Arguments Against Nuclear Power Development in Iran

1
Arguments Against Nuclear Power Development in
Iran

• May, 2003

2
Overview

• Economics of nuclear vs. fossil fuels
• Increased oil / gas exports
• Energy security
• Environmental issues
• Infrastructure
• Conclusions

3
Irans major economic concerns

• Oil export revenues are important to the
  government and the overall economy
• x of GDP and/or x of tax revenues

4
Factors that speak against nuclear capacity
development in Iran

• Average cost of nuclear capacity world wide
  2,000 per kW
• Only 3-year domestic supply of production uranium
  to operate Bushehr is available
• Will require approximately 150 - 190 tons of U
  per year
• After indigenous supply is depleted, Iran would
  have to purchase either yellowcake or processed
  fuel in the world market
• Cost of raw uranium is prohibitive compared to
  open market resources (80 - 130 per kg U vs.
  40 per kg U)
• Capital costs for fuel cycle infrastructure that
  support one Bushehr reactor are approximately
  500 million

5
Nuclear power will not free up oil for export

• Only 20 of Irans electric energy is produced by
  oil. 
• Natural gas has been the fuel of choice for
  electricity generation for the past 10 years.
  Therefore, it can be reasonably assumed that
  Irans oil-fired generating units are some of the
  oldest plants on the electric system. 
• Standard electric utility practices would dictate
  that these oil-fired units be phased out of
  operation and retired at the end of their
  economic lives probably within the next 20
  years.  
• Therefore, oil presently used for electric power
  generation would likely be freed-up for export
  regardless of whether Iran develops nuclear
  generating capacity.

6
Nuclear power will not free up natural gas for
export

• In 2000, electric power generation consumed only
  40 of Irans natural gas production.  
• By 2020, natural gas use for electric power
  generation is projected to increase by
  approximately 90 - while production is expected
  to increase by approximately 160.
•  

7
Development of nuclear power will not create
energy security for Iran

• Iran has enough Uranium to operate the Bushehr
  reactor for only 3 years.
• In contrast, Iran has proven natural gas reserves
  of over 300 years.
• Once indigenous Uranium supplies are used up,
  Iran must seek a supply on the world market.
• Development of a domestic nuclear fuel cycle
  infrastructure without adequate indigenous
  resources will not increase energy security in
  Iran and would place a high risk on the
  infrastructure investment.
• Economies of scale dictate that large capacity,
  multi-unit nuclear stations be constructed. This
  will tend to reduce the reliability of the
  electric system compared to dispersing smaller
  capacity natural gas-fired generating units
  around the electrical grid.

8
Nuclear power does not address environmental
concerns in Iran

• The mining, processing, fabricating, reprocessing
  and/or storage of nuclear fuel will create
  enormous environmental impacts with high,
  long-term costs of mitigation.
• New, high-efficiency natural gas-fired generating
  units have very low emissions. 
• Natural gas-fired generating units can utilize
  dry cooling technology which reduces water use.
  

9
Status of Irans electricity-generating sector

• Currently, 75 of all electricity generation is
  produced from natural gas
• Enormous proven natural gas reserves estimated to
  be at least 812 trillion cubic feet or, 15 of
  the world total
• Natural gas reserves to production ratio
  conservatively estimated at 300 years
• 20 of electricity generation is produced from
  oil
• Irans oil reserves are among the most abundant
  in the world

10
Economic factors do not favor the development of
nuclear capability over oil/gas

• Nuclear power is the economic choice only for the
  most unlikely combination of low nuclear cost,
  high natural gas prices and a low discount rate
• World-wide, the average capital cost for nuclear
  power plants is about 2,000 per kW
• At this level nuclear is uneconomic, unless
  natural gas prices are at the highest levels, and
  then, only for the lowest discount rate
• Flaring of 10 of natural gas production does not
  support assumptions of high gas prices the cost
  of re-injection or intra-country transportation
  is greater than the value of the gas
• A 3 discount rate does not include a risk
  component. Nuclear power is one of the highest
  risk investments in the electric power sector

11
Projected generating capacity requirements

• Currently, Irans economy is growing at about 4
  annually
• This translates to an expected 20 gigawatts of
  new generating capacity needed

12
Infrastructure challenges for non-nuclear
generating development

• Domestic pipeline construction
• Technology challenges (well conditions, access,
  etc.)
• Imports and refineries
• Domestic subsidies
• OPEC - Sanctions - Subsidies
• Electricity grid enhancements

13
Conclusions

• The choice of which new electricity generating
  venue depends upon the relative costs of each
  technology
• Using a standard economic analysis, it is not
  economical for Iran to develop nuclear power for
  electricity generation
• It is also not economical for Iran to develop a
  nuclear fuel cycle for power generation based on
  its small uranium resources and the wide
  availability and low price of nuclear fuel
  worldwide.