Nuclear reactors' construction costs: The role of lead-time, standardization and technological progress

Michel Berthélemy and Lina Escobar Rangel ()
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Michel Berthélemy: CERNA i3 - Centre d'économie industrielle i3 - Mines Paris - PSL (École nationale supérieure des mines de Paris) - PSL - Université Paris Sciences et Lettres - I3 - Institut interdisciplinaire de l’innovation - CNRS - Centre National de la Recherche Scientifique
Lina Escobar Rangel: CERNA i3 - Centre d'économie industrielle i3 - Mines Paris - PSL (École nationale supérieure des mines de Paris) - PSL - Université Paris Sciences et Lettres - I3 - Institut interdisciplinaire de l’innovation - CNRS - Centre National de la Recherche Scientifique

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Abstract: This paper provides an econometric analysis of nuclear reactor construction costs in France and the United States based on overnight costs data. We build a simultaneous system of equations for overnight costs and construction time (lead-time) to control for endogeneity, using change in expected electricity demand as instrument We argue that the construction of nuclear reactors can benefit from standardization gains through two channels. First, short term coordination benefits can arise when the diversity of nuclear reactors' designs under construction is low. Second, long term benefits can occur due to learning spillovers from past constructions of similar reactors. We find that construction costs benefit directly from learning spillovers but that these spillovers are only significant for nuclear models built by the same Architect-Engineer. In addition, we show that the standardization of nuclear reactors under construction has an indirect and positive effect on construction costs through a reduction in lead-time, the latter being one of the main drivers of construction costs. Conversely, we also explore the possibility of learning by searching and find that, contrary to other energy technologies, innovation leads to construction costs increases

Keywords: Nuclear; energy (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (16)

Published in Energy Policy, 2015, 82, pp.118-130. ⟨10.1016/j.enpol.2015.03.015⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01523016

DOI: 10.1016/j.enpol.2015.03.015

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