• High capital costs of nuclear power create a first-mover investment problem. • Learning rates fail to capture the impact of high-level decision making. • A probabilistic framework links decision-making parameters to cost evolution. • Committed order books paired with policy support enable competitive nuclear costs. • Project characteristics associated with low overruns and cost reductions are identified. This study presents a probabilistic evaluation of the capital cost and construction schedule overruns and reduction potentials involved with building a series of new nuclear power plants in the United States. High capital costs for first-of-a-kind projects present a significant barrier to investments and create a “first-mover” problem that can best be resolved through a committed order book of several plants that are built sequentially. This study hypothesizes that explicitly decomposing cost and schedule overruns into specific decision-making parameters, referred to as levers , provides a more transparent and quantifiable basis for projecting cost reduction pathways than conventional learning rate approaches. The study models the evolution of cost and construction duration in such order books, from the first to the last plant, as a function of levers, such as order book size, interest rates, and design completion level before construction, using a probabilistic framework with one million sampled scenarios. The results show that the first plant, which is assumed to be first of a kind, is prone to significant cost and schedule overruns (median cost overrun of around 130%), while the last plant benefits from a gradual reduction in overruns as well as learning-based efficiencies that result in cost and schedule reductions (median cost reduction of around 30%). The study also identifies specific project characteristics of the levers that determine overruns. For example, projects with first-of-a-kind capital cost overruns under 25% tend to have at least four firm orders, a design that is at least 60% complete before construction begins, components of at least medium technological maturity, some prior experience in architecture/engineering and supply chain management, at least medium proficiency in nuclear plant construction, modular civil construction methods, a low interest rate not exceeding 6.5%, and an investment tax credit of at least 30%. These results suggest that committed order books, when paired with deliberate planning decisions across key levers, have the potential to substantially reduce nuclear capital cost risk, provided sequential deployment is sustained and the conditions identified in this framework are met. With the United States gearing up to significantly increase nuclear capacity, the framework, which can be customized to any plant technology, can provide policymakers, utilities, and stakeholders with a quantifiable basis for exploring cost reduction scenarios and informing investment and deployment decisions, while explicitly acknowledging the conditions under which such reductions may not materialize.
Hanna et al. (Thu,) studied this question.