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- Title
The Turnkey Era in Nuclear Power.
- Authors
Burness, H. Stuart; Montgomery, W. David; Quirk, James P.
- Abstract
The paper presents a brief history and analysis of the turnkey era. A study of the era is of interest because it provides an understanding of the development of the nuclear industry itself and also establishes a more general basis for evaluating the commercialization phase of a new entity in the energy industry. Turnkey era is seen as a period during which reactor manufacturers offered fixed price turnkey contracts on nuclear units to utilities at the highest price the utilities would be willing to pay, at a cost such that nuclear was just competitive with fossil fuel units. The reactor manufacturers were willing to undertake the technical and cost risks associated with building commercial size nuclear units because they expected to earn quasi-rents from succeeding generations of nuclear units. Utilities ordering turnkey units during the turnkey era ended up acquiring a bonanza-they paid roughly 50% of the true capital cost of a turnkey unit. and increases in fossil fuel costs made nuclear even more cost-attractive. Even the utilities ordering non-turnkey units during and immediately after the turnkey era did all right, since increases in fossil fuel costs more than offset the 100% or more cost overruns on the non-turnkey units.
- Subjects
NUCLEAR energy; FOSSIL fuel power plants; COMMERCIALIZATION; MANUFACTURED products; CAPITAL investments; NUCLEAR industry
- Publication
Land Economics, 1980, Vol 56, Issue 2, p188
- ISSN
0023-7639
- Publication type
Article
- DOI
10.2307/3145862