New decommissioning reports tackle cost estimation challenge

A series of new nuclear industry guidelines are set to improve decommissioning cost estimates through the earlier integration of project risks, cost benchmarking, and greater data sharing between operators, Simon Carroll, Swedish Radiation Safety Authority & Chair of the OECD-NEA Decommissioning Cost Estimation Group, said.

Nuclear decommissioning activity is set to hike in Europe and the U.S. in the coming years as ageing fleets and regulatory shifts combine with stubbornly-low wholesale power prices. Operators and stakeholders are requiring an increasing level of detail of cost estimates and greater transparency over calculations and procedures.

Operators build up nuclear decommissioning funds based on estimated costs but very few decommissioning projects have been completed thus far and estimates vary widely between countries and corporations.

In February, a French parliamentary report said EDF's decommissioning cost estimates for its 58-reactor fleet appear too low.

EDF has estimated the cost of decommissioning its plants at 350 million euros per reactor, far lower than the cost estimates by other European operators which range between 900 million and 1.3 billion euros per reactor, the report said.

EDF believes learnings from the dismantling of its Chooz A reactor and the transfer of operational fleet data will accelerate the process. However, U.S. data has shown that decommissioning cost estimates have increased over time.

       US estimated decommissioning costs

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Source: Callan Institute's '2016 Nuclear Decommissioning Funding Study.'

With decommissioning activity set to rise, nuclear operators will need to demonstrate cost estimates are reliable, Carroll told the Nuclear Decommissioning Conference Europe on May 25.

"We have an awfully large number of plants that are going to enter into decommissioning in the coming years... For the projects that have been completed there is very limited cost data available and the cost data that is available has not been systematically compared to the estimates," he said.

In a bid to improve decommissioning cost estimates, the OECD’s Nuclear Energy Agency (NEA) and the International Atomic Energy Agency (IAEA) plan to publish in the coming weeks a new report setting out best practice for addressing project uncertainties, Carroll said.

The report aims to improve the transparency and accuracy of estimates by integrating systematic project risk analysis earlier in the planning of decommissioning project scope, he said.

Clearer picture

In 2012 the NEA, IAEA and European Commission (EC) jointly published the International Structure for Decommissioning Costing (ISDC) document which provides a common reporting format for project estimates.

While the ISDC guidelines provide a detailed costing framework for operators, they do not fully address the ways in which operators can include contingency for uncertainties within the defined project scope, Carroll told the conference.

To that end, NEA and IAEA plan to publish in the coming weeks new best practice guidelines for the consistent treatment and documentation of decommissioning project uncertainties, he said.

By including the cost of potential risks in base estimates early in the planning phase, companies increase the credibility of their estimates and reduce the risk contingencies added on top of basic project scope, Carroll said.

"Unless you actually address the risks and uncertainties from the outset, you will not have a complete picture of the possible costs," he said.

The new guidelines recommend the systematic calculation and presentation of project uncertainties, factoring analysis and latest learnings into the basic scope through multiple iterations, Carroll said.

"It comes down to adding risk elements to the ISDC structure in a transparent and documented way," he said.

Operators must also implement a systematic quality assurance program for the input data and analysis used in the estimation process, Carroll noted.

"Part of the report is focused on understanding those numbers-understanding what stands behind the numbers and the whole quality assurance approach to the estimate," he said.

The report sets out best practice guidelines for the documentation of calculations and ways to demonstrate the validity of assumptions and judgements, Carroll said.

Comparison tools

In addition, the NEA’s Decommissioning Cost Estimation Group (DCEG) has started a two-year research project to develop benchmarking approaches to decommissioning costs.

The study responds to growing interest in improving the cost efficiency of decommissioning projects and contracts and ensuring the adequacy of decommissioning funds.

"At the moment, we have lots of estimates and we have very few costs and we don't really understand the relationship between our estimates and costs," Carroll said.

The DCEG team will set out possible benchmarking methodologies which systematically analyze estimates in relation to actual costs, "probably at the activity level," he said.

The study also aims to encourage the sharing of decommissioning cost data. Other competitive energy sectors such as oil and gas have supported information sharing between firms to improve decommissioning efficiency and reduce costs.

"We have a lack of relevant cost data from decommissioning projects and there are real barriers to sharing that cost data," Carroll said.

The benchmarking study will set out possible models for collecting and sharing project data, taking into account commercial sensitivities, he said.

The research is scheduled to be completed around the end of 2018 and the final report will complement the new findings on addressing project uncertainties to help improve decommissioning efficiency, Carroll said.

"Hopefully together we will develop a roadmap towards turning information into insights that can be used for decommissioning project delivery," he said.

Nuclear Energy Insider