CIGI Papers, February, 2008
Existing nuclear power plants in the United States and Canada have been recovering from the pre-1998 cost overruns, unreliability and safety concerns. The favourable economics of existing plants (after debt has been written down or otherwise managed) have attracted private sector investment in capacity uprates and life extensions. This improved performance, coupled with claimed construction cost reductions for new nuclear power plant designs, has been heralded as evidence of a "Nuclear Renaissance." Estimates comparing the economics of new nuclear plants with alternatives such as natural gas-fired generation spur debate over the accuracy of the data used. It is clear that the economics of nuclear power vary inversely with interest rates and improve as natural gas prices rise and become more volatile. In competitive electricity markets, new nuclear plants may not be financially attractive to private sector investors without government action to tilt the economics in nuclear's favour, at least for FOAK (first-of-a-kind) plants. Some governments are exploring incentives for the construction and operation of new nuclear designs in order to avoid greenhouse gas emissions and enhance energy security. The industry's response to the incentives enacted in the United States will provide fresh evidence about the economics of nuclear power.
This paper adopts a critical view of the Senlis proposals, arguing that their underlying principles - economic, social and political - diverge only marginally from those underpinning previous approaches and have little potential for success under current political conditions. The paper concludes that, despite many imperfections, the current policies in place may be optimum given both Afghanistan's present situation and the structural problems inherent in the global war against drugs.