Capacity Factor Risk at Nuclear Power Plants

Center for Energy and Environmental Policy Research (CEEPR) No. 10-016

125 Pages Posted: 17 Nov 2010 Last revised: 25 Dec 2013

See all articles by Yangbo Du

Yangbo Du

Massachusetts Institute of Technology (MIT)

John E. Parsons

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Date Written: November 8, 2010

Abstract

We develop a model of the dynamic structure of capacity factor risk. It incorporates the risk that the capacity factor may vary widely from year-to-year, and also the risk that the reactor may be permanently shutdown prior to the end of its anticipated useful life. We then fit the parameters of the model to the IAEA’s PRIS dataset of historical capacity factors on reactors across the globe. The estimated capacity factor risk is greatest in the first year of operation. It then quickly declines over the next couple of years, after which it is approximately constant. Whether risk is constant or increasing in later years depends significantly on the probability of a premature permanent shutdown of the reactor. Because these should be very rare events, the probability is difficult to estimate reliably from the small historical sample of observations. Our base case is parameterized with a conservatively low probability of a premature permanent shutdown which yields the approximately constant variance. Our model, combined with the global historical dataset, also yields relatively low estimates for the expected level of the capacity factor through the life of the plant. Our base case estimate is approximately 74%. Focusing on alternative subsets of the data raises the estimated mean capacity factor marginally, but not significantly, unless the sample chosen is restricted to selected countries over select years. This emphasizes the need for judgment in exploiting the historical data to project future probabilities.

Keywords: Nuclear Power, Capacity Factor, Risk

JEL Classification: D24, L94, Q41

Suggested Citation

Du, Yangbo and Parsons, John E., Capacity Factor Risk at Nuclear Power Plants (November 8, 2010). Center for Energy and Environmental Policy Research (CEEPR) No. 10-016, Available at SSRN: https://ssrn.com/abstract=1708002 or http://dx.doi.org/10.2139/ssrn.1708002

Yangbo Du

Massachusetts Institute of Technology (MIT) ( email )

77 Massachusetts Avenue
50 Memorial Drive
Cambridge, MA 02139-4307
United States

John E. Parsons (Contact Author)

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

100 Main Street
E62-416
Cambridge, MA 02142
United States

HOME PAGE: http://www.mit.edu/~jparsons/

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
51
Abstract Views
737
rank
508,293
PlumX Metrics