The Investment Evaluation of Third-Generation Nuclear Power - From the Perspective of Real Options

Abstract

The continued growth of world’s population and gradual increase of people’s living standards in developing countries have sped up the exhaustion of fossil fuels and caused large amount of greenhouse gas emissions. Although renewable energy sources (e.g. wind energy, solar energy, hydro energy and biomass energy) have developed rapidly in recent years, limitations existing in these energy sources (e.g. non-continuous electricity supply of wind and solar power generation, resource constraints for hydro power and biomass energy etc.) still set barriers to launching application in large scale and fulfilling world’s energy demand in near future. Currently, great attention has been paid to nuclear technology. It has been widely accepted around the world that nuclear power is a clean energy option which causes zero-emissions of SO2, NOx, smoke dust and carbon. A safely-operating nuclear power plant with strict radiation monitoring and risk management system will have little impacts on its surroundings, and the effects of radiation dose on citizens near the plant will be lower than 1% of underground natural radiation. The development of nuclear energy can broaden the energy sources in energy industry, ease the limitations of fossil fuel supply, and reduce the environmental pollution caused by fossil fuel combustion. The development of nuclear technology will also have significant impacts on greenhouse gas emission reduction. Asia has become the largest market for nuclear power after remarkable growth has emerged to its economies in the last decade, especially in China and India. The enjoyment of rapid economic development in Asian countries also brings the booming of energy consumption. On one hand, considering large fluctuation of international fossil energy prices (e.g. oil prices) in recent years and lack of effective energy supply, Asian countries have to face more serious energy security situations; On the other hand, the consumption of fossil energy has caused severe environmental pollutions and large amount of greenhouse gas emissions, in the case of renewable energy development barriers, Asian countries need to find other new, clean, stable and extensive energy resource to meet their domestic energy demand. Nuclear power is regarded as a trustworthy way to enhance Asian countries’ energy security and becomes a preferred-choice in their energy options. As the world’s largest developing country which is struggling with limited energy resources, growing energy demand, increasing dependence on imported oil, deteriorating