Reference Class Forecasting and Its Application to Fusion Power Plant Cost Estimates

Developments in fusion energy technology and the aspiration to build and run commercial fusion energy power plants have seen the commencement of numerous publicly and privately funded projects in recent years. Megaprojects, like fusion power plants, by their very nature are inherently complex and risky, therefore, providing a robust cost estimate in the early stages is challenging. In the fusion sector, this is amplified by the fact that very little data exist on which to base an estimate due to the novel nature of the materials and technologies involved. A common phenomenon during the estimating phase of a new project is the concept of optimism bias (OB), where underestimation of time, cost, and risk can cause impacts on the baseline cost and schedule, leading to significant over-runs during the project lifetime. Reference class forecasting (RCF) is a method used to mitigate against these factors, based on using actual performance data in a reference class of comparable projects to improve forecasting accuracy. This article will discuss RCF, how it has been used in recent megaprojects, and how it is intended to be used in the Spherical Tokamak for Energy Production (STEP) program to provide a full program cost model for a prototype fusion energy plant.