Title: The value of being able to start the construction of a nuclear power plant in Chile by 2020

Authors: Geoffrey Rothwell

Addresses: Economics Department, Stanford University, Stanford, CA 94305-6072, USA

Abstract: This paper calculates the expected value of beginning construction on Chile|s first nuclear power plant in 2020. This requires (1) an appropriate regulatory authority capable of issuing site and technology licences and construction and operating permits, (2) a committed owner-operator and investors and (3) a specified system of handling fresh and spent nuclear fuel. At that time, the Net Present Value (NPV) of the project can be calculated and compared with competing alternatives. Until that time, funds must be spent on regulatory and physical infrastructure. This paper finds that Chile should be willing to invest a positive amount on this infrastructure, even though a nuclear power plant might never be built. The benefits of being nuclear power-capable arise from uncertainty in the establishment and form of international carbon dioxide (CO₂) controls. The greater the uncertainty in knowing the social and environmental cost of CO₂, the greater the value of holding the option to build carbon-free nuclear power plants. This paper estimates this value to be between US$60 million and US$600 million based on the planner|s beliefs about binding international CO₂ constraints.

Keywords: Chilea; energy policy; nuclear energy policy; nuclear power economics; investment uncertainty; carbon dioxide controls; nuclear power plants; NPP construction; nuclear power governance; net present value; NPV; infrastructure investment.

DOI: 10.1504/IJNGEE.2009.027902

International Journal of Nuclear Governance, Economy and Ecology, 2009 Vol.2 No.4, pp.323 - 336

Published online: 16 Aug 2009 *

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