Don’t do that. China built its first AP1000s in 9 years, including waiting approximately half that time for a coolant pump. We take about that long to NEPA a transmission line. The problem is very obviously permitting.
> can extend the amortization for renewables power plants with similar effects
No, you can’t, because they aren’t being built to actually last that long. Nukes are.
> what we expect to have available in 20 years are so much better that the economic efficiency gains are worth it
You’re confusing technological progress with the time value of money. The former is unpredictable, particularly between two technologies progressing at different frontiers.
Maybe it's safety, democracy (locals and others get a say in having a local nuclear plant) or lots of other things we could speculate. What does the evidence say? And even if permitting is involved, that could just be the mechanism of safety, democracy, etc.
Words like 'obviously' and 'bunk' (in a prior comment) aren't persuasive, just provocative - they signal to me that you won't listen to anyone else (maybe you don't mean it that way).
That it’s not safety related. The evidence being in the block you quoted: it shouldn’t take 10 years to clear a wire through environmental review.
For what? These threads are littered with citations and specific data.
> Do you work in the industry?
Nope.
Yeah, because China is what we want to emulate. Of course, if it paints nuclear power in a positive light you gotta do what you gotta do.
> No, you can’t, because they aren’t being built to actually last that long. Nukes are.
Which means you do not understand economics 101, while still trying to justify something that goes against it.
They are built for a certain lifespan because that is what investors find are the optimal between construction cost and payback time. It is trivial to engineer renewable a plant to last 40 or 60 years. The construction cost would of course not double or triple to achieve this.
Thus we aim for 20 years, because that is the current optimum.
> You’re confusing technological progress with the time value of money.
Technological progress, means risk, because your solution might become obsolete and a stranded asset before it pays back the investment.
Technological progress is the time value of money. The same as political progress. Imagine you construct a factory in eastern Ukraine in 2005. What is the risk of Russia invading?
This is why the time value of money is an exponential factor, the longer out you go the larger the profit must be because the risk increases exponentially.
No, but we don’t throw out data we don’t like. Pre-AP1000, in the modern era, the data are grim. Post-AP1000 it’s much better.
> Which means you do not understand economics 101
Have you ever held a senior role in finance or banking? If you’re going to go ad hominem, don’t bring a rubber duck to a battleship.
> we aim for 20 years, because that is the current optimum
It’s because it divides by 5. It’s a short-hand, similar to the value of a company being 10x and a reasonable margin of error 15%. (It’s also an available risk-free rate in most currencies.)
> trivial to engineer renewable a plant to last 40 or 60 years. The construction cost would of course not double or triple to achieve this.
Data sorely lacking. (Outside hydro.)
> Technological progress is the time value of money
No, it is not.
> This is why the time value of money is an exponential factor
Oof, no, it’s not. Seriously, you can derive this and it’s elementary finance. Also, like, the marshmallow test.
Why aren't you answering the point? Is it that hard to substantiate your claims that a 60 year amortization + 15 year construction = 75 years is reasonable.
> Data sorely lacking. (Outside hydro.)
You mean like the data available on economic nuclear energy? :)
> Oof, no, it’s not. Seriously, you can derive this and it’s elementary finance. Also, like, the marshmallow test.
Do you see the year in the investment time ending up in the exponent? Of course in reality you expect the money to trickle in over time reducing the risk a bit.
https://www.investopedia.com/articles/03/082703.asp#toc-calc...
What do you mean reasonable? It’s real. We amortise over long time horizons in project finance all the time. Also, look up residual value. (And dams.)
And yes, I’m contesting both 60 and 15; they’re 80 and 10 and could be 80 and 5 with permitting reform. And within that latter envelope, it works with conventional financing. (The same problem plagues HVDC lines, which also take 10+ years to permit.)
> Do you see the year investment time ending up in the exponent?
You may actually enjoy reading some of the foundational texts whose concepts you’re glancing across. (Principles of Economics, Mankiw, is a classic. For a more-applied text, Fabozzi’s Fixed Income.)
You’re citing real things. But you’re connecting them nonsensically. Investopedia isn’t a replacement for training, though it’s a good reference once you’ve learned the material.
(The exponent comes from compounding time preference. Its time component is orthogonal to technological progress, which embeds in the rate. That’s why it’s constant. If you want to consider obsolescence risk, you start getting into hyperbolic discounting.)
Residual value for nuclear power plants are negative. The plant is EOL and now it is time to decommission the entire site.
Now you try to equate nuclear power with infrastructure, even though we have cheaper alternatives which the public don't even have to finance. Sounds reasonable?
For the private industry a typical expected discount rate is 10-15% above the risk free return rate to account for known and unknown risks.
Apply this to nuclear investment. For the money being returned year 60, in percentage, what is the risk?
Please calculate it, don't try to suggest different methods of "delaying gratification", that is simply trying to talk around the subject because you know the answer.
The risk premium for the expected returns year 60 are ludicrous which is why no one suggests it.
Not what residual value means.
> you try to equate nuclear power with infrastructure, even though we have cheaper alternatives which the public don't even have to finance
Infrastructure isn’t dependent on source of financing. Neither do ROI calculations, though you might scope them differently for public benefit. We are doing none of that here.
> risk premium for the expected returns year 60 are ludicrous which is why no one suggests it
Plenty of large projects model residuals and terminal value over the long term. Bankers typically stop modelling when the financing has to be rolled over for practical reasons; it’s unnecessary to be precise.
I’m genuinely curious what your background in this is.
> Please calculate it
Lots of people at federal agencies, banks and private companies are; their work is cited across these threads. But if you’re arguing about the definition of time value and infrastructure, I don’t think that’s a productive place to start. There is seldom substitute for fundamentals.
The investment horizon is so long that we can't model it. Sounds good!
Looking at Hinkley Point C, Lazard, IEA, NuScale and the French accounting agency the number is $120-180/MWh.
You've found one low quality source which massage the numbers to fit your narrative and continue harping about it.
OK, let's take China out of the equation.
What long economic payback time means is that the risks are huge. A 15 year construction and 40 year payback time and we are in the 1960s. A 60 year payback time and it's 1940s and the second world war is raging. How reasonable is it for Churchill, FDR and Stalin to predict energy investments that they only expect to get returns on in the 2020s?
All while competing solutions are already eating nuclear energy's lunch.
Trying to use long amortization is simply a crutch by people who do not understand basic economics. You can extend the amortization for renewables power plants with similar effects.
The chosen 20 years are simply because it is more economically efficient to replace them early, because what we expect to have available in 20 years are so much better that the economic efficiency gains are worth it.
Engineering a renewable plant for 40 or 60 years is trivial, it simply is not worth it.
A read for you is: "Understanding the Time Value of Money"
https://www.investopedia.com/articles/03/082703.asp