The costs of generating electricity and the competitiveness of nuclear power

• The competitiveness of nuclear power depends on the risk perceived by investors.
• The LCOE methodology allows to incorporate market risks in the value of the cost of capital.
• MIT results published in 2003 are compared with those presented in 2009.
• The analysis reveals much higher prices.
• The weights of the main factors affecting the viability of nuclear power are determined.

This paper provides an analysis on the costs of generating electricity from nuclear and fossil sources (coal and natural gas) based on the most recent technical data available in literature. The aim is to discuss the competitiveness of nuclear power in a liberalized market context by considering the impact on the generating costs of the main factors affecting the viability of the nuclear option. Particular attention will be devoted to study the variability of the generating costs regarding the level of risk perceived by investors through a sensitivity analysis of the generating costs with respect to the cost of capital and the debt fraction of initial investment. The impact of environment policies is also considered by including a “tax” on carbon emissions. The analysis reveals that nuclear power could have ample potentiality also in a competitive market, particularly if the level of risk perceived by the investors keeps standing low. For low values of the cost of capital, nuclear power seems to be the most viable solution. Uncertainty about environmental policies and unpredictability of carbon emissions costs might offer further margins of competitiveness.