Date of Award

4-2008

Document Type

Thesis

Degree Name

Bachelor of Science

Department

Economics

First Advisor

Dr. Robert C. Dolan

Abstract

In early 2005 the government of Bulgaria commissioned the construction of a new nuclear power plant (NPP) near the town of Belene on the Danube border with Romania. The € 4 billion project will be executed by a consortium appointed in October 2006 by the National Electric Company led by the Russian Atomstroyexport. The work will be overseen by the architect-engineer of the plant, the American company WorleyParsons. The endeavor received a “green light” in December 2006 when the Nuclear Regulatory Agency of Bulgaria approved the Belene site for the construction of a new nuclear power plant.

The need for a new electricity-producing facility in Bulgaria after the shutdown of Units 1-4 of Kozloduy is clear. It is not clear, however, what dictated the choice of nuclear technology. Why didn’t Bulgaria decide to build another coal-fired plant, since it has always been the case that coal plants provide the largest percentage of total electricity production in the country? Was the decision based upon the economic advantage of nuclear versus other technologies, in particular coal? To address these questions, I will perform a comparative analysis between the Belene NPP and a plausible alternative such as a coal-fired Thermal Electric Power Plant (TEPP). The basis of the analysis is comparing the marginal cost (MC) of both generating technologies. The lower MC technology is deemed economically superior. I identify the input price (PI) of both the nuclear plant and the coal plant with their respective levelized discounted cost of electricity (LDCE), which I develop based on a literature review. I estimate a Cobb-Douglas production function with multiplicative energy terms. The estimated output elasticity of nuclear and coal is their respective marginal product (MP). Combining information on the relative PI and MP of both technologies I gauge the relative magnitude of their MC.

Download

Included in

Economics Commons

Share

COinS