DE DETERMINACIÓN, RECAUDACIÓN Y COBRO DEL IMPUESTO DEL 1.5 POR MIL SOBRE LOS ACTIVOS TOTALES EN EL CANTÓN PUCARA.

Fossil based electricity generation has considerably higher external costs than nuclear power and renewable technologies. Through safety and environmental regulations, the nuclear industry has already internalized the bulk of its potential external costs.¹³

As mentioned earlier, cost is an important factor, although a plethora of other factors ought to also be considered in deciding whether to construct an NPP (such as available alternatives, the structure of electricity demand and market structure as well as regulatory and investment environments). Other things being equal, nuclear power’s front loaded cost structure is less attractive to a private investor in a liberalized market that values rapid returns than to a government that can consider the longer term, particularly in a regulated market that ensures attractive returns. Private investment in liberalized markets will also depend on the extent to which energy related external costs and benefits have been internalized. In contrast, governmental investors can incorporate such externalities directly into their decisions. All these factors, including regulatory risks, political support and public acceptance, vary across countries.

The magnitude of the investment needed is often presented by the overnight cost indicator that seeks to capture the capital costs incurred if an NPP could be built instantaneously (or overnight), thereby abstracting from costs such as escalation and interest during construction (IDC). The most recent data on the overnight costs for nuclear power projects are US $1800–6600/kW(e) — with the mean around US $4500/kW(e) (Fig. 17). The variations in the investment cost levels can be explained by factors ranging from site characteristics and plant types/sizes to country specific financial, technical and regulatory conditions. The high end estimates are recorded in Western Europe and the USA whereas the lowest estimates are reported for China and the Republic of Korea. Particularly high overnight investment costs are encountered when constructing a first of a kind reactor and costs tend to decline when moving towards the construction of a fully mature nth of a kind plant. For instance, a potential saving of 10% in the total design and construction costs was recently estimated if a nuclear fleet¹⁴ of up to eight new reactors was to be built by 2030 in the United Kingdom [54].

Overall or total capital costs also include both escalation and financing cost, mostly IDC. Given the large upfront capital requirements and lengthy construction periods associated with a nuclear project, IDC can be substantial:

with a typical profile of spending on a nuclear plant construction, IDC could amount to US $1 billion over a five year construction period if financed at an interest rate of 5% and to as much as US $2.8 billion over a seven year period if financed at an interest rate of 10% [55]. On the one hand, IDC could be reduced if the construction period were shortened and if the nuclear industry were able to improve its performance to deliver “on time and to budget” (Ref. [52] p. 12). Alternatively, IDC could be reduced significantly if the required financial resources were obtained at lower cost. This cost reflects various risk factors such as construction risks (cost and duration), electricity price and regulatory risks (nuclear safety regulation) that can impact planning and construction times. It remains crucial to clearly define the roles and responsibilities of different stakeholders involved in a nuclear project (vendors, utility, host country, local supply chain participants and regulators) so that the risks can be better allocated among them.

Table 2 provides a summary of emerging models to reduce the riskiness of a nuclear project and examples of their successful implementation.

14 A fleet is defined as two or more pairs of reactors relying on the same reactor technology and common design of the conventional island and the balance of plant.

FIG. 17. Overnight investment cost estimates for selected electricity (and heat) generation technologies. Data source: Based on Ref. [49]. Note: CHP — combined heat and power;

CSP — concentrating solar power; PV — photovoltaic; OCGT – open cycle gas turbine;

CCGT — combined cycle gas turbine.

TABLE 2. ACTIONS SUPPORTING THE FINANCING OF A NUCLEAR PROJECT

(Based on Refs [52, 55, 56])

Action Features Example

Government-to-government financing Financing is procured at government-to-government level, and its availability is specific to certain countries

• Implemented by the Russian Federation in a number of countries, including Bangladesh, Belarus, India, Viet Nam, Nigeria.

• Implemented by China in Pakistan.

TABLE 2. ACTIONS SUPPORTING THE FINANCING OF A NUCLEAR PROJECT (cont.)

Action Features Example

Loan guarantees provided by host country governments or export credit agencies (ECAs*)

Guarantees may assure lenders of receiving full repayment of the loan and any interest owed on the guaranteed amount or they may protect the lender against a portion of potential losses

• Loans backed by the US Department of Energy and furnished by the Federal Financing Bank for developing the Vogtle 3 and 4 reactors in Georgia, USA.

• UK Treasury guaranteed debt may finance 65% of the expected total costs of the Hinkley Point C nuclear project prior to operation.

• The ECA’s financing has been the key source of nuclear financing in the past and continues to play a role in most nuclear financing models.

Mechanisms to reduce electricity market risks

Mitigates uncertainties in long term electricity prices and hence assures lower interest rates by including an agreement to purchase some or all of the electricity generated by the NPP at a fixed price

• The UK’s Contract for Difference effectively fixes the price of electricity at a strike price for the first 35 years of the Hinkley Point C project; consumers are committed through legislation to pay or receive the difference between the market price and the strike price, depending on which one is higher.

• The total cost of the Akkuyu NPP project in Turkey is backed by a 15 year power purchase agreement for 70% of the electricity generated by the first two units and 30% of the last two units at an average price of US cents 12.35/kW∙h.

• The Mankala model (Finland), in which a consortium of electricity consumers (shareholders) benefit from the equivalent of a long term supply contract and stable electricity rates.

TABLE 2. ACTIONS SUPPORTING THE FINANCING OF A NUCLEAR PROJECT (cont.)

Action Features Example

Vendor financing in the form of equity stake

Addresses short term financing constraints on raising large amounts of long term debts

• The United Arab Emirates contract provides for equity shares for the Emirates Nuclear Energy

Corporation and the Korea Electric Power Corporation for the design and construction of four 1.4 GW(e) NPPs.

• ROSATOM (State owned company of the Russian Federation) is implanting a ‘build, own and operate’

model for four NPPs (a total of 4.8 GW(e)) to be constructed in Akkuyu, Turkey (see also the discussion of mechanisms to reduce market risks above).

* ECAs are sovereign or quasi-sovereign entities designed to promote the exports of a country.

In addition to the financing models outlined in Table 2, the latest report of the Intergovernmental Committee of Experts on Sustainable Development Financing (ICESDF) emphasizes the need to internalize externalities and mainstream environmental sustainability when mobilizing domestic public financing [57].

Policy measures such as cap and trade systems and carbon taxes seek to curb GHG emissions by raising the price of emissions and internalizing externalities. Such incentives could also support nuclear investments. Nonetheless, carbon markets remain relatively small, covering only 7% of the world’s emissions. Furthermore, the impact of current carbon prices on the returns of low carbon investments is not sufficient to fill the gap between the private and social returns of such projects. The ICESDF report also suggests considering other governmental policies such as subsidizing R&D of clean technologies, tax incentives and feed-in tariffs as well as the inclusion of environmental accounting into national GDP assessments. It is important that, in changing the investment patterns, such public policies support a level playing field for all low carbon sources.

International public finance complements and facilitates national efforts on sustainable development. The future role of development banks in the financing of NPPs is currently unclear. Although they have financed past projects, development banks are not at present financing nuclear plants, but could potentially play a role in assisting developing countries interested in nuclear energy [52]. With a view to financing global sustainable development, the ICESDF report suggests further exploration of innovative mechanisms in the international community. International financial institutions, including the World Bank and other development banks, and specialized mechanisms, such as the Global Environmental Facility, the Climate Investment Fund and the Green Climate Fund, have the potential to increase the mobilization and deployment of finance for sustainable development.

In search of such an enabling environment for financing sustainable development, nuclear arguably merits treatment on an equal footing with other low carbon technologies and inclusion in the intergovernmental discussions and negotiations for the post-2015 development agenda on financing sustainable development.