Economic Indicators Assessment of

NPP Project in Indonesia

Suparman

Centre for Nuclear Energy Development

INTRODUCTION

• Indonesia has performed:

• economics assessment using INPRO Methodology within its 2012-

2014 NESA project

• economics assessment in the feasibility study for NPP project in

Bangka in 2012-2013

• In the FS: The evaluation uses the IEA’s long-term CO2

trade price forecast to convert the CO2 reduced amount by

a NPP as money value

3

Bangka NPP Feasibility Study

Bangka Sites:

Feasibility study

(2011-2013)

CONSTRUCTION

Deeply - costly

Construction cost

No. Item

NPP

(W.Bangka)

NPP

(S.Bangka)

1. M & E system cost 6107 6107

2. Building cost 659 571

3. Civil cost 1060 987

4. Initial core fuel cost 553 553

5. Contingency 1,676 1,644

6. Owner’s cost 1,398 1,385

7. IDC 1,467 1,442

8. VAT 1175 1154

Total (Unit cost: USD/kW) 14,095

(5,972)

13,843

(5,866)

(million USD)

Owner Cost

No. Item

Cost (million USD)

NPP

(W. Bangka)

NPP

(S. Bangka)

1 Electricity supply system 8 8

2 Temporary house cost on site 6 6

3 Cost for land resettlement,

compensation 52 52

4 Project management cost 16 15

5 Consultancy cost 64 62

6 Miscellaneous costs 26 25

7 Transmission between Java and

Sumatra 1126 1118

8 Training center 98 98

9 Cost of land 2 1

Total 1398 1385

Generation cost

LCOE = Σt [ (Ct + Ot + Ft + Dt) x (1+r)-t ] / Σt [ Et x (1+r)-t ]

With:

Ct = Capital cost in the year t

Ot = Operation and maintenance (O&M) cost in the year t

Ft = Fuel cost in the year in t

Dt = Decommissioning cot in the year t

Et = Electricity generation in the year t

r = Discount rate

Capital cost components

1) Depreciation cost

Depreciation in the generation cost is a method of expensing the value of fixed assets,

and the means to recover the invested capital. In this study, the 20 years is regarded

as useful life based on Indonesian law, and the specified amount is evenly

depreciated every year for the period.

2) Interest payment

Interest of the loan is added to the generation cost in case of raising funds from

outside. The interest rate applied is 2.73 %, and the repayment terms is regarded as

18 years.

3) Fixed asset tax

As for the lands and buildings, 0.5 % of the net taxable amount is subject to the fixed assets taxation according to the tax law of Indonesia.

Interest rate

• Interest rate and repayment period for nuclear power project refers to:

Commercial Interest Reference Rates (CIRRs) - OECD The

Arrangement for Officially Supported Export Credits as May 2013 for

US dollar

• In year 2014 CIRRs for US Dollar:

Technical and Economic Parameter

Plant output : 1,180MWe

Internal consumption : 5%

Availability : 93%

Economic Lifetime : 40 years

Discount rate : 10%

Generation cost

No. Item

Cost (UScent/kWh)

NPP

(W. Bangka)

NPP

(S. Bangka)

1. Capital cost 3.60 3.53

2. Operation and maintenance cost 1.10 1.10

3. Fuel costs 1.22 1.22

4. Decommissioning cost 0.17 0.17

Total 6.14 6.01

Economic Evaluation Methodology

• The alternative thermal power method is applied to this evaluation.

When the electricity supply is set to economic benefit, then, how

the same benefit could be obtained by different ways. The expense

which is necessary to obtain, it is defined as “benefit” (B).

• On the other side, any cost to install and operate a NPP in

Indonesia is set to “cost” ( C). The cost includes any NPP specific

costs, such as policy cost, any possible risk measure

expenditures.

• The balance of (B) and (C) is considered to be the benefit which is

brought by NPP introduction into Indonesia. With this balance,

Economic evaluation is conducted by calculating Economic IRR

(EIRR) and NPV.

CO2 PRICE ASSUMPTION

Years High/2DS Low

2020 30 10

2025 55 17

2030 80 24

2035 95 30

2040 110 35

2045 120 38

2050 130 41

0

20

40

60

80

100

120

140

2020 2025 2030 2035 2040 2045 2050

High/2DS

Low

USD/tCO2

Economic Indicators

Parameter NPP (W. Bangka) NPP (S. Bangka)

NPV 2,156 2,285

IRR 13.1% 13.4%

Parameter NPP (W. Bangka) NPP (S. Bangka)

NPV -1,550 -1,421

IRR 7.3% 7.5%

Based on High price of CO2

Based on Low price of CO2

Economic Assessment using INPRO

Methodology

• Investment cost of NPP (including owner and contingency cost ) :

5254 USD/kWe

• Selling price of Electricity : 12 cent/kWh*

• Economic indicators:

* Average electricity tariff per 1 September become 1280 Rp/kWh or 11.6

cent/kWh (1 USD = 11,000 Rp)

Parameter Selling price (cent$/kWh)

12 11.6

LUEC 11.7Cent/kWh 11.7Cent/k

IRR 10.13% 9.75%

ROI 16.06% 15.44%

Sensitivity analysis

Discount Rate (%)

3.7 5 8 10

LUEC (c$/kWh) 6.39 7.27 9.7 11.7

CFPP : USD 1.250/kW

CCPP : USD 850/kW

GTPP : USD 600/kW

GEOPP : USD 1.600/kW

(Power Plant Only)

OVERNIGHT COST

Coal : USD 70/ton

Gas : USD 6/MMBTU

HSD : USD 80/barrel

Geo. steam : USD 4,2 c/kWh

FUEL PRICE

ASSUMPTIONS: L evelized C os t [c /kWh]

8.04

18.33

10.12

7.256.33

-

2

4

6

8

10

12

14

16

18

20

C OA L G A S (C C ) L NG (C C ) OIL G E OT HE R MA L

C apex IDC F uel C ost O &M C ost

Source: PLN

Levelized Cost of Electricity Generation for Different Technologies [c/kWh]

Conclusion

• Based on the Feasibility Study, NPP project in Indonesian highly

depends on the CO2 price market. In CO2 price low scenario, NPP

does not seem to be beneficial from the view of Indonesian

economy. This is because some costs (risk cost and policy cost)

are considered in the study.

• Based on assessment using INPRO methodology indicate that

NPP with total capital cost of 4765 USD/kWe seem to be attractive

when selling price is 12 USD cent/kWh

THANK YOU