Editor –
We have had the pleasure of reading your article entitled ‘SA meets more nuclear vendors amid “costly diversion” criticism’, and would like to share our opinion on the cost of electric power and why we can confirm that the cost of electric energy generated by a nuclear power plant (NPP) is the most predictable for the end-user.

Actually, the consumer is not very interested in how electrical energy is produced; the most important aspect is the price. We at Rosatom, for example, can guarantee a certain price for electrical energy generated by an NPP built by us. This is due to the fact that we control the entire process chain – from uranium production to the construction of NPPs and finally the sale of electrical energy.

Rosatom has been purposefully creating the entire chain to achieve this objective; for example, we have included a machine-building division into the State corporation. The fact that we can control the cost of every stage of production enables us to control and guarantee the price of electrical energy generated by a Rosatom-built NPP.

One of the challenges faced by the nuclear energy sector nowadays is the ability to ensure its competitive advantage in comparison with power generated from hydrocarbon raw materials. Today, it is often said that nuclear energy is more expensive, but this depends on the calculations. It is true that NPPs are expensive to build, but the process of generating electrical power is far cheaper in comparison with that of gas or coal generation.

What is most important is the fact that it is much more predictable. We have been studying the volatility in the raw materials markets in recent years, and the way the prices of natural uranium and gas have been fluctuating. The price range is quite broad in both cases but the resulting ultimate cost of electrical energy is different. This has everything to do with the share of the fuel component.

The cost of nuclear power is not volatile due to a low fuel component that is multiples below that of generation cost volatility in thermal energy. The average annual volatility of NPP power generation cost is 7%; for TPP, it is 61%.

The cost of electric power gener- ated by an NPP (the levelised cost of energy, or LCOE) is comparable to and even lower than that of gas-fired power stations; in Germany, the LCOE for an NPP is $50/MW, for a gas-fired TPP $68/MW, for a coal-fired TPP $38.4/MW. In the US, the LCOE is $48.7/MW for an NPP, and $40.6 $/MW for a TPP.

The share of an NPP fuel component accounts for only 10% of the operating cost, and the share of a gas or coal station fuel component is 60% to 70%. That is, even if the uranium price doubles, it will only result in a 5% to 7% increase in the electricity price. But if gas prices are two times higher, then it will result in a 70% increase.

Taking this into account, the production cost of a kilowatt hour of electric energy produced by nuclear is in the smallest way subject to changes in the commodity market and is therefore the most predictable for the investor and the end-user.

One should also note that the life span of an NPP is far longer than any other source of power generation and, therefore, once paid off in 15 to 20 years, becomes a cash cow for future generations, and not a burden – much like Koeberg.

It is important to create a balanced and diverse energy mix in the country, one that does not solely depend on hydrocarbons for baseload generation. In addition, it should be noted that nuclear power does not emit greenhouse gases into the atmosphere. Thus, it avoids the fees for exceeding quotas.


Viktor Polikarpov
Regional VP (sub-Saharan Africa)
Rosatom International Network JSC