High construction cost to double the cost of power generation

The cost of electricity generation per kilowatt from the Rooppur nuclear power plant in Bangladesh will be 9.36 cents compared to 5.34 cents for a similar plant in Kudankulam, Tamil Nadu, India.

The high construction cost of the Rooppur nuclear power plant is said to be the reason for the excessive cost of potential electricity generation.

In Bangladeshi currency, the cost of generating electricity per unit of two RNPP reactors will be 7.94 Tk while their establishment costs are $12.65 billion, according to a study published by Springer-Verlag GmbH. , Germany, earlier this year.

In Indian currency, the cost of producing electricity from the Kudankulam 3 and 4 power plants will be 3.93 rupees since their construction costs are around 5.38 billion dollars.

A research paper jointly authored by academics Gour Gobinda Goswami and Umama Rahman of North-South University in Bangladesh and Mehdi Chowdhury of Bournemouth University Business School in the UK estimated the levelized cost of electricity from nuclear power plants at using a financial model in both countries.

The levelized cost of electricity, or levelized cost of energy, is a measure of the average net present cost of producing electricity for a generator over its lifetime.

The university researchers did a comparative study on two power plants since their construction and found them almost identical in terms of power generation.

Bangladesh and India have benefited from financial and technical assistance from Russia for the establishment of the reactors.

Using the discounted present value method developed by Du and Parsons (2009), MIT (2003; 2009; 2018) and Singh et al. (2018), the researchers noted that the levelized cost of power plant electricity in India would be lower than in Bangladesh for several reasons.

Research reveals that the construction cost is more than double in Bangladesh compared to India; in addition, Bangladesh bears an additional external cost of $187.5 million, according to the research.

Since Bangladesh established its first nuclear power plant, it bears a cost of installing different facilities such as telecommunications, transportation, establishing water pipe and establishing power grid, while Kudankulam 3 and 4 are India’s 25th and 26th nuclear reactors, according to the document.

He said the cost per unit of nuclear power in Bangladesh would be 70% higher than a comparable plant in India, mainly because the construction cost was more than double in Bangladesh than in India.

Part of the reason for the high construction costs is the 69% higher interest cost when building a nuclear power plant here, while the other reason is the 69% higher overnight costs, have observed the researchers.

The former chief economist of the World Bank office in Dhaka, Zahid Hussain, noted that the research paper could have been more meaningful if the researchers had explained why there was a big difference in the construction costs of the reactors in two countries.

“The question, however, remains unanswered,” he said.

Zahid said the research should yield more information about the Kudankulam 1 and 2 reactors built at a cost of $2.6 billion to produce 1,000 megawatts of electricity by 2016 after they started up in 2002.

That the two RNPP reactors have a capacity to generate 1,200 megawatts of electricity but are almost five times more expensive, as research shows, than the Kudankulam 1 and 2 reactors built 10 years ago seems surprising, a he added.

According to the Executive Director of the Policy Research Institute, Ahsan H Mansur, the cost of building the country’s first nuclear power plant was very high since its contractor was appointed without any international tender.

Calling the contract process non-transparent, Mansur said the country could have produced the same amount of electricity for less than $3 billion.

He argued that the country’s debt sustainability would be strained due to the repayment of the loan to Russia taken out for the nuclear power plant.

The first installment of $569 million in loans is due in March 2027.

The researchers, however, hinted that the power plant would be profitable if the government could sell electricity per kilowatt above 7.94 Tk.

They said that in Bangladesh, the cost of generating electricity was always higher than the price of electricity.

The power sector has been subsidized by Taka 52,260 crore over the past 10 years due to higher production cost compared to lower selling price, they argued.

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