Academic Review 2024

54 ST EDWARD’S, OXFORD

Nuclear fission economics When looking at the production and supply of energy in the UK, the main macro-economic factors affected are economic growth, levels of inflation and unemployment. To start producing any goods in an industry, a firm needs to allocate all factors of production. These include land, labour, capital and entrepreneurship. One major problem nuclear power plants have is planning, operation and cost. The planning-to operation times of all nuclear plants in the UK have been 10-19 years as shown here in figure 1 (WNA, 2022). This makes firms less keen on building new fission power plants. Even though they may not be expensive to run, there are exceedingly high capital costs. These plants will go through years of construction without any income received and are usually financed by funds with interest. ‘Over a long period of construction, these funds compound into significant amounts’ (WNA, 2022). Once these power plants are operational however, it is relatively cheap to keep them running. Fuel is not too expensive as not much is required and they only needs refuelling once every 1-2 years. Another advantage of fission plants are the zero carbon emissions. Fossil fuels cause negative

externalities on the environment. Nuclear fission is not responsible for any negative externalities related to the climate making it a clean source of energy. However, there are still some negative externalities. A problem with fission reactors is the radioactive waste and possibility of nuclear meltdowns. In economic terms this is known as market failure. This is the idea that the activity of a firm in an industry is causing more external costs over external benefit. We can see this here in figure 2 below where marginal private cost (MPC) is greater than marginal social cost (MSC).

Figure 2: Negative externality graph

MSC

Costs & Bene ts

MPC

P

P

MPB = MSB

Output

Q Q

Figure 1: UK nuclear plants construction times

SRAS FIRST GRID CONNECTION

Price Level REFERENCE UNIT POWER (MWe)

REACTOR NAME

REACTOR TYPE

CONSTRUCTION START

MODEL

SRAS

Hartlepool A 1 Hartlepool A 2 Heysham A 1 Heysham A 2 Heysham B 1 Heysham B 2

AGR AGR AGR AGR AGR AGR

GCR GCR GCR GCR GCR GCR PWR GCR GCR

590 595 485 575 620 620

1968-10 1968-10 1970-12 1970-12 1980-08 1980-08 1988-07 1980-08 1980-08

AD 1983-08 1984-10 1983-07 1984-10 1988-07 1988-11 1995-02 1988-05 1989-02

PL

PL

Sizewell B Torness 1 Torness 2

SNUPPS

1,198

AGR AGR

595 605

Real GDP

Q

Q

PL

LRAS 1

LRAS 2