Authors

:
Ceorglna LwarL, Samuel WaLLs, Chor ?eng 1an
(MaLL), Adam Chan, Cody MaLher, Alexander
Campbell

!"#$%&%'%() +",-.( / 012'"#. %3 41$(.#'%#


TABLE OF CONTENTS
Conceptual Plan and Business Definition: .................................................................................. 4
Why Nuclear? ............................................................................................................................................... 5
Economic Feasibility ..................................................................................................................... 6
Choice of Technology .................................................................................................................... 8
Alternative Nuclear Technologies ................................................................................................................ 8
Alternative Energy Technologies .................................................................................................................. 9
Site Selection Criteria ................................................................................................................. 11
Selection System ......................................................................................................................................... 11
Preliminary Examination ............................................................................................................................ 12
In Depth Analysis ........................................................................................................................................ 12
Lake Macquarie ....................................................................................................................................... 12
Lake Illawarra ......................................................................................................................................... 13
Hastings ................................................................................................................................................... 14
Conclusion .................................................................................................................................................. 14
Financials of the project ............................................................................................................. 15
Initial Capital Cost - $8 billion in 2027 ...................................................................................................... 15
Fuel, Operating and Maintenance Costs (Production Cost) ........................................................................ 16
Waste Management ..................................................................................................................................... 16
Decommissioning ........................................................................................................................................ 16
Weighted Average Cost of Capital (WACC) or Discount Rate - 6.34% .................................................... 17
Forecasting Revenue ................................................................................................................................... 17
Forecasting Revenue and Costs from 2027 (Plant life of 50 years) ........................................................ 18
Financial Feasibility of the Project ............................................................................................ 18
Government Subsidies ................................................................................................................................ 19
Evaluation Methods .................................................................................................................................... 19
Net Present Value (NPV) - $290m for the base case ............................................................................... 19
Simple Payback Period – 18 years .......................................................................................................... 19
Internal Rate of Return (IRR) Method – 6.81% ...................................................................................... 20
Conventional B-C Ratio - 1.02 ................................................................................................................ 20
Sensitivity and Scenario Analysis ............................................................................................................... 20
Sensitivity Analysis .................................................................................................................................. 20
Scenario Analysis .................................................................................................................................... 21
Environmental Issues ................................................................................................................. 22
Social Issues ................................................................................................................................. 23
Impact of Carbon Tax ................................................................................................................ 24
Additional Benefits ..................................................................................................................... 25
Conclusion ................................................................................................................................... 27
Bibliography ................................................................................................................................ 28


Appendix ...................................................................................................................................... 30
Appendix 1: Measurement Criteria in Selecting Alternatives .................................................................... 30
Potential Joint Venture ............................................................................................................................ 30
Appendix 2: Total Cost of Electricity Production per kWh ........................................................................ 31
Appendix 3: McNair Gallup Poll ................................................................................................................ 31
Appendix 4: State Energy Transfer ............................................................................................................. 31
Appendix 5: Conversion Factor .................................................................................................................. 32
Appendix 6: Sensitivity of Nuclear costs to Fuel ....................................................................................... 32
Appendix 7: Cost breakdown in Finland .................................................................................................... 32
Appendix 8: Levilised Costs of Various Power Generation in Australia ................................................... 33
Appendix 9: Inputs, Assumptions and Costs .............................................................................................. 33
Inputs and Assumptions ........................................................................................................................... 33
Excel Output with Formula References ................................................................................................... 34
Costs at 2027 (Start date of the operation of the plant) .......................................................................... 34
Excel Output with Formula References ................................................................................................... 34
Appendix 10 ................................................................................................................................................ 34
Appendix 11 ................................................................................................................................................ 35
Appendix 12 ................................................................................................................................................ 35
Appendix 13 ................................................................................................................................................ 35
Comparable Beta ..................................................................................................................................... 35
CAPM and WACC Calculation ............................................................................................................... 35
Excel Output with Formula References ................................................................................................... 35
Appendix 14 ................................................................................................................................................ 36
Revenue and Costs Forecast ................................................................................................................... 36
Excel Output and References ................................................................................................................... 36
Appendix 15 ................................................................................................................................................ 36
Results of Financial Evaluation .............................................................................................................. 36
Excel Output and References ................................................................................................................... 37
Appendix 16 ................................................................................................................................................ 37
Sensitivity Analysis .................................................................................................................................. 37




CONCEPTUAL PLAN AND BUSINESS DEFINITION:
The proposed business is the construction and operation of a nuclear power plant, a
Westinghouse AP1000 reactor, capable of producing 8,806,428 MWh/year (calculation provided
in the Financial segment), which will be a base-load generator. BREE’s latest report in energy
demand in Australia found that total consumption for Australians in 2009-2010 was 5945 PJ
(Bureau of Recourses, 2012). Converting that to MWh, and comparing with the total production
of the plant, it can be deduced that the potential market share for a plant is 0.5%. Compared to
Wind energy at 2%, and Others at 3% from the same BREE report, this is a reasonable and
feasible beginning.
The Westinghouse AP1000 reactor is a Pressurized Water Reactor (PWR) type reactor, which is
particularly safe reactor that relies upon steam generation (Westinghouse, 2012). The detailed
justification of the choice of this technology will be discussed further in the subsequent sections.
The power plant proposed to be built in Lake Illawarra, will have access to the existing NEM
linkages and will benefit from the fact that NSW is a net importer of energy (state energy
transfers is provided in Appendix 4). The power plant will service the energy needs of the region
for 50 years before eventually being decommissioned. It is estimated that this plant will have an
NPV of $290m without consideration for any government rebates or reimbursement for carbon
tax credits. However, tax concessions and certain amount of government guarantee in its loans to
lower its cost of debt were assumed. A sensitivity and scenario analysis will be made to ensure
the stakeholders are well aware of the risks involved. Environmental and Social Impacts are also
well considered to ensure this project will not have disastrous effect on the environment and will
receive approval from the people. This will be discussed in greater length in their subsequent
sections.


WHY NUCLEAR?
Australia is the 18
th
top energy consumer in the world; with an average 1.8% growth rate this
century. With over 35% of the energy needs being supplied by Coal and less than 5% being
supplied by renewable means, there is definitely a niche in the market for a cleaner energy
(Bureau of Recourses, 2012).
It was immediately apparent that if an energy source is going to be selected it should be selected
from a recourse which will not accrue the punitive $24.15/kg CO
2
carbon tax (Regulator, 2013).
The field of potential energy fuels was immediately narrowed down to the established sectors of
gas, wind, solar and nuclear. Gas, whilst occupying roughly 25% of the market share in
Australia, does have its shortcomings, specifically in the infrastructure that is required to
transport the fuel to the plant (Bureau of Recourses, 2012).
With the field of potential energy fuels narrowed down to wind, solar and nuclear, the matrix in
Appendix 1 was drawn. Data for wind and solar energy are derived from case studies whilst
nuclear used the bespoke estimation, which is further outlined in Financials. From the matrix, it
is clear that based upon the selected measurement criteria, nuclear is the preferred energy source.
However, nuclear experiences certain hurdles such as government permits, social stigmas, which
will be discussed in the subsequent sections. Another issue that needs be mounted is the need for
experienced operators to run the power plant. However, a potential solution to this issue is to
have a joint venture with an experienced operator or allowing the company to acquire certain
equity stake. Areva is identified as a potential candidate and details regarding the potential of this
solution are shown under Appendix 1. Though the challenges are evident, the benefits of
building a nuclear power plant will be further investigated in this Feasibility Report.


ECONOMIC FEASIBILITY
The Australian energy market is projected to grow by 29% by 2035 (Morgan, 2010). The global
warming debate has led to reforms such as the carbon tax and growing public disapproval of coal
based energy production. Current market trends still favour renewable sources of energy over
nuclear. 80% of Australians are in favour of making renewables a government priority and 15%
are in favour of nuclear (Free, 2010). Currently, renewables are projected to account for 70% of
the growth in the energy market between 2009 and 2035

(Ch. Breyer, 2011).
However, the low cost of nuclear makes it a viable competitor to take a portion of this market as
shown in the previous section. In the US, nuclear energy costs only 1.9 cents/kWh, compared to
coal at 2.7 cents, wind at 3 cents and gas at 8 cents (Institute, 2012). The total cost is best
illustrated in the diagram in Appendix 2. Australia is particularly well placed to implement a cost
effective nuclear program. 31% of the world’s Uranium is produced is Australia (Association,
2012), meaning that uranium is cheap and accessible. Logistically, Australia’s location is
tectonically stable and there is abundant unpopulated land for waste disposal.
It is estimated the proposed nuclear power plant could capture 0.5% of the market share and is
economically viable with minimal government subsidies. This estimate has been reached using
figures for public demand, market share and project scale that can be found in Financial section
of this paper. A 0.5% market share will also not be too risky for the supply of electricity in the
country in the event of a plant failure. Though a double reactor would definitely increase
profitability due to economies of scale, it was decided to start the industry with a single reactor to
minimise risk of failure. In addition, once the plant is online, revenue will not be affected by
consumer opinions of nuclear, since there is little consumer choice within the energy market.
However, public opinion will significantly affect political decisions to pursue nuclear power.

Opinion polls show that nuclear could be in the realm of political possibility. The McNair Gallup
poll found that Australians in favour of nuclear has risen from 34% in 1979, to 49% in 2009. The
actual survey is included in Appendix 3. It is likely that approval will rise as nuclear awareness
increases. A survey by Virulent Ideas found that 90% of Australians believe that a nuclear power
plant are explosive, a phenomenon that is scientifically impossible (Russell, 2013). There is
definitely room for greater public awareness, and with it higher approval rates for nuclear.


CHOICE OF TECHNOLOGY
Once again, nuclear energy is chosen because it supplies an extremely reliable base load energy
source, the fuel costs are low relative to gas and coal and there are no carbon emissions.
(Thomas, 2012)
ALTERNATIVE NUCLEAR TECHNOLOGIES
Within the nuclear industry a number of technologies exist and the selection criteria are safety,
cost and efficiency. In describing reactor technology two things are often mentioned: the type of
technology used and which generation of the technology it is. Generation one to three of the
technology are often for existing plants, three for new builds and four for future designs.
Generation one reactors were the first power reactors to be built in the 1950’s and 60’s. Most of
these reactors have reached the end of their useful life and have been decommissioned.
Generation two reactors are the majority of the reactors found around the world that were built in
the 1970’s, 80’s and 90’s. Generation three reactors are built based on generation two reactors
and with simpler and safer designs. Generation four reactors are newer designs that completely
rework or improve technology to lower the cost of operation and production while increases the
safety of the plant. Generation four reactors will not be chosen in this report, as it is not expected
to be in operation till 2020, hence being commercially unproven. Thus, the newer yet
commercially viable generation three reactor will be chosen in this study.
There are a large variety of technologies for nuclear reactors, mainly differing in the techniques
used during the crucial cooling process. These technologies include: Pressurised Water Reactor
(PWR), Boiling Water Reactor (BWR), Pressurised Heavy Water Reactor (PHWR), Gas Cool
Reactor (AGR), Light Water Graphite Reactor (RBMK) and a Fast Neutron Reactor (FNR). The
AGR and RBMK technologies were generation one reactors and despite some improvements,
they have not been taken up around the world due to safety concerns. These will not be

considered further in our feasibility study. The FNR is a generation four technology with the
potential to be 60 times more efficient in the use of uranium as a fuel. However this technology
has not been used in large-scale commercial operations and is not expected to within the next 10
years. Of the remaining three options, the Pressurised Water Reactor is the predominant reactor
in the world with a market share of 60%. This is because of its proven safety features including
negative feedback and multiple cooling loops. The Boiling Water Reactor only has one cooling
loop, which results in minor radiation in the water it dispose, while the Pressurised Heavy Water
Reactor uses heavy water which will increase the set up cost.
As a result, the PWR design was chosen. Due to recent industry consolidation, only two main
PWR manufacturers remain, which are Areva NP and Westinghouse. Among these two, the
AP1000, a 1000MWe reactor manufactured by Westinghouse is the front-runner of large reactors
being built or in the pipeline at present. In particular, there is a strong demand for these in China
with four currently being built with a number of others being planned. These allow an abundance
of data in terms of costing, safety and technical details in obtaining approval from the public and
the government during pre-construction stage. In addition, there will be more testing and
research done to ensure these reactors perform perfectly. Also, the AP1000 will most likely
minimise costs as compared to other options as it is an off-the-shelf design (Green, n.d.). Finally,
the sufficiently large capacity of this reactor will justify the political and legislative effort in
setting up a nuclear industry in Australia.
ALTERNATIVE ENERGY TECHNOLOGIES
The main competitors of a 1000MWe base-load generator in Australia are coal, gas generators
and some forms of renewables. However, renewables such as wind, hydro and solar are unlikely
to be financially competitive at this scale without significant government subsidies (WNA,
2012). The expected capacity factor for the AP1000 lies around 0.9 whereas for wind generation,

it is only 0.29 making nuclear power almost three times more efficient. The capacity factor of
solar energy is even lower and the current technologies for the storage of such energy in order
for it to provide base-load power are not commercially viable as of the present.
Nuclear power is also estimated to be more competitive than gas in the long run. Relative to gas
and even coal, the fuel cost of nuclear remains extremely low. This provides a buffer against a
further spike in prices of gas and coal as the demands for these commodities increases.
As shown in Appendix 7, the capital cost for gas is three times lower than nuclear but the cost of
fuel inclusive of fuel storage is far more than nuclear. Appendix 8 shows the projected levelised
costs of the various types of power in Australia from an EPRI study. It shows that for settled
down costs with moderate commercial risk similar to other base-load investment, nuclear power
could fall within the cost range of $40–65/MWh. This cost range would still be uneconomic
compared to Australia’s cheap coal generation, but it does overlaps with the higher end of
combined cycle electricity and would likely be lower on average than renewables. This study
was done before the introduction of carbon pricing but it predicts that nuclear power would
become economical as conventional coal-based electricity experiences low to moderate prices
(approximately $15–40/t CO
2
) for carbon emissions. With the existing carbon price set at
$24.15/t, this falls within that range, making nuclear energy very competitive.
Evidently, nuclear power is a feasible choice of technology for the future base-load power
requirement in Australia. Currently, it is far more efficient than any renewable alternatives and it
will require significant technological improvements before renewables are able to provide
baseload power. Gas is deemed not a feasible alternative due to high fuel cost and is highly
subjected to the fluctuation in commodity prices. Finally, a carbon tax will definitely increase the
cost of coal power, thus making nuclear power more competitive.


SITE SELECTION CRITERIA
SELECTION SYSTEM
The feasibility of each potential site is evaluated using a system of scoring by having points
allocated to each criterion. The selection process is given as follows:




Selection Process
1. Cost effective connection link to the
high voltage main grid (20 points)
• Solution – build alongside an existing or decommissioned power plant
• The main grid in Australia is the NEMS. This will exclude WA and NT
from this site analysis, as they do not lie on the network. Though Tasmania
is a part of NEMS, it has a low projected increase in electricity demand
and is well supplied with 81% coming from hydroelectric power
(Macintosh, 2007)
• Another issue that this criterion encompasses is the easement required for
the power lines. This will definitely hinder any construction in any major
cities, as the cost of land will be too high. Safety of inhabitants will be
raised as well
• Finally, the location within the grid is deemed of importance. The
northern parts of QLD and most of SA lie at an inefficient distance from
the major base load energy market. This will result in significant power
losses and must be taken into account. Locations in NSW will be favoured
as it is a net energy importer from the other states (shown in Appendix 4)
2. Availability of a deep water port in
order to ship in/out the materials
required to build the plant (20 points)
• Ideally a port designed for heavy industry (Wollongong/Newcastle) or
mining (Gladstone/Bundaberg) will be most suitable for this criterion
3. Availability of water to provide
cooling (dry or wet) (20 points)
• Cannot use the Murray Darling basin as water use there is heavily
regulated
• Demands are expected to be between 10-20 Giga litres of water a year
(WNA, 2013). Australia is the driest inhabited continent on earth and
because demands for fresh water are projected to rise dramatically, we will
attempt to situate our reactors close enough to the coast to use seawater for
cooling
4. Minimal proximity to urban population
centres and national parks where public
opposition will be the strongest (20 points)
• This will most likely exclude the major capital cities although they will
be in the consideration during preliminary stages
• Any areas that are close to marine parks, especially the great barrier reef
will be excluded
5. Threat of environmental hazards including
earthquakes, tsunamis and flooding (10 points)
• The sites must not lie on exposed coast but instead be situated inside
harbours or coastal lakes. Earthquake risk across Australia is relatively low
but it is mindful that some areas experience higher risks than others
6. Security risks including proximity to defence
bases, airports and heavy industry (20 points)


PRELIMINARY EXAMINATION





Figure 1: Site Criteria
14 sites will be examined initially using the above stated 6 criteria, subsequently deriving a score
out of 100. The 3 sites with the highest score are Lake Macquarie, Lake Illawarra and Hastings,
which will then be analysed more in-depth in the subsequent section.
IN DEPTH ANALYSIS
Table 1: Rough Approximate of Land, Transportation and Connection Cost

Cost of Land was calculated by taking an average of 5 similarly sized (100-200ha) properties in
the surrounding area. Cost of Transport was calculated by taking the total weight of the materials
(Humes, 2009) x distance x cost of haulage (Anon., 2013). Cost of Connection is calculated by
considering the cost of a substation and 330kw lines to the nearest transformer (SKM, 2008).
LAKE MACQUARIE
On the southern end of Lake Macquarie lies the Vales Point coal fired power plant (1320MW).
Placing a nuclear power plant in the area would enable it to use the existing network linkages
and power lines. Subsequently, this would reduce issues involving new power line easements.
!"#$ &'()**)"+, Lake Macquarle Lake lllawarra PasLlngs
Land (100-200ha) 13 12 20
1ransporL from ÞorL 0.8 0.6 0.6
Crld ConnecLlon 3 4.3 12
-"$.* /010 /21/ 3415
!"#$%#&'( *&#$+
,-.*
/&%0 1234
!"5#
677$++
1234
8'#$5 1234
69'&(':&(&#;
!<:(&7 1234
=>>"+&#&"%
-%9&5"%?$%#'(
@A5$'#+ 1B34
*$7<5&#;
C&+0 1B34
@"#'( 1B334
@"D%+9&(($ E B2 BF G H I H2
C"70A'?>#"% J BK B2 E G E HG
L('M+#"%$ B3 BG BI E G G IH
N5&:&$ O+('%M B2 BF BK I G E I3
!"5# *#$>A$%+ BH BG BK B3 H J
IJ
!"#$ &"'()"*+$ BE BE BK B2 E J ,-
N"#'%; N'; B2 BG BK F G G I3
!"#$ .//"0"**" BE BE BF BK E E ,1
P$59&+ N'; G H B3 H H B3 F2
L&>>+('%M BE I B2 BK I G I2
2"34+563 B2 BF BK BF J J ,7
!"5# !A&((&> BF BE BK H G G IF
!"5# 6M$('&M$ BG BF I G E E I3
!"5# 6<Q<+#' BH BH G BF E J IE

The Port of Newcastle would be used to bring in the reactor and the existing coal rail link to
Vales point would be utilised as transport means. Water needs would be taken from Lake
Macquarie using a once through transfer and would be put back into the lake a couple of degrees
higher than they were brought in (WNA, 2013). There are no marine parks in this area, which
will reduce public opposition risk. The area is perfect in regards to energy demand to serve both
the hunter region and the Sydney electricity market if required with minimal transmission loss.
Risks for this site include major community opposition as it is moderately populated (190
thousand people live around the lake). Furthermore, there is a risk of earthquakes, as 8 have
occurred in this area historically. The area is mostly residential; hence the security risk is deemed
very low.
LAKE ILLAWARRA
A proposed nuclear power plant in this area would be on the western shore, in the vicinity of the
400MW Tallawarra gas power station. The existing NEMS linkages would be used and it would
also not be directly competing with the existing station, as it is gas powered and hence not a base
load station. Port Kembla (used in the steel industry) would be used to bring in nuclear reactor
facilities, as it has the ability to handle the heavy point loads (PKPC, 2011). Similar to Lake
Macquarie, community opposition may prove to be problematic as 290 thousand people live in
the region. However the area around the lake itself is sparsely populated. Water needs would be
taken from Lake Illawarra with a water management plan put into place so as to minimally effect
the Bushrangers Bay Marine Reserve (NSW, n.d.) located 10km south of the lake. The site will
allow the plant to provide base load power for the Illawarra region and potentially the Sydney
market. Furthermore, there are potential demands from energy intensive heavy industry across
the region (provided the steel mills are still in operation). The risk of earthquakes is moderate
with 6 having been recorded in the region. Finally, risk in the area is moderate to low with no
military outposts or in close proximity to airports.

HASTINGS
Hastings is located in Western Port; represents the only feasible Victorian solution to nuclear
power. Although the area itself lacks an existing base load generator, a wind farm is 5km away
with a 220kw connection to NEMS. 110km to the east lies the La Trobe valley power stations
which account for the majority of Victoria’s electricity generation but these stations run on
brown coal which could well become unfeasible under a rising carbon price and the
implementation of carbon tax. In addition, an improved link would have to be built and the port
facilities would require an upgrade in order to handle the size of the nuclear reactor. However,
the cost of the link should not be too expensive as the area is sparsely populated. Furthermore,
community opposition would be minimal as compared to Port Phillip. The market for base load
electricity will be strong with Bluescope steel manufacturer and the Melbourne domestic market
in close proximity. Water would be taken from the Western Port with care taken to pump water
away from the Yaringa Marine National Park (Macintosh, 2007) located on the easterly side of
the Port. The threat of earthquakes is low with 17 small earthquakes having been recorded in the
area and the security risk is moderate with a HMAS facility located nearby.
CONCLUSION
Unfortunately, due to public backlash of nuclear fuel and waste being taken near the Great
Barrier Reef, the major QLD industrial towns are not viable candidates for nuclear power as the
public opposition would be too high. Also, SA is not particularly attractive as the port facilities
are inadequate and it is located on the very edge of the NEMS network. This leaves NSW and
VIC as the two remaining viable states. NSW is more attractive as it is a major importer of
electricity from the other states. Of the all the sites chosen, Lake Illawarra presents the best
location to build a nuclear power plant with the major risks being public opposition and
earthquake threats.

FINANCIALS OF THE PROJECT
At time of writing, there are currently no AP1000 nuclear reactors in operation; there are
however, several in construction phases across China and the USA. To analyse the financials
involved with development, construction, operation, decommission, and expected returns for an
AP1000 Nuclear Power Plant in Australia, this report has utilised information provided by
Westinghouse, the manufacturer of the AP1000, as well as general information available from
the International Atomic Energy Association (IAEA), the World Nuclear Association (WNA)
and also previous reports on cost estimates for Nuclear Power. The inputs, assumptions and costs
are provided in the form of an excel table in Appendix 9. However, the major figures and
assumptions will be explained in the following sections:
INITIAL CAPITAL COST - $8 BILLION IN 2027
China estimated the first few AP1000 nuclear reactors to be around $1600-2000/kW and it is
estimated that the same AP1000 nuclear reactor built in US would be 3 times that amount
(Association, 2013). By taking a conservative higher amount of $2000/kW multiplied by 3, this
gives a capital cost of $6000/kW for an AP1000 built in the US. For the capital cost in Australia,
an additional 10% is added in addition of that figure to account for higher labour cost and
preparation cost as compared to US. This cost covers the pre-construction and construction
period, which have been earmarked by Heptonstall et. al as 5.5 and 7.5 years respectively (Grant
Harris, 2012). But for conservative purposes, a pre-construction phase of 8 years and
construction phase of 7 years will be used instead with anticipation of potential legislation
hurdles and social stigma in Australia. Hence, the nuclear power plant is proposed to start
operation in year 2027 and estimated to run for 50 years (Westinghouse, 2012) (60 years based
on technical details from Westinghouse but a more conservative 50 years is used instead). The
capital cost in 2027 will be derived by bringing forward the estimated cost of $6600/kW in 2011
by an inflation rate of 2.7%. However, it was estimated by US Energy Information

Administration (EIA) that the capital cost of nuclear would drop by 30% in 2030 in constant
dollars along with time and experience. This is taken into consideration and the capital cost in
2027 will subsequently be adjusted.
FUEL, OPERATING AND MAINTENANCE COSTS (PRODUCTION COST)
The graph in Appendix 10 by WNA shows that the production cost in the US in 2008 is
approximately 2c/kWh, which translate to approximately $300million in 2027. Production costs
include fuel, operating and maintenance costs but exclude other indirect costs and capital costs.
To ensure this figure is reasonable, a separate estimation of fuel costs and other operation costs
was done and the figure obtained validates the assumption above. This additional estimation can
be found in Appendix 11.
WASTE MANAGEMENT

In a Nuclear Power Plant, waste management can be considered outside general O&M costs due
to the high risk of improper handling. The WNA propose to allocate 5% of production costs
(Association, 2013) to waste management cost, which is approximately 22m a year.
DECOMMISSIONING
Given the sensitivity of materials handled at a Nuclear Power Plant and the potential for
catastrophic disaster, the decommissioning of the plant must be considered in the feasibility
study due to its large cost attributed to the Principal as a back end-lifecycle cost (De, 1990). The
worst case decommissioning cost estimated by WNA is 15% of the capital costs, yielding $1.2
billion and will be incurred in year 2078 (end of plant life). Further information regarding
decommissioning cost and how it will affect the NPV of the project is given in Appendix 12.



WEIGHTED AVERAGE COST OF CAPITAL (WACC) OR DISCOUNT RATE - 6.34%
A 5% or 10% discount rate is often used in nuclear feasibility reports around the world (e.g., the
MIT study in 2003). However, for the base case scenario, it is more accurate to use a discount
rate similar to the WACC of the project, which is the Minimum Attractive Rate of Return
(MARR) of the project. By using a 10 years Australian Government Bond of 3.09%; a historical
Equity Market Risk Premium (EMRP) in the 1883-2010 period relative to Bonds of 5.05%
(derived an arithmetic and geometric mean); comparable Beta derived from other operators of
Nuclear Power Plant of 0.82; cost of equity is estimated to be 7.25%. (Appendix 13)
Cost of debt is estimated to be a spread over the risk free rate. A BBa credit rating company
spread is obtained as 3.32%. However, it is likely that if a nuclear power plant is build, it will
have the support of the government, hence the project will borrow with a lower debt. Assuming
it is not completely risk free, a spread of 1.5% is added to the risk free rate of 3.51% yielding a
cost of debt of 5%
1
. This cost of debt is much lower than the commercial borrowing rate and it is
hinge of the willingness of the government to support this project.
By assuming tax concession is given by the government in supporting the feasibility of this
project, and a Debt to Capital ratio of 0.5, a WACC of 6.34% is obtained. This falls between
the 5% and 10% discount rate commonly used in other feasibility reports and close to the usual
7% used in evaluating infrastructure project and will be used as a base case estimate.
FORECASTING REVENUE
To calculate the maximum possible revenue from the plant, a number of factors have been
considered. Firstly, the net electrical output of the AP1000 reactor is 1117 MW
e
(Westinghouse,
2007). A Load Factor provided by the IAEA of 93% (IAEA, 2011) has been taken in to account,

1
8lsk free-raLe, LM8Þ, credlL spread flgures are obLalned from a valuaLlon of Amcor LLd based on pald lnformaLlon such as 8loomberg and
Moody's credlL raLlng subscrlpLlons

and made further conservative to 90%. Lastly, the AP1000 is a base load reactor, which means it
provides power 24 hours per day as required (Westinghouse, 2011). Thus, the resulting power
output is the product of these variables, resulting in a production of 8806428 MWh/ year. The
Australian Government body: the Bureau of Resources and Energy Economics (BREE) latest
report gives the average whole sale price of energy in 2009 dollars as $45/MWh (Bureau of
Recourses, 2012).
FORECASTING REVENUE AND COSTS FROM 2027 (PLANT LIFE OF 50 YEARS)
The pro forma financial statement of the plant is given in Appendix 14. The revenue was
forecasted to grow every year from 2027 in line with historical inflation of 2.7%. In order to find
the average operating revenue, a geometric gradient series formula was used to find the present
value at 2027 (as every revenue was increasing with inflation and discounted to the present with
a discount rate of 6.3%) and an annuity factor over 50 years was used to find the average
annuity. The equivalent annual revenue is given as $964m. This same method is applied to
production costs (inclusive of fuel and O&M costs). Waste management is 5% of the production
costs. The base case debt/total capital ratio is assumed to be 50% for the preliminary study.
Based on an interest of 5%, the annual loan repayment is estimated using an annuity factor of
(A/P, 5%, 50), yielding a figure of $216m. The equivalent annual cost is given as $638m.
Decommissioning cost will assumed to be 15% of the initial investment, however, this cost will
only be incurred at the end of the 50-year life. This will then be discounted back to the present
for further analysis.
FINANCIAL FEASIBILITY OF THE PROJECT
It is evident that there is a huge assumption on government subsidies in the form of reduced cost
of debt and tax concessions in enabling this project to be feasible. Government subsidies are
elaborated more as follow:

GOVERNMENT SUBSIDIES
There are many ways governments across the world have been subsidizing nuclear power plant
projects. They are namely, giving the nuclear operators loan guarantees thus lowering their cost
of debt, tax breaks or concessions, subsidizing borrowing costs, subsidized fuel costs and under
priced cooling water for the operation of the nuclear power plant (Koplow, 2011). The
aforementioned two government subsidies are the most likely and it was assumed these subsidies
were given in this project in the future. The subsidies in terms of tax break and lower cost of debt
are absolutely vital as it lowers the WACC, subsequently, increases the value of the project. It is
shown in the subsequent sections (sensitivity and scenario analysis) that when government
subsidizes a small portion of capital cost, the profitability of the project shoots up noticeably.
This effect will be investigated in the subsequent sections.
EVALUATION METHODS
The results of the evaluation in terms of feasibility of this project are given in Appendix 15.
NET PRESENT VALUE (NPV) - $290M FOR THE BASE CASE
The NPV method is the simplest whereby the Present Value of all the cash flows in the
forecasted years is summed up. An NPV greater than 0 indicates the financial benefits of the
project in present value terms are greater than 0, making the project viable. The NPV of the
project under the base case scenario is given to be $290m.
SIMPLE PAYBACK PERIOD – 18 YEARS
The simple payback period is a metric often used by most mining companies, as it is easily
understandable by most shareholders of diverse backgrounds. This method does not take into
account the time value of money and it determines the number of years required for the profit of
the project to exceed the investment cost and decommissioning cost of the project.

INTERNAL RATE OF RETURN (IRR) METHOD – 6.81%
The IRR method determines the rate of return whereby the NPV or Present Worth (PW) of the
project equals 0. Thus, the IRR generated by the project has to be higher than the Minimum
Attractive Rate of Return (MARR) required by the stakeholders for a project to be viable. This
metric is found by using the in built IRR formula in Excel, after forecasting the pro forma
financials of the project. As stated, the IRR under the base case scenario is given as 6.81%.
CONVENTIONAL B-C RATIO - 1.02
The conventional B-C Ratio is derived using the following formula:
! ! ! !
!" !!"#"$%&'!
!"#$%&'$"! ! !" !"#$%& !"#$% ! !"!!"#$%&'() !"#$#!

It is undeniable that this project might have indirect benefits, such as job creations, industry
creations and a reduction in carbon emission. However, for the first two mentioned benefits, as it
is indirectly observable and might be accrued similarly if another project is taken instead, it will
be overestimating the benefits of the project by its inclusion. On the other hand, carbon tax will
not be imposed on the plant, thus this has already captured the benefits of a reduction in carbon
emission.
SENSITIVITY AND SCENARIO ANALYSIS
Sensitivity and Scenario Analysis are chosen over more complicated risk based estimation
methods such as Monte Carlo analysis due to their simplicity in presenting the factors that affect
the valuation of the project. They are straightforward and easily understandable even by
stakeholders who are not educated in the area of finance.
SENSITIVITY ANALYSIS
The four factors that are deemed most important in affecting the viability and feasibility of the
project are the potential cost escalation of production and capital cost, a higher borrowing rate
and the level of subsidy of the government in terms of the capital cost of the project. As shown in

the tables under Appendix 16, the multidimensional sensitivity analysis shows any escalation in
cost ceteris paribus will drive the NPV of the project to a negative. It was shown that the NPV of
the project increases substantially with an increasing level of subsidy from the government. On
the other hand, even a 1% increase in borrowing rate with the assumption of 50% debt to capital
will drive the NPV to a negative territory.
SCENARIO ANALYSIS

The scenario analysis above shows the potential NPV of the project in 3 different scenarios
namely the bear case, most likely or the bull case scenario. It can be seen in the bear case, the
project will be borrowing at a higher rate, driving WACC up. In addition, there is a 20% in cost
escalation for production and capital costs and no subsidies from the government. Wholesale
price of electricity will be down by 10%. In the bull case scenario, it was assumed that cost of
debt fell to 4.5%, just 1% higher than the risk free rate of 3.51% due to government guarantee.
Subsequently, WACC falls. Instead of cost escalation, it was assumed that there is a 10%
reduction in cost for both production and capital cost. Conservatively, it was also assumed the
government will subsidize up to 10% of the capital cost of the project.


ENVIRONMENTAL ISSUES
The environmental issues stemming from building a nuclear power plant can be split into two
areas. Firstly, the impacts on local area from the clearing of land and building of the power plant,
while second is the impacts that occur after it is built, from the outputs and processes involved in
the operation phase of the power plant. All environmental risks such as waste mismanagement
must be within socially acceptable levels, due to the OECD Member countries agreements.
In the feasibility stage of nuclear power stations construction, there must be a risk analysis of the
safety issues that could arise. This takes the form of an action and condition approach, where a
risk is identified and the behaviour or conditions are changed in order to minimise this risk. The
plant has potential for catastrophic environmental risks if any failure of the plant occurs.
A nuclear power plant requires a large area, usually away from any residential or industrial
zones. This means that it is usually located in an area full of flora and fauna, within close
proximity to large body of water. Clearing such an area means large amounts of deforestation
local eco-systems, which even with a relocation exercise, may not ever fully recover.
With the likelihood of Lake Illawarra being chosen as the location, the NSW has identified
numerous environmental factors that must be maintained in the area. The area is full of extensive
seagrass beds, fish breeding grounds, wetlands and a diverse bird population. All of this must
remain un-impeached during the construction of the plant and during the production of energy
(Authority, 2010).
During the operation of the power plant, environmental issues arise from the radioactive waste
that is produced. The depleted uranium and plutonium must go through high-level waste disposal
to ensure it does not leak into the surrounding areas. Due to the long half-life of these elements,
the waste can take thousands of years to break down, thus any leaks would be a catastrophic risk
of a major impact on the local environment.

Nuclear power stations require a huge amount of water for cooling during operation, much more
than coal based power station. As the power plant must be located next to a large body of water
for its operation, this has clear impacts on any eco-systems located in the body of water, with
studies from nuclear power stations in the US showing that heated water pumped back has led to
large decreasing in the populations of water species in the area (Woods, 2006-07).
While the regularly released radioactive material released by nuclear power stations is too small
to have an adverse effect on humans, it can be absorbed by moss and other lichen materials. This
can then have a flow on effect to other flora and fauna that may use the moss as a food or living
source.
SOCIAL ISSUES
Much of the social issues that arise from a nuclear power plant come from the population’s fear
of radiation exposure. Opposition stems from two sources, firstly the perceived potential health
risks associated with nuclear energy and secondly the economic or social impact of having a
nuclear power plant in close proximity to one’s home.
The normal production operation processes of a nuclear power plant pose minimal risk to any
persons living in the local area. Despite this, most of the population perceives radiation as a huge
health risk, with previous disasters such as Chernobyl and the Japanese meltdown leading people
to form strong opposition to any nuclear sites within their area. The probability of a severe
accident leading to a meltdown at the plant is very small, but due to the high consequences there
are very strict regulations and safety precautions designed to mitigate any of this risk, which
must be adhered to. One of the major hurdles in getting a nuclear power station is the public’s
perceived image of the uranium and plutonium. Any production will require significant work to
change this perception.
When locating the plant in the Illawarra Lake area, there are numerous social values that must be

upheld. The lake is known as an unpolluted body of water, with locals and tourists using the lake
for numerous water and land based activities. A nuclear power plant in the area must not reduce
the standard of living for those who live near it as well as ensuring there is no significant impact
on tourism in the area. The overall visual amenity of the lake must be maintained along with its
attractiveness as thriving economic location (Authority, 2010). The community must be engaged
in the process of risk assessment with a view to have well informed acceptance of risk. Most
people are more concerned about the low probability and high consequences risks and thus
keeping the community informed of all steps taken to reduce the risk is a key aspect in the
construction.
The most obvious solution to most of the social issues is to locate the plant away from any
residential or industrial areas. This would reduce the community’s fear of social impacts, but
would lead to more concerns about the potential impacts on the environment that it is located.
IMPACT OF CARBON TAX
The carbon tax is based around the idea that by charging companies for the amount of carbon
they release into the atmosphere, it will encourage them to drastically reduce their wastage. The
government’s plan is to initially set the carbon price to $24.15/tonne of emissions. This will then
increase incrementally until 2015 where the price will then be dictated by the market, with the
expectation that the price will drastically drop.
Companies can buy and trade credits, thus providing opportunities for companies that cut their
emissions to make money out of the scheme, thus further increasing incentive. While there are
many critics to the carbon tax, saying that it will not work and will only harm local production,
in reality it is a necessary step, with many overseas nations, especially in the European Union
already implementing a carbon tax system.

With the existence of carbon tax, nuclear energy becomes an increasingly attractive option. Coal
power stations produce huge amount of carbon dioxide emissions, meaning they will be hit with
a heavy carbon tax bill. This will lead to increased costs in the production of energy making it
less economically attractive.
Nuclear energy has the advantage of being impacted by carbon tax minimally. Its power station
produces very little to no carbon emissions, thus the introduction of the carbon tax will not
impact the cost of nuclear energy, making it more competitive in the market. Once again, this is
validated in Appendix 7, where the existence of carbon tax increases the cost of gas and coal.
With Australia having an abundance of uranium supplies and the carbon tax linked with a
relatively lower cost of production from nuclear power stations, the push for nuclear has received
a significant boost.
ADDITIONAL BENEFITS
The construction of the first nuclear power plant will benefit Australia in many ways, ranging
from the environmental to the economical to the physiological.
The largest and most beneficial impact will be from the reduction in carbon emissions. Australia
currently uses coal and petroleum based products to produce over 70% of the nation’s energy
needs. With coal producing one to four hundred grams of CO
2
/kWh
e
the implementation of a
nuclear power plant producing the proposed output would result in approximately 10 million
tons of CO
2
reduction per year.
This benefit bridges with the economical since as of 2013, the price of carbon will start at $24.15
per kg of CO
2
and escalates each year after. This is a minimum saving of $213 million in 2013
alone. However, as of 2015, it will be possible to trade carbon credits on the open market. Whilst

the exact system of how this will work has yet to be decided, even if the price is set as low as
!10, that would still result in a saving of $120 million.
Another indirect economic benefit Australia will see is a boost in the job market. Whilst jobs for
operating the power plant will only be created in later years when a training regime has been
implemented, jobs within the construction industry will be realised straight away. With Australia
seeing a 1% downturn in the construction industry after a decade worth of growth (Branson,
2013), the construction of a new nuclear power plant, potentially spanning 7 years, could result
in 3,500 new jobs at the peak of the project schedule (NEI, 2012).
Australia will likely see a benefit in terms of reduction of physiological side effects related to the
coal energy industry. Every year, it is estimated that people suffer from a variety of afflictions as
a direct result from the coal industry, which include: lost working days, asthma attacks, chronic
bronchitis, heart attacks, hospital admissions and even premature deaths.
The following table shows the estimated numbers of people who suffered from these diseases in
the US in 2010. By using a conversion factor of 6%, it is possible to roughly equate these
statistics to Australian terms. The derivation of the conversation factor is given in Appendix 4.
Table 2: Estimated Number of People Suffering from Coal Industry in the US
Affliction USA Australia
Lost Days at Work 1,600,000 100,000
Asthma Attacks 300,000 18,000
Chronic Bronchitis 8,000 480
Heart Attacks 20,000 1,200
Hospital Admissions 10,000 600
Premature Deaths 13,000 780
$ Cost of Health Impact $100 Billion $6 Billion (RMI, 2010)
The above figures are only for indicative purposes only, but even as an illustration, they are
staggering. Whilst the nuclear power plant will only take 0.5% of the current energy market
share, it is definitely a step in the right direction and any reduction in human suffering is a great
gain.

CONCLUSION
A nuclear power plant would be a feasible investment in the energy future of Australia. The
carbon tax and public pressure to reduce Australia's carbon footprint has eliminated coal as a
socially feasible investment. As such, rigorous analysis has been conducted on the feasibility of
nuclear, gas and renewables. On the basis of financial, technical, environmental, social factors
and reliability as a base load power, nuclear has been selected as the optimal choice.
Environmentally, renewables far outstrip nuclear in popularity. However, nuclear still offers a
reduction in carbon emissions, and it can do so without compromises to energy reliability or cost.
Socially, nuclear is subject to significant controversy but the McNair Gallup Poll reveals that
approval ratings are at 49% and have been on an upward trajectory since 1979. With the
spreading awareness, the political feasibility of nuclear power continues to grow.
A nuclear power plant at Lake Illawarra could help meet rising energy demands in NSW and
surrounding states for 50 years. Approval would need to be received to operate in the Lake
Illawarra area but in the scenario that community opposition cannot be overcome other feasible
sites have also been identified. Alternative technologies have also been evaluated; this report
recommends the use of AP1000 reactors, which are an advanced, safe and cost effective off-the-
shelf technology.
Based on these projects and many other factors the total capital cost is estimated at $8 billion.
The low cost of uranium and an estimated market share of 0.5% will result in total revenue of
$966 million over the lifespan of the project. Assumptions made include the use of government
subsidies in the form of reduced cost of debt and tax concessions. A positive net present value of
$290 million and an IRR of 6.8% demonstrated that a nuclear power plant is a financially
feasible government investment. In looking to our future, no other source of power offers the
same combination of environmental benefits, reliable base load power and cost effectiveness.

BIBLIOGRAPHY
Anon., 2013. Truck Operating Cost Calculator. [Online] Available at:
http://www.freightmetrics.com.au/CalculatorsRoad/TruckOperatingCost/tabid/104/Default.aspx [Accessed 1 May 2013].
Association, W.N., 2012. Australia's Uranium. [Online] Available at: http://world-nuclear.org/info/Country-
Profiles/Countries-A-F/Australia/#.UYIB28q1Ukc [Accessed 25 April 2013].
Association, W.N., 2013. Energy Subsidies and External Costs. [Online] Available at: http://www.world-
nuclear.org/info/Economic-Aspects/Energy-Subsidies-and-External-Costs/#.UXpMsCuLEy4 [Accessed 25 April 2013].
Association, W.N., 2013. The Economics of Nuclear Power. [Online] Available at: http://www.world-
nuclear.org/info/Economic-Aspects/Economics-of-Nuclear-Power/#.UYIEEMq1Uke [Accessed 25 April 2013].
Authority, L.I., 2010. Management of the Lake. [Online] Available at:
http://www.lia.nsw.gov.au/the_lake/lake_facts/management_of_the_lake [Accessed 25 April 2013].
Branson, A., 2013. Land of Oz. [Online] Available at: http://www.building.co.uk/land-of-oz/5052488.article [Accessed 25
April 2013].
Bureau of Recourses, E.a.T., 2012. Energy in Australia, 2012. Canberra: Australian Government, Bureau of Resources
and Energy Economics.
Ch. Breyer, M.G.J.S., 2011. FUEL-PARITY: IMPACT OF PHOTOVOLTAICS ON GLOBAL. In Symposium
Photovoltaische Solarenergie. Bad Staffelstein, 2011.
De, P.L., 1990. Costs of decommissioning nuclear power plants. International Atomic Energy Agency.
Free, C.N., 2010. Clean Energy Solutions To Climate Change. [Online] Available at:
http://foe.org.au/sites/default/files/CNF%20clean%20energy%20final.pdf [Accessed 25 April 2013].
Grant Harris, P.H.R.G.D.H., 2012. Cost estimates for nuclear power in the uk. London: Imperial College Centre for
Energy Policy and Technology.
Green, R., n.d. Generic Design Assessment AP1000. [Online] Available at: http://cdn.environment-
agency.gov.uk/geho1211btof-e-e.pdf [Accessed 29 April 2013].
Humes, J., 2009. AP1000 Equipment Supplier UK Launch. [Online] Available at:
https://www.ukap1000application.com/images/pdf/AP1000%20Opportunity.pdf [Accessed 30 April 2013].
IAEA, 2011. Advanced Passive PWR (AP1000). International Atomic Energy Agency.
Institute, N.E., 2012. U.S. Electricity Production Costs and Components (1995-2011). [Online] Available at:
http://www.nei.org/resourcesandstats/documentlibrary/reliableandaffordableenergy/graphicsandcharts/uselectricityproduct
ioncostsandcomponents/ [Accessed 25 April 2013].
Koplow, D., 2011. Nuclear Power: Still Not Viable without Subsidies. Cambridge, MA: Union of Concerned Scientists.
Lawrence, A., 2011. Keep the wind turbine blades turning. [Online] Available at:
http://www.renewableenergyfocus.com/view/19362/keep-the-wind-turbine-blades-turning/ [Accessed 25 April 2013].
Macintosh, A., 2007. Sitting Nuclear Sites in Australia - Where should they go? [Online] Available at:
https://www.tai.org.au/documents/downloads/WP96.pdf [Accessed 25 April 2013].
Morgan, J., 2010. Comparing Energy Costs of Nuclear, Coal, Gas, Wind and Solar. [Online] Available at:
http://nuclearfissionary.com/2010/04/02/comparing-energy-costs-of-nuclear-coal-gas-wind-and-solar/ [Accessed 25 April
2013].
NEI, 2012. Reliable and Affordable Energy. [Online] Available at:
http://www.nei.org/resourcesandstats/documentlibrary/reliableandaffordableenergy/factsheet/nuclearpowerplantcontributio
ns/ [Accessed 25 April 2013].
NSW, M., n.d. NSW Marine Parks. [Online] Available at: http://www.mpa.nsw.gov.au/ [Accessed 29 April 2013].

PKPC, 2011. Concept Plan and Major Project Stages. [Online] Available at: http://www.portkembla.com.au/page/port-
development/ [Accessed 29 April 2013].
Regulator, C.E., 2013. About the carbon pricing mechanism. [Online] Available at:
http://www.cleanenergyregulator.gov.au/Carbon-Pricing-Mechanism/About-the-Mechanism/Pages/default.aspx#How-
does-it-work [Accessed 25 April 2013].
RMI, 2010. Estimated health effects from U.S. coal-fired power plant emissions. [Online] Available at:
http://www.rmi.org/RFGraph-health_effects_from_US_power_plant_emissions [Accessed 25 April 2013].
Russell, G., 2013. Exploding Australia's nuclear delusion. [Online] Available at:
http://www.businessspectator.com.au/article/2013/3/22/energy-markets/exploding-australias-nuclear-delusion [Accessed
25 April 2013].
sdfsd, n.d. dfsf. [Online] Available at: sdfs.
SKM, 2008. Transmission Asset Cost Benchmarking. [Online] Available at:
http://www.erawa.com.au/cproot/6979/2/20081008%20AAI%20Appendix%204%20-
%20Transmission%20Asset%20Cost%20Benchmarking.PDF [Accessed 1 May 2013].
Thomas, M., 2012. The Economics of Nuclear Power. [Online] Available at:
http://www.engineersaustralia.org.au/sites/default/files/he_economics_of_nuclear_power.pdf [Accessed 26 April 2013].
Westinghouse, 2007. Ready to Meet Tomorrow's Power Generation Requirements Today. [Online] Available at:
http://www.westinghousenuclear.com/docs/AP1000_brochure.pdf [Accessed 25 April 2013].
Westinghouse, 2011. AP1000: Passive Safety Systems and Timeline for Station Blackout. [Online] Westinghouse
Available at:
http://ap1000.westinghousenuclear.com/station_blackout_home/images/AP1000_Integrated_Safe_Shutdown_Solution.pdf
[Accessed 25 April 2013].
Westinghouse, 2012. AP1000 at a glance. [Online] Available at:
http://ap1000.westinghousenuclear.com/ap1000_glance.html [Accessed 25 April 2012].
Westinghouse, 2012. Improved and More Efficient Operations. [Online] Available at:
http://ap1000.westinghousenuclear.com/ap1000_imeo.html [Accessed 25 April 2013].
White, M.A.M., 2010. Generic Design Assessment: Disposability Assessment for Wastes and Spent Fuel arising from
Operations of the Westinghouse Advanced Passive Pressurised Water Reactor (AP1000). Part 1: Main Report. Nuclear
Decommissioning Authority.
WNA, 2012. Australia's Electricity. [Online] Available at: http://world-nuclear.org/info/Country-Profiles/Countries-A-
F/Appendices/Australia-s-Electricity/#.UYGoGLWmjvR [Accessed 24 April 2013].
WNA, 2013. Advanced Nuclear Power Reactors. [Online] Available at: http://world-nuclear.org/info/Nuclear-Fuel-
Cycle/Power-Reactors/Advanced-Nuclear-Power-Reactors/#.UYGpY7WmjvQ [Accessed 28 April 2013].
WNA, 2013. World Nuclear Association - Cooling Power Plants. [Online] Available at: http://www.world-
nuclear.org/info/Current-and-Future-Generation/Cooling-Power-Plants/#.UYJ1ZoagxS6 [Accessed 26 April 2013].
Woods, G., 2006-07. Water Requirements of Nuclear Power Stations. Canberra: Parlimentary Library.
World Nuclear News, 2010. Areva announces reorganization. [Online] Available at: http://www.world-nuclear-
news.org/C-Areva_announces_reorganization-2801104.html [Accessed 25 April 2012].
XE, 2013. XE Live Exchange Rates. [Online] Available at: http://www.xe.com/?r=8 [Accessed 25 April 2013].





APPENDIX
APPENDIX 1: MEASUREMENT CRITERIA IN SELECTING ALTERNATIVES
Wind Solar Nuclear Weighting 1st 2
nd

Case Study Walkaway
Wind Farm
Greenough River Bespoke
estimation
- 2 points 1 point
Output 90MW 10MW 1117MW -
Capacity
Factor
47% 26% 90% -
Maximum
Possible
Output
42.3MW 2.6MW 1005.3
MW
20% Nuclear Wind
Estimated
Output
222 GWh/yr 22GWh/yr 8806
GWh/yr
10% Nuclear Wind
CapEx 210 million 50 million 8 billion -
CapEx per
MW
4.96 million 19.23 million 7.95
million
25% Wind Nuclear
Site Area (ha) - 80 15% Nuclear Solar
OpEx
2
$19 per MWh
generated
(Lawrence,
2011)
1.5% of CapEx
per year (Ch.
Breyer, 2011)
-
OpEx ($/yr) 4.2 Million 0.75 Million 274
Million
-
OpEx
($/GWh/yr)
0.022 Million 0.034 Millions 0.031
Million
15% Wind Nuclear
Base Line
Stabile output
No No Yes 10% Nuclear n/a
Harmful
Waste
No No Yes 5% Solar &
Wind
n/a
Total Points
Won
1.2 0.25 1.5 100%
POTENTIAL JOINT VENTURE
Areva, a world-leading French company in nuclear energy, has expressed interest in a joint
venture or a majority equity stake in building the nuclear power plant in Australia. The
economies of scale experienced coupled being the only company with presence in each industrial
activity linked to nuclear energy: mining, enrichment, engineering, nuclear reactors, waste
disposal and decommissioning (World Nuclear News, 2010) will be invaluable to the maiden
operation of nuclear power plant in Australia. Their experience will also allow a local team of
Australian experts to be trained for future expansion in this newly formed market. However,
being a multinational conglomerate, Areva will require a major equity stake in the NewCo. In
addition, there might be issues regarding having a foreign company having a majority stake in
the nuclear energy industry in Australia as this might be a concern of national security and
safety. These potential problems will definitely be investigated further in the Project Definition
Plan.


2
Cenerlc cosLs as case sLudy cosLs are confldenLlal and noL publlshed

APPENDIX 2: TOTAL COST OF ELECTRICITY PRODUCTION PER KWH

APPENDIX 3: MCNAIR GALLUP POLL

APPENDIX 4: STATE ENERGY TRANSFER
Showing NSW being a net importer of energy



APPENDIX 5: CONVERSION FACTOR
!"#$ !"#$% !" !"#$%& !!!"# !" !"
!"#$ !"#$% !" !"#$%& !!!" !" !"
!
!"#$%&'(") !" !"
!"#$!"#$%& !" !"
!
!"!!
!!!!
!
!" !"##"$%
!"# !"##"$%
! !"
APPENDIX 6: SENSITIVITY OF NUCLEAR COSTS TO FUEL


APPENDIX 7: COST BREAKDOWN IN FINLAND



APPENDIX 8: LEVILISED COSTS OF VARIOUS POWER GENERATION IN
AUSTRALIA

APPENDIX 9: INPUTS, ASSUMPTIONS AND COSTS
The costs derived from literature, actual, estimated et cetera is given in their respective years. These costs are then
adjusted for inflation up to the estimated start operational date. 2027 is when the plant operations start, thus, costs
derived from literature, estimates, and actual data is first brought forward from their respective years to 2027.
Actual calculation formulas of the excel output given above will given in the Appendix. It is assumed $AUD and
$USD achieved parity for the forecasted horizon.
INPUTS AND ASSUMPTIONS








EXCEL OUTPUT WITH FORMULA REFERENCES

COSTS AT 2027 (START DATE OF THE OPERATION OF THE PLANT)

EXCEL OUTPUT WITH FORMULA REFERENCES

APPENDIX 10






APPENDIX 11
Westinghouse has tagged the AP1000 with a gross power rating of 3415 MW
t
(Westinghouse, 2007). Similarly, an
assessment report by the Nuclear Decommissioning Authority (NDA) in the UK has found the AP1000 having a
burn up rate of 65000MWd/t (White, 2010). Considering there are 365 days in a year, it has been calculated that the
yearly fuel consumption is 19.2 t of enriched Uranium. The price of enriched Uranium is given by the WNA as
US$2770/kg (Association, 2013), which at today’s exchange rate is AU$2695/kg (XE, 2013). Simple calculations
show that the total annual cost of the Uranium required to power the plant is AU$51.7 million. Other costs
associated with the running of the power plant, such as general O&M costs, insurance, connection to grid and use of
services have been considered by Heptonstall et al in their analysis of a commissioned report by Department of
Energy and Climate Change into costs of Nuclear Power Plant operation, and will be used as an estimate for the
feasibility of this report (Grant Harris, 2012). The estimated cost is approximately $150m.
APPENDIX 12
The WNA assert that 9 – 15% of the capital cost should be considered. Taking the worst case of 15%, the total
decommissioning cost in 2078 (after 50 years of operation from 2027) is $1.2 billion. However, when discounting
this cost back to 2027 with a discount rate of 6.3%, it is found that the actual cost at present value terms is in the
order of $56m. This is consistent with what WNA asserts, and that is when discounted, decommissioning only
accounts for less than a few percent of the investment cost and even less of the generation cost.
9
APPENDIX 13
COMPARABLE BETA

CAPM AND WACC CALCULATION

EXCEL OUTPUT WITH FORMULA REFERENCES



APPENDIX 14
REVENUE AND COSTS FORECAST

EXCEL OUTPUT AND REFERENCES

APPENDIX 15
RESULTS OF FINANCIAL EVALUATION







EXCEL OUTPUT AND REFERENCES

APPENDIX 16
SENSITIVITY ANALYSIS
1A8LL 1: LllLC1 Cn vA8?lnC Þ8CuuC1lCn Anu CAÞl1AL CCS1 LSCALA1lCn Cn nÞv

1A8LL 2: LllLC1 Cn vA8?lnC CCS1 Cl uL81 Anu LLvLL Cl Su8Slu? Cn nÞv

Master your semester with Scribd & The New York Times

Special offer for students: Only $4.99/month.

Master your semester with Scribd & The New York Times

Cancel anytime.