Abstract
This paper analyses socially optimal nuclear plant operation and nuclear waste management. Two waiting rules are derived: the first characterizes the optimal continuation of electricity production, and the second gives the optimal nuclear waste disposal date. Both rules balance the cost and benefit of either continuing production or delaying waste disposal into a deep geological repository. In addition, multiple regulatory options are investigated. The optimized waste storage and disposal cost forms the payment that should be collected from the nuclear power firm into a nuclear waste fund. The properties of this payment and other regulatory options including a tax to be paid at the shutdown date of the plant are investigated, and it is shown that the money can be collected by a plant-specific constant fee targeted at firm’s profit or output. Numerical illustration shows that waste disposal to a deep geological repository is a cost-minimizing solution only with very low interest rates. For interest rates above one percent it is optimal to store the waste in an on-ground storage facility in perpetuity.
Highlights
The disposal of spent radioactive nuclear fuel and waste has been a problem since the beginning of the Atomic Age.1 A nuclear power plant generates a large quantity of electricity from a small quantity of fuel input, but simultaneously the plant produces nuclear waste as a side-product
Given the current and future importance of nuclear waste management, this paper aims to contribute to the relatively limited economic literature on nuclear power production and waste management by analysing a model where the plant shutdown and waste disposal dates are chosen optimally
The spent fuel is stored at the reactor sites, which can be risky and the re-opening of the Yucca Mountain repository is seen as a relevant part of nuclear waste management programme (Schaffer, 2011)
Summary
The disposal of spent radioactive nuclear fuel and waste has been a problem since the beginning of the Atomic Age. A nuclear power plant generates a large quantity of electricity from a small quantity of fuel input, but simultaneously the plant produces nuclear waste as a side-product. In practice the monies are often collected based on the electricity output, like was done in the U.S (Blue Ribbon Commission, 2012) or is done in Sweden (European Commission, 2017), but setting the fee at the right level requires information on the (optimized) total waste management cost, which is studied here These questions are analysed with a two-stage model, where an electricity and waste production stage is followed by a waste storage and disposal stage. The optimal dates together with the cost structure and the physical waste properties determine the total post-operation waste management cost and the waste management payment that is plant specific These analytical results are illustrated by a numerical application which shows that deep geological disposal of the waste is a cost-minimizing solution only with very low interest rates of less than one percent. This seems to suggest that cost-minimization is not a sufficient reason to opt for geological disposal, but that indefinite on ground storage should, be seriously considered as an alternative to it unless the use of a very low social discount rate is justified
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