Effect of delays in NPP construction on investment efficiency

9/20/2018 2018 - #03 Nuclear power plants

Solov’yova A.P. Kharitonov V.V. Shmakov O.G.

https://doi.org/10.26583/npe.2018.3.05

An economicmathematical model for analytical calculation of the loss of efficiency of investments in nuclear power plants (NPPs) in case of delayed commissioning of the plant is presented for the first time. Both the conventional approach to investment analysis and new authors’ developments were used. Quantitative estimates of investment efficiency criteria deterioration caused by delays in commissioning of typical NPP unit by up to several years and, consequently, delays in accrual of revenues necessary for paying back bank loans and accumulation of profits, were obtained. The following two limiting scenarios of delays in the construction of the power unit were examined: 1) with constant total capital costs, i.e. with decreasing annual costs, and 2) with increasing total capital costs, i.e. with constant annual costs. It was demonstrated that the increase in duration of construction results in the decrease of the internal rate of return of the project to low values of 4 – 7% per year. With fairly low discount rate (4 – 5% per year), the project becomes unprofitable for construction periods in excess of 10 years (under scenario 2). The losses amount to more than 1 billion dollars of profit (total) for each additional year of construction of the power unit (possible fines and sanctions not included). The payback period doubles for every two years of delay in NPP commissioning and exceeds 30 years already for TC ≥ 9 years. It is important to inform all participants of the NPP construction projects about the critical impact of the length of the NPP construction period on its financial performance and about the significance of efficient project management.

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nuclear energy delays in NPP construction investment efficiency criteria capital and operating costs human factor project management

Link for citing the article: Solov’yova A.P., Kharitonov V.V., Shmakov O.G. Effect of delays in NPP construction on investment efficiency. Izvestiya vuzov. Yadernaya Energetika. 2018, no. 3, pp. 52-62; DOI: https://doi.org/10.26583/npe.2018.3.05 (in Russian).