Compared to the fossil-fuel fired power plants, nuclear power reactors have high capital costs, slightly higher operation and maintenance (O&M) costs but very low fuel costs, which make it competitive with other forms of electricity generation. It is difficult to correlate the capital costs of nuclear power plants built or planned for construction at different places, at different times, and with different scopes of supply.
Moreover, it is not always clear whether the quoted prices are overnight costs or inclusive of escalation and interest during construction. Costs can also vary depending on construction period and local costs of labour and materials. In some cases, the first fuel load is included in the capital cost, though it is supposed to be a part of the fuel costs.
During the last several years, there has been a sharp increase in the cost of construction of nuclear power plants, partly for the incorporation of improved safety features, and partly for increase in costs of materials. Under such circumstances, what would be the cost of the proposed Rooppur Nuclear Power Plant?
It may be recalled that Russia agreed to build and finance a nuclear power plant consisting of two VVER-1000 reactors at Rooppur. The Russians are now performing a feasibility and environmental impact assessment study on the project plus some preparatory works at the project site under two separate agreements worth about $311 million.
It is interesting to note that even though there has been no statement by the Russians on the likely cost of the nuclear power plant at Rooppur, certain individuals in Bangladesh have stated, on several occasions, that the cost would be between Tk12,000 crore ($1.5 billion) and Tk15,000 crore (nearly $2 billion) per reactor.
It was further disclosed that Russia would finance 85% of the cost of the plant on soft terms. Again, the terms were not specified. If we convert the costs into dollar per kWe for the purposes of comparison, Tk1,500 crore for a 1,000 MWe plant comes to close to USD 2,000/kWe.
At present, this price is no longer quoted. Perhaps, a revision of the cost is on the table. The real cost may be known after the feasibility study now being prepared by NIAEP-ASE, or after the signing of the contract with Atomstroyexport (ASE). Both NIAEP-ASE and Atomstroyexport are, by the way, subsidiary companies of the State Atomic Energy Corporation (Rosatom) of the Russian Federation.
It will be interesting to note whether NIAEP-ASE, a consultant to Bangladesh Atomic Energy Commission (BAEC), works in the interest of its client or in the interest of its sister organisation Atomstroyexport, in estimating the cost of the plant as a conflict of interest is obvious in this case.
Now let us examine the costs of some nuclear power reactors, built recently or planned with confirmed commitment, in Asia and East Europe. The following information was taken from country reports on nuclear power prepared by the World Nuclear Association.
Russia built two 1060 MWe VVER-1000 reactors at Tianwan in Jiangsu province of China. The cost is reported to be $3.2 billion, with China contributing $1.8 billion.
It was announced in 2012 that the Akkuyu Nuclear Power Plant, consisting of four VVER-1200 reactors, in Turkey would cost $18.7 billion, and that Russia would fully finance the project to more than $20 billion.
In October 2010, an intergovernmental agreement was signed for Atomstroyexport to build the Ninh Thuan 1 nuclear power plant in Vietnam, using two VVER-1000 or 1200 reactors. Rosatom has confirmed that Russia is prepared to finance at least 85% of this first plant, ie $9 billion, and the total cost will amount to about $10 billion. This comes to $4,166/kWe, if VVER-1200 reactors are built.
The nearest location close to Rooppur and the most recent price quoted for nuclear power reactors are those of Kudankulam Units 3 and 4 in India. The price comes to $3,500/kWe. The second and the third units at the same site usually cost about 10% less than the first two units.
We are unlikely to sign the contract for Rooppur before 2015. If we adjust price increase for the first two units at Rooppur and add escalation for one year, the cost per kWe will come to $4,000, ie $4 billion for a 1000 MWe reactor.
The actual price to be negotiated between the governments of Bangladesh and Russia may be completely different for various reasons. Russia has been a trusted friend of Bangladesh since its inception and now wants to enter our nuclear market in view of its long term prospects.
Russia is also active in exploration of natural gas in our off-shore fields. Under such circumstances, nobody should be surprised if Russia makes a promotional offer with a price tag that may be much lower than the estimated price of $4,000/kWe.
There are two more issues to be considered. Since the capital charges of a nuclear plant constitute 75% or more of the cost of generation of electricity, we must negotiate for a very soft term of credit and long repayment period, preferably spread over the economic life of the plant, to lower the cost. These measures will help reduce the cost of generation of electricity from the nuclear power plant to make it competitive with other conventional forms of electricity.