possibly including revenue offsets from byproduct production. Typically the four reported components of LUEC are (1) the capital component (recovery of capital cost over economic life); (2) the production or non-fuel operations and maintenance component; (3) the fuel component; and (4) the decontamination and decommissioning (D&D) component.

The levelised unit energy cost (LUEC) calculation in G4ECONS is used to determine if there is a life cycle cost advantage over other energy sources.

EMWG FAQ question 3

Note: All annual costs are discounted over the construction/operating life of the plant.


4. What are the tools available for economic evaluation?

The Generation IV International Forum (GIF) Economic Modeling Working Group (EMWG) has created two main tools to assist with economic evaluation.

In 2007, the EMWG published the Cost Estimating Guidelines for Generation IV Nuclear Energy Sources. This document provides a uniform set of assumptions, a uniform Code of Accounts (COA) and cost-estimating guidelines to be used in developing cost estimates for advanced nuclear energy systems. It discusses the development of all relevant life cycle costs for Generation IV systems, including the planning, research, development, demonstration (including prototype), deployment, and commercial stages.

In 2018, the EMWG released version 3 of the Generation 4 Excel-based Calculation Of Nuclear Systems (G4ECONS) software tool. This tool utilises the methodology described in the Cost Estimating Guidelines document to facilitate the development of consistent, comprehensible cost estimates of the advanced reactor concepts and designs. G4ECONS calculates the two figures of merits (TCIC and LUEC) to assess the nuclear energy system against the two economic goals of GIF.


5. Can these tools be used for any type of nuclear system?

The EMWG was established with a goal to identify a methodology and toolkit flexible enough to support the analysis of a wide variety of reactor technologies at different stages of development and technical maturity. As such the methodology can be used for any nuclear energy system and is not limited to Generation IV systems.

For capital costs, where sufficient detail exists G4ECONS-V3 allows reactor costs to be detailed following the code of accounts structure in the Cost Estimating Guidelines in order to calculate the TCIC. However, G4ECONS-V3 can also estimate the LUEC figure of merit based on a high level TCIC estimate ($/kWe).

Similarly, for operating costs G4ECONS can accept detailed annual costs or parametric costs for fixed ($/MWe) and variable ($/MWh) costs. Finally, G4ECON-V3 is also flexible enough to accommodate various fuel cycles including once through, partial recycling and fully closed fuel cycles.


6. Where can I obtain G4ECONS or the Cost Estimating Guidelines?

A copy of the G4ECONS software can be obtained free of charge from the GIF Technical Secretariat at Nuclear Energy Agency (secretariat@gen-4.org).

The Cost Estimating Guidelines for Generation IV Nuclear Energy Systems can be downloaded from the GIF Website (https://www.gen-4.org/gif/jcms/c_42161/g4econs).


7. At what stage of development should the economic assessment be performed?

Economic assessments should be performed throughout the development process.

For initial concepts, a high level economic assessment can show areas with the greatest potential to reduce cost. This information can be used to direct design development. For more developed designs, a detailed cost estimate can be used to demonstrate the economic viability of the design to potential investors and end users. As explained in question #5, G4ECONS accepts either a detail cost breakdown or a lumped parameter depending on the information available at any given stage of system development.


8. Are Generation IV systems assessed using the GIF economic methodology?

G4ECONS has been requested by a number of nuclear organizations, including reactor developers, research laboratories and universities. The users of G4ECONS have published their work in conferences and in scientific journals. Some examples of economic assessments of nuclear systems using G4ECONS can be found in the following references.

References: • Kiyoshi Ono et al., “JAEA Sodium Cooled Fast Reactor (JSFR) Total System Cost Analysis using the G4ECONS Code”, presented at the American Nuclear Society Annual Meeting, Boston, 2007 • Moore, Leung & Sadhankar, 2016, “An Economic Analysis of the Canadian SCWR Concept Using G4-ECONS”, CNL Nuclear Review, 5(2):363-372, https://doi.org/10.12943/CNR.2016.00027 • Aliki van Heek, Ferry Roelofs and Andreas Ehlert, Cost estimation with G4-ECONS for Generation IV reactor designs, Proceedings of the GIF Symposium 2012, San Diego, United States, November 14-15, 2012 • Kyoko Mukaida, Atsushi Katoh, Masayoshi Kamiya and Katsunori Ishii, “Levelized cost of electricity evaluation of SFR system considering safety measures”, ICAPP International Congress on Advances in Nuclear Power Plants, Juan-les-pins, France, May 12-15, Paris, France


9. Are there other methodologies available for performing economic assessment of nuclear systems?

The International Atomic Energy Agency (IAEA) has developed a suite of economic assessment tools some of which are being updated.

The Nuclear Energy (NESA) Economic Support Tool (NEST) allows the user to perform economic estimates of a reactor technology. In addition to the TCIC and LUEC, NEST models also calculate financial figures of merit such as Return on Investment (ROI) and Net Present Value (NPV).

IAEA’s Hydrogen Economic Evaluation Program (HEEP) allows the user to evaluate different hydrogen production techniques using nuclear thermal and/or electrical energy. G4ECONS V2.0 was benchmarked against both NEST and HEEP tools as explained in Question # 10 below.

IAEA also has Desalination Economic Evaluation Program (DEEP), which allows the user to evaluate different desalination production techniques, including the use of nuclear thermal and/or electrical energy for desalination production.


10. How does GIF methodology differ from that developed by IAEA?

A thorough benchmarking was performed between G4ECONS version 2 and the relevant NEST models. As a result of EMWG’s decision to ensure that G4ECONS is universally applicable, financial calculations such as NPV and ROI are not included. Therefore the benchmarking focused specifically on the two figures of merit: TCIC and LUEC. The analysis showed very good alignment with the two models with only minor difference in the first core fuel and fuel-reprocessing assumptions. Some modifications were made in G4ECONS version 3.0 to further improve the alignment of G4ECONS and NEST. For more information refer to: Moore, Korinny, Shropshire & Sadhankar, 2017, “Benchmarking of Nuclear Economics Tools” Annals of Nuclear Energy Vol. 103, pp. 122-129.

It should be noted that the evaluation of non-electric applications was not included in G4ECONS version 3.0, however some benchmarking was done using G4ECONS version 2.0.

A benchmarking was also performed between G4ECONS version 2.0 and the HEEP tool. The tools were used to evaluate the cost of hydrogen production using high temperature steam electrolysis coupled with a Super-Critical Water-cooled Reactor (SCWR). The results were found to be comparable. For more information refer to: Sopczak, Ryland, Sadhankar, El-Emam & Khamis, 2018, “Benchmarking of Economic Models for Nuclear Hydrogen Production”, Pacific Basin Nuclear Conference, 30 Sept – 4 Oct 2018, San Francisco, USA.


11. What external factors affect the economic viability of nuclear plant?

In many OECD counties, the penetration of variable renewable energy sources is growing while demand for electricity is flattening. This can create an environment where residual electricity demand, after electricity from variable renewables has been despatched on a priority basis, could be lower than the baseload capacity of nuclear power plants. In a liberalized electricity market this can lead to negative electricity prices, or situations where the nuclear plants sale their electricity below the variable costs. These policy- and market-driven changes adversely affect the economics of current nuclear fleet and pose a significant barrier to investment in new nuclear power plants.

For more information refer to: Impact of Increasing Share of Renewables on the Deployment of Generation IV Nuclear Systems, Economic Modeling Working Group (EMWG), September 2018 on this website.


12. What is the difference between levelised cost and systems cost?

The levelised cost of electricity is the most common metric used to compare electricity generation technologies. It represents the average cost of each unit of electricity produced by a power plant, commonly reported in $/MWh. However, within the last decade some have argued that this figure is not a true representation of what that generation technology costs the consumer. As a result there is a growing interest in systems cost.

Systems costs include the following: • the cost to produce the power, these are the levelised costs reported by G4ECONS; • the grid costs, which include transmission and distribution of the power from where it is generated to where it is consumed, as well as any storage or back-up power required to maintain grid reliability; and • the external or social costs, this can include a monetary valuation of factors such as air pollution and land disturbance that can negatively affect society.

For more information refer to the 2018 NEA report, “The Full Cost of Electricity Provision”.


13. What are the flexibility requirements for nuclear plant for integration in the grid with significant share of variable renewable resources?

Operational flexibility is generally understood as the ability of the nuclear power plant to respond to the variability of demand from the grid while maintaining the power quality. The utility requirements in Europe and the United States for the new nuclear plants specify the operational flexibility requirements in terms of load following, power ramp rates, step changes in output, primary and secondary frequency control and island mode operation. The advanced Generation IV reactors are significantly different compared to Gen III/III+ reactors and could use a variety of different fuels and coolants and operate at higher temperatures; making it suitable for applications beyond just the electricity production. Electrical Power Research Institute (EPRI) proposed expanded criteria to evaluate the flexibility of advanced reactor systems, which include deployability (scalability, siting and constructability) and product flexibility (co-generation and compatibility with hybrid energy systems).

More information on flexibility requirements can be found in the following publications. • European Utility Requirements for LWR Nuclear Power Plants, 2012, www.europeanutilityrequirements,org/ • Electric Power Research Institute (EPRI), “Advanced Light Water Reactors Utility Requirements Document”, Revision 13, Technical report No. 3002003129, 2014 • Electric Power Research Institute, “Program of Technology Innovation: Expanding the Concept of Flexibility for Advanced Reactors: Refined Criteria, a Proposed Technology Readiness Scale and Time-Dependent Technical Information Availability”, Report No. 3002010479, November 2017 • Electric Power Research Institute, “Program on Technology Innovation: Owner-Operator Requirements Guide (ORG) for Advanced Reactors, Revision 0, Technical Report No. 3002011802, March 2018 • International Energy Agency, “Status of Power Systems Transformation 2018: Advanced Power Plant Flexibility – Technical Annexes”, 2018 • International Atomic Energy Agency, IAEA Nuclear Energy Series, “Non-Baseload Operation in Nuclear Power Plants: Load Following and Frequency Control Modes of Flexible Operation”, NP-T-3.23, 2018.


14. What considerations are required during the development of nuclear systems for flexible operation?

Flexibility requirements mentioned above should be taken into consideration during the research and development stage of Gen IV systems. For example, the load following mode of operation could induce thermomechanical stresses and lead to accelerated ageing of the components and may require increased inspection and maintenance. Material selection and component and control system design should take into consideration the operation flexibility requirements. To improve deployability, the system developers should also consider the ease of construction by considering factory assemblies and modular construction. The reduction of overnight capital costs through modular constructions and factory fabrication will also be important considerations for deployability. To enable the system to be deployed for more than one mission, the developers should also look at the requirements for safe and effective transfer of thermal energy with capability of fast switching between the thermal and electrical output.

More information on development of Gen IV systems can be found in the following references: • Generation IV International Forum, “GIF R&D Outlook for Generation IV Nuclear Energy Systems”, 2019. • Generation IV International Forum, “Technology Roadmap Update for Generation IV Nuclear Energy Systems, 2013.


15. What can Generation IV reactors offer to improve economic competitiveness?

Generation IV reactor systems are being developed to have improved built-in operational flexibility compared to current generation reactors. For example, the fast reactor concepts being developed as Generation IV systems would not have limitations of xenon poisoning of fuel at extended operation at lower load. The fast reactors would have a greater power density and higher fuel burn-up. For some of the Generation IV systems, thermal fluctuations can be avoided by controlling the coolant flow to adjust the power output. Additionally, the Generation IV systems are more amenable for co-generation applications because of higher outlet temperatures, thus reducing the time the reactor has to operate at low load factor.

More information can be found in the following references: • International Atomic Energy Agency, “Opportunities for Cogeneration with Nuclear Energy”, IAEA Nuclear Energy Series, NP-T-4.1, 2017. • International Atomic Energy Agency, “Examining Technoeconomics of Nuclear Hydrogen Production and Benchmark Analysis of the IAEA HEEP Software”.


16. What are the options for economic viability of nuclear plants in the emerging low-carbon economy?

Nuclear plants are typically characterized by high capital cost and low variable costs. Therefore, the plants have to operate at full capacity to derive the full economic benefit. However, with the advent of abundant variable energy resources on the grid, the nuclear power plants may be required to operate in power modulating mode, with overall lower capacity factor, thus adversely impacting its economic viability. Possibility of providing thermal energy for industrial applications presents opportunities for Generation IV systems to operate at high capacities while meeting the variable electrical demand from the grid, thus improving its economic viability. Generation IV reactors will also be better suited for the proposed nuclear hybrid energy systems which would improve the economics of integrated system. Policies that are conducive to nuclear deployment and recognize nuclear contribution in combating the climate change would also be critical for the economic viability of new nuclear deployment. Some of the policies to enable economic viability of nuclear in the low-carbon energy market include carbon taxes, zero-emission credits, electricity pricing that recognizes reliability contribution of nuclear, and favourable financing of new nuclear plants including loan guarantees and long-term power purchase agreements. • International Energy Agency, “ Nuclear Power in a Clean Energy System”, May 2019. • Nuclear Energy Agency, “Carbon Pricing, Power Markets and the Competitiveness of Nuclear Power – Executive Summary”, 2011. • Nuclear Energy Agency, “Nuclear Energy and Renewables – System Effects in Low-Carbon Electricity Systems”, 2012. • Nuclear Energy Agency, “The Full Costs of Electricity Provision”, 2018.


17. How can co-generation applications be used to improve a reactors economic competitiveness?

Co-generation is generally understood as the simultaneous production of electricity and thermal energy for heat; and is also called as combined heat and power (CHP) mode of operation. However, in some cases, production of radio-isotopes that make use of neutrons instead of thermal/electrical energy has also been referred to co-generation. There have been numerous low-temperature cogeneration applications in the past but these accounted for <1% of the total nuclear output to date. Generation IV reactors with high outlet temperatures would be more amenable to many more applications of thermal energy, especially in the industrial sector to replace fossil fuels for thermal energy, as identified in EUROPAIRS study. Co-generation improves economic viability of nuclear by: • achieving overall high capacity factors, • alternate revenue through sale of co-generated product or steam or heat • avoiding selling of electricity below variable cost, and • avoiding selling electricity at negative prices

More information on nuclear cogeneration can be found in the following references: • International Atomic Energy Agency, “Industrial Applications of Nuclear Energy”, IAEA Nuclear Energy Series, NP-T-4.3, 2017. • International Atomic Energy Agency, Proceedings series, “Non-Electric Applications of Nuclear Power: Sea Water Desalination, Hydrogen Production and Other Industrial Applications”, Proceedings of an International Conference, Oarai, Japan 16-19 April 2007, IAEA-CN-152, 2009. • International Atomic Energy Agency, “ Advances in Nuclear Power Process Heat Applications”, IAEA-TECDOC-1682, May 2012. • Alexandre Bredimas, “Results of a European Industrial Heat Market Analysis as a Prerequisite to Evaluating the HTR Market in Europe and Elsewhere”, Nuclear Engineering and Design, vol. 271, pp 41-45, 2004. • EUROPAIRS Final Report Summary, EU Cordis Website.


18. What is energy arbitrage? How can energy storage be used to improve a reactors economic competitiveness?

Energy arbitrage occurs when storage is used to take advantage of a time-of-use pricing structure. During periods of low demand, the storage facility buys excess power at a low cost and stores it. Then during periods of high demand, when the price for electricity is higher, the storage facility will sell the stored electricity for a profit. Depending on the storage technology and time-of-use pricing structure this can represent a significant revenue stream for the storage facility.

In addition, energy arbitrage can also help improve reliability of a grid by storing excess power during times of low demand for use during peak periods when the system may struggle to meet demand with existing generation capacity.


19. What unique economic considerations are there for Small Modular Reactors?

Small modular reactors (SMRs) can offer unique economic advantages that are not possible with large nuclear reactors.

SMRs are designed in modules that can be fabricated in a factory and assembled on site. Although some components in large reactors can be modular, the small size of SMRs allow them to be completely modular. In some cases the entire integral reactor can be fabricated as a module in a factory and shipped to site in a single piece. Factory fabrication achieves benefits from economies of replication as the factory gains experience procuring reactor modules for various sites, and the lower factory labour rate.

To further leverage the benefits of factory fabrication, SMRs are intended to be standardized. With a single design that is suitable for many applications and locations, limited re-work is required with each successive deployment.

Due to the low electrical output, SMRs are more scalable. Initially only one or two reactor units may be built at a site, supplying a modest amount of electricity to a nearby community and/or industrial site. As demand grows, additional reactor units can be added over time. The scalability and ease of on-site construction of SMRs make it amenable to unique applications – such as remote industrial or mining sites, remote communities or distributed smaller grids that are looking for reliable energy supply not affected by fuel price fluctuations.

Finally, SMR requires smaller capital investment compared to large-scale reactors and thus reduces the financial risks for the investors.

More information on Small Modular Reactors can be found in the following reference: • IAEA, Advances in Small Modular Reactor technology developments, Edition 2018.


20. What are the benefits of performing an economic analysis early in the design process?

An economic analysis performed early in the design process can provide designers with valuable insights and information about key cost drivers for their design. This will help focus efforts to improve the cost competitiveness of the technology and reduce the need for rework later in the development process.


21. Are there Generation IV Reactors that are SMRs ?

Yes, several of the Generation IV reactor concepts are SMRs, however, not all SMRs are Generation IV.


22. Where can I find more information?

The Cost Estimating Guidelines for Generation IV Nuclear Energy Systems can be found on the EMWG website.

Copy of the G4ECONS v3.0 User Manual and a CD can be obtained by writing to the GIF Technical Secretariat. Training seminars are offered on request; please contact GIF Technical Secretariat (secretariat@gen-4.org).

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