and try to produce assessments that account for as many consequences of an
accident as possible. Even if this is necessary for the aforementioned goals, it fails
to provide insights into how the aftermath of nuclear accidents might be mitigated.
Indeed, numerous countermeasures are available and can help reduce the impact of
a nuclear accident on the economy. Yet, few economic studies try to assess the
impact of mitigation policies on the cost of nuclear accidents. Those who do reduce
their scope to a specific nuclear countermeasure—such as land decontamination—
often yield less uncertain results or clearer insights for policy-makers. Therefore, we
stress the need for future research in the economics of nuclear countermeasures,
which could provide guidelines for mitigation policies.
2 Evaluating the Expected Cost of Nuclear Power
2.1 Limitations in Estimating the Probabilities of Nuclear
Accidents
The expected costs of nuclear accidents seen as car crashes
How to compare different technologies to produce electricity? What is the optimal
mix of power generation? To answer these questions economists use the levelized
cost of electricity (hereafter, LCOE), defined as the price of electricity required to
balance discounted costs and benefits throughout a power plant’s service life. From
a welfare perspective, the costs and benefits must include both the private costs the
operators will incur (e.g., fuel costs) and the external costs society will have to pay
for (e.g., polluting emissions). For instance, the UK department of energy and
climate change estimates the LCOE of a Combined Cycle Gas Turbine and of a
nuclear power plant (hereafter, NPP) to respectively 80 and 90£/MWh for a project
starting in 2013 with a 10% discount rate.
1
As far as nuclear generation is concerned, accidents have to be included in the
LCOE. However, this inclusion has a negligible impact because the huge amount of
damage is multiplied by an infinitesimal probability. Let’s consider a simple
back-of-the-envelope calculation: 1 billion euros of damage and a large early
release frequency of 10
−5 per reactor-year. This leads to 1 €/MWh, that is about one
hundredth of the total cost to produce one MWh from a nuclear plant. According to
a recent study on nuclear costs based on a comprehensive literature survey [1], the
order of magnitude of external costs due to nuclear accident is between 0.3 and .
Such an approach to compute the social external cost of nuclear power generation is far from satisfactory. It views nuclear accidents as transport crashes. It is
1
DECC, Electricity Generation Costs 2013, https://www.gov.uk/government/uploads/system/
uploads/attachment_data/file/223940/DECC_Electricity_Generation_Costs_for_publication_-_
24_07_13.pdf.
The Economic Assessment of the Cost of Nuclear Accidents
81
accident as possible. Even if this is necessary for the aforementioned goals, it fails
to provide insights into how the aftermath of nuclear accidents might be mitigated.
Indeed, numerous countermeasures are available and can help reduce the impact of
a nuclear accident on the economy. Yet, few economic studies try to assess the
impact of mitigation policies on the cost of nuclear accidents. Those who do reduce
their scope to a specific nuclear countermeasure—such as land decontamination—
often yield less uncertain results or clearer insights for policy-makers. Therefore, we
stress the need for future research in the economics of nuclear countermeasures,
which could provide guidelines for mitigation policies.
2 Evaluating the Expected Cost of Nuclear Power
2.1 Limitations in Estimating the Probabilities of Nuclear
Accidents
The expected costs of nuclear accidents seen as car crashes
How to compare different technologies to produce electricity? What is the optimal
mix of power generation? To answer these questions economists use the levelized
cost of electricity (hereafter, LCOE), defined as the price of electricity required to
balance discounted costs and benefits throughout a power plant’s service life. From
a welfare perspective, the costs and benefits must include both the private costs the
operators will incur (e.g., fuel costs) and the external costs society will have to pay
for (e.g., polluting emissions). For instance, the UK department of energy and
climate change estimates the LCOE of a Combined Cycle Gas Turbine and of a
nuclear power plant (hereafter, NPP) to respectively 80 and 90£/MWh for a project
starting in 2013 with a 10% discount rate.
1
As far as nuclear generation is concerned, accidents have to be included in the
LCOE. However, this inclusion has a negligible impact because the huge amount of
damage is multiplied by an infinitesimal probability. Let’s consider a simple
back-of-the-envelope calculation: 1 billion euros of damage and a large early
release frequency of 10
−5 per reactor-year. This leads to 1 €/MWh, that is about one
hundredth of the total cost to produce one MWh from a nuclear plant. According to
a recent study on nuclear costs based on a comprehensive literature survey [1], the
order of magnitude of external costs due to nuclear accident is between 0.3 and .
Such an approach to compute the social external cost of nuclear power generation is far from satisfactory. It views nuclear accidents as transport crashes. It is
1
DECC, Electricity Generation Costs 2013, https://www.gov.uk/government/uploads/system/
uploads/attachment_data/file/223940/DECC_Electricity_Generation_Costs_for_publication_-_
24_07_13.pdf.
The Economic Assessment of the Cost of Nuclear Accidents
81