NEA press room

Economics of nuclear power FAQs

How much does it cost to build a nuclear power plant?

Exact figures for the construction of nuclear power plants are often commercially sensitive and hard to provide. However, a typical cost for construction of a Generation III reactor between 1400 - 1800 MW in OECD countries might be in the region of USD 5 - 6 billion. In non-OECD countries such as China, the cost of reactors is lower. Generally reactors which are first-of-a-kind are more expensive to build than those which are built in a series with previous experience of construction.

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How long does it take to build a nuclear power plant?

As nuclear power plants are complex construction projects, their construction periods are longer than other large power plants. It is typically expected to take 5 to 7 years to build a large nuclear unit (not including the time required for planning and licensing). Currently in countries such as South Korea and China, typical construction times range from 4 to 6 years, and in European countries construction may take between 6 and 8 years. In comparison, large coal plants can be built in about 4 years, while the construction time for natural gas fired plants is around 3 years.

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Who can afford to build nuclear power plants?

In a few countries there are very large, well-capitalised electricity utilities that are able to finance nuclear construction from their “balance sheet”, at least for a limited number of plants. Some of these are fully or partly state-owned, while others are vertically integrated (giving them direct access to electricity customers) which reduces risk as any cost increases can be passed on. To some extent, utilities may be able to share risks with nuclear power plant suppliers and contractors, as well as with other investors (including banks and investment funds). Support through public loan guarantees, export finance and long-term contracts can also lower the cost of capital.

Several models for financing nuclear power plants exist. Apart from financing through a strong balance sheet, there is also the possibility that major electricity consumers invest in a plant, such as in the case of Olkiluoto-3 in Finland. Construction may also be on a build-own-operate (BOO) basis. This is the scheme under which Atomstroyexport of Russia is building a nuclear power plant at Akkuyu in Turkey, and is the first nuclear power plant project to be constructed under these terms.

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Why are financing costs so important to nuclear power plant projects?

Due to the high initial investment costs of nuclear power plants (overnight costs), the financing costs during construction are very high. Together they can constitute up to 75% of the total lifetime costs of a nuclear power plant that will run for 40 to 60 years. On the other hand, operating costs are low and stable. Nevertheless, due to the high initial outlay required, those financing nuclear power plants may demand interest rates sufficient to compensate for risk.   

The cost of financing is often significantly lower in emerging economies, as plants are usually built by publicly owned utilities with access to cheaper government-backed finance. Such projects are usually part of central energy planning, which further reduces construction risks as prices are regulated. This is the case in China. In the United States, the federal government recently offered loan guarantees for two new reactors at Georgia’s Vogtle plant.

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Is the management of radioactive waste taken into account in the cost of nuclear-generated electricity?

The cost of radioactive waste management is typically taken into account by a charge on every megawatt produced. The sums set aside are placed in a fund which is often managed centrally or by a separate national organisation (that fund will accrue interest to constitute the capital required when the time comes to dispose of the waste). With a charge of only a few euros per megawatt hour (it is one USD for every MWh in the United States), this typically represents a substantial sum (there may be, for example, 8 000 operating hours in a year, which multiplied by several megawatts and over the lifetime of a power plant would yield an adequate sum for waste management).

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Do figures on the cost of nuclear power take into account the decommissioning of nuclear power plants?

Yes. In the IEA/NEA study Projected Costs of Generating Electricity (2010), the decommissioning costs of the nuclear power plants reviewed were included in the levelised cost calculations. While the absolute sums can be very significant, decommissioning accounts for a relatively small portion of the levelised costs of electricity due to the effect of discounting. For nuclear power plants, decommissioning costs are due after 60 years of operation and are discounted back to the commissioning date (which in the study is 2015). This means that the net present value of decommissioning is close to zero, even when assuming much higher decommissioning costs.

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Last reviewed: 8 June 2014