Izvestiya vuzov. Yadernaya Energetika

The peer-reviewed scientific and technology journal. ISSN: 0204-3327

Criteria of return on investment in nuclear energy

6/21/2017 2017 - #02 Environmental aspects

Kharitonov V.V. Kosterin N.N.

DOI: https://doi.org/10.26583/npe.2017.2.15

UDC: 330.322.5: 338.5, 621.039.5

For the first time, analytical relationships have been defined between the investment performance criteria (Net Present Value (NPV), Levelized Cost of Electricity (LCOE), internal rate of return (IRR), discounted payback period (TC), and discounted costs (Z)) and basic engineeringeconomic parameters of nuclear reactors (capital costs K, annual operating costs Y, annual revenue R, NPP construction TC and operation TE periods), characterizing the NPP profitability and competitiveness at the microeconomic level.

The power function of discounted cash flows was used in calculations. It is shown that the joint analysis of the entire set of investment efficiency criteria (not only LCOE as it often occurs) can help avoid contradictions in assessing the NPP project profitability and formulate optimal requirements for reactor engineering and economic parameters. The obtained analytical expressions provide solutions not only to the traditional «direct problem» (to assess projected performance criteria for capital and operating costs and profit stream) but, equally important, to solve the «inverse problem»: based on the desired values of efficiency criteria, to assess restrictions on capital and operating costs, i.e. identify «investment corridors».

Due to the natural uncertainty in long-term cash flow forecasting during the NPP construction and operation, to assess the efficiency of investments, the investment risk assessment results are presented by means of the Monte-Carlo method. The calculation results of probability distributions of the investment efficiency (profitability) criteria are presented for the specified ranges of the forecasting cash flow uncertainty. It is shown that the project unprofitability risk can be quite high. To reduce investment risks, it is necessary to justify the changes in basic reactor parameters (decrease in K, Y, TC and increase in R and TE) and uncertainty ranges in the initial data.


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investment efficiency criteria nuclear energy nuclear power reactor capital and operating costs revenues discount rate NPP competitiveness Monte Carlo method