4/28/2008 Colloquium - Geoffrey Rothwell

Geoffrey Rothwell

Event Info

Title: Cost Structure and Market Sustainability of the International Light Water Reactor Fuel Fabrication Industry

Date: Apr 28, 2008
Location: 3105 Etcheverry Hall
Time: 4-5pm

Abstract

This paper examines the cost structure of the light water reactor (LWR) fuel fabrication industry. The LEU industry is decades old, and (except for high entry cost), labor and additional fabrication lines can be added at (Nth-of-a-Kind) cost to the maximum capacity allowed by the license. This means that new entrants could have a difficult time penetrating a market where incumbents can add and subtract new lines at low cost. Therefore, the commercial market safeguards against new entrants and can add capacity whenever it is needed to existing sites. This industry appears to be sustainable. On the other hand, new MOX fuel fabrication is still in its “First-of-a-Kind” stage. Because of high costs and low profits, a large part of the commercial MOX capacity is either closed or will be closed in the next decade. Because of the high entry cost of securing a site to work with separated plutonium and because of the much higher labor requirements to fabricate MOX fuel, a competitive MOX market is not sustainable. There may be only room for one firm in this market, i.e., demand might not be large enough for more than a “natural” monopolist. For other firms to be viable, MOX fuel fabrication could require government and/or corporate support with subsidies, long-term contracts, and/or low-cost loans.