The effect of economic growth, oil prices, and the benefits of reactor standardization: Duration of nuclear power plant construction revisited

• Published in: Energy policy 2016-04, Vol.91, p.49-59
• Main Authors: Csereklyei, Zsuzsanna, Thurner, Paul W., Bauer, Alexander, Küchenhoff, Helmut
• Format: Article
• Language: English
• Subjects: Construction; Construction duration; Construction planning; Construction standards; Cost analysis; Crude oil; Crude oil prices; Debt; Economic development; Economic growth; Economics; Energy prices; GDP; Gross Domestic Product; Guanosine diphosphate; Investments; Nuclear energy; Nuclear power; Nuclear power plants; Nuclear reactors; Payments; Petroleum; Plant construction; Power; Prices; Profitability; Public utilities; Reactors; Standardization; Studies; Utilities
• ISSN: 0301-4215; 1873-6777
• DOI: 10.1016/j.enpol.2015.12.032

The profitability of nuclear power plant investment is largely determined by the construction duration, which directly impacts discounted cash flows, debt and interest payments, as well as variable costs, such as labor. This paper analyzes the key drivers of construction duration using survival models. We focus especially on the strategic expectation formation of private and public utilities engaging in such highly risky megaprojects. Using a balanced dataset of explanatory variables and the IAEA/PRIS dataset of reactor construction starts between 1950 and 2013 we find that the expectation of rising oil prices and higher economic growth, along with the higher per capita GDP of a country tend to reduce the time needed to grid connection. We also identify the reactor models with the fastest construction duration. •We find that higher future economic growth speeds up nuclear reactor construction.•Higher national capacity (measured by income per capita) results in faster projects.•Higher oil prices during construction lead to faster construction times.•Reactor standardization may result in faster building times.