Perspective Chapter: Efficiency of the Phased Financing of the Construction of a Nuclear Energy System with Small Reactors

Abstract

The chapter is directed to finding ways to enhancing investment attractiveness of small and medium reactors (SMRs). The approach being discussed in the chapter is based on the notion that mechanisms for financing a power system can be more flexible and efficient than those used to finance individual units. As an implementation of this general idea, a matrix investment model, in which management and financing are centralized, is presented and discussed. Results of the model application for evaluation of the economic indicators of SMR system construction are compared with the results provided by the levelized cost model. The results of the comparison show that integration of few SMRs into a financially united system opens up opportunities for the shareholder income growth, creates favorable conditions for credit/private investors and promote public acceptance of nuclear power as a cost-effective energy option.

1. Introduction

The comprehensive research of recent decades shows a significant role that nuclear power can play (and is already playing today) in reducing greenhouse gas emissions and preserving the environment, while ensuring a sustainable energy supply [1, 2, 3, 4, 5, 6]. The growing recognition of the objective capabilities of the nuclear energy option in preventing climate change and reducing of the environmental impact is a critical condition for the inclusion of nuclear power into the energy sector of many countries, which, however, does not guarantee its large-scale deployment without solving some internal problems.

One of these problems is low return on investment in nuclear energy business. For a long time, when the main type of electricity markets was a regulated one, financing of the power plants was provided by state or municipal structures, with preference given to reducing electricity prices as a social task, rather than electricity generation as a business. The low electricity price was being achieved by investing in the NPP construction low cost capital provided by the state or municipal corporations with a very long-term return. These favorable financial conditions made it possible to build power units of high capacity over a long period of time in order to rich lower cost of electricity than one in units of smaller capacity due to economies of unit scale (sсale effect).

Under funding conditions similar to the mentioned above, large generation reactor units occupied a significant place in the world nuclear power generation, maintaining to a large extent the development trend in the same direction. In contrast to the specific nuclear power market, the deregulated non-nuclear power markets have evolved away from the very large generation units toward small and medium ones. The intrinsic complexity, associated risks and costs of extremely large systems have offset all economies of unit scale in power engineering [7]. Since the end of the last century, interest to small and medium reactors has also been rapidly growing in the nuclear power. By now, more than a hundred of SMR designs have been developed in the world and some of them are in the implementation phase [8, 9, 10]. Increased design activities on SMRs were driven by new opportunities offered by this technology: inherent safety; adaptability to mass fabrication, facilitated transportation and localization in remote regions; flexibility; possibility of integration with renewables; adaptability to small power grids, etc. SMRs also have a number of economic advantages compared to high power reactors (HPRs): lower total capital investments in the construction of a power unit, shorter times for commissioning, lower capital value at risk during construction, significantly lower amount of civil liability insurance.

Although in many respects SMRs are close to those of small and medium non-nuclear power units, there is a significant difference that adversely affects the deployment of a nuclear option of this type. The problem is the high overnight capital cost of the SMR building, which leads to exclusion of credit financing, high electricity costs, and, ultimately, low return on capital. The chapter evaluates an opportunity for enhancing investment attractiveness of SMRs by creating on their basis a net commercial structure—a financially integrated energy system.

2. Economic grounds for uniting power units in a financially integrated system

2.1 Specific features of nuclear power units financing

In the studies on the comparative assessment of the economic efficiency of power plants of various types in scenarios for the development of the energy sector of countries and regions, the levelized costs of electricity (LCOE) method is commonly used [11, 12]. The constant value of the specific cost of production of one kWh of electricity, being determined in this method, provides the same net present value of the electricity unit as the time-distributed income and expense flows associated with the life-time operation of the facility. Being very useful in general assessments, the LCOE model does not take into account many factors that affect the real cost of electricity, such as specific regional conditions, the number of power units on the site, infrastructure, specific ways of financing, etc. All these factors remain outside the scope of consideration in forecasting cost. For the study discussed in the chapter, it is essential that the LCOE method offers an overly simplistic approach to estimating the cost of capital and does not distinguish between the cost of electricity generated by the one power unit and a system of several units. Theoretical analysis provided below makes it possible to understand why the LCOE model does not correctly describe the process of investing in energy projects for two main mechanisms of financing: from equity and bank capital.

The levelized unit electricity cost c of electricity is the sum of the component r for the recovery of capital invested in the construction of the power unit and the component of operating costs u, which includes fuel costs. The focus of the chapter is the component r of the reimbursement of the investments K made in the power unit construction. Assuming that unit operating costs u and power unit q generation remain constant during the period of the power unit operation, an equation for c can be presented as:

$$c=r+u=\frac{K\bullet i}{q\bullet \left(1-e^{-\mathit{iT}}\right)}+u,$$E1

where i—weighted average cost of capital WACC; q—annual electricity unit production; T—repayment period.

The equation for calculation of investments (total cost of construction) K is:

$$K={\int }_{-T_c}^0{k}_t{e}^{-\mathit{it}}\mathit{dt}$$E2

where k_t—investment in time from the start of construction of the power unit t = − Тс to the start of the unit operation t = 0.

The cost of capital i is a key value for assessing the investment project profitability by bringing cash flows at different points in time to a single reference point and choosing the most promising investment from the available ones. It generally characterizes the investment climate in a country while sometimes serves as an element of technical policy, creating preferential conditions for a particular energy technology. In the case when the project is supposed to be invested by equity holders and debt, money i is usually defined as the weighted average cost of capital (WACC):

$$\mathsf{i}\mathsf{=}{\mathsf{\epsilon }}_{\mathsf{D}}·{\mathsf{i}}_{\mathsf{D}}\mathsf{+}{\mathsf{\epsilon }}_{\mathsf{E}}·{\mathsf{i}}_{\mathsf{E}},$$E3

ε_D, ε_E—shares of debt and equity, respectively (ε_D + ε_E = 1); i_D , i_E—interest on debt and equity.

The weighted average cost of capital partly reflects the fact that investment sources are inherently different. In particular, shareholders bear a much greater risk than creditors, so the return on equity should be higher than on debt, which can be taken into account using Eq. (3). However, a simple “weighing” of interest on debt and equity does not provide a correct guideline for choosing a project investment strategy from internal and external financial sources. Eq. (3) does not describe the distribution of investment and return flows of owners and creditors over time, which significantly affect the results of cost calculations. The owners (shareholders) return their funds with dividends during the commercial operation of the power plant over a period of 30–60 years, while the typical time to repay debt to creditors (banks and investment funds) is much shorter: 5–15 years. These features determine the choice of investment model for energy sources of various types. The Eq. (1) implies some asymptotic (limit) relations for the component r, which determine possible value of return in different circumstances:

$$r_0\approx \frac{K}{q\bullet T},\mathit{\text{when}}\mathsf{Т}\mathsf{\to }\mathsf{\infty }\mathsf{,}\mathsf{iT}\mathsf{\to }\mathsf{\infty }\mathsf{,}{e}^{-\mathit{iT}}\approx 0;$$E4

$$r_E\approx \frac{K\bullet i}{q},\mathit{\text{when}}i\approx \mathit{0},\mathit{iT}\approx \mathit{0},e^{-\mathit{iT}}\approx 1-\mathit{iT};$$E5

$$r_D\approx \frac{K\bullet i}{q\bullet \mu }\gg \frac{K\bullet i}{q},\mathit{\text{when}}\mathsf{Т}\mathsf{\to }\mathsf{0}\mathsf{,}\mathsf{iT}\mathsf{\to }\mathsf{0}\mathsf{,}\mathsf{\mu }\mathsf{=}\mathsf{1}\mathsf{-}{e}^{-\mathit{iT}}\ll 1.$$E6

Eq. (4) corresponds to the case of the power unit building by the state or a municipal company with very low interest rate on invested capital and the time of the investment return T equal or comparable to the lifetime of the unit T₀. In this case, the value of the funds K invested in the unit construction is close to the value of overnight cost K₀. The annual return on investments is the lowest among practically possible. This option, as noted in the introduction, is a part of socially oriented energy policy directed to provide low prices for customers. At the same time, it puts the big players on the verge of economic survival and closes the door for all other potential investors.

The limit relation (5) describes a quite widespread practice of power units financing by shareholders and creditors that is more profitable for investors (primarily under high WACC) than that in the case described by the ratio (4). However, for nuclear power where K value is much higher than in non-nuclear units, the only way to implement relation (5) and get acceptable unit electricity cost is to decrease the component r in Eq. (1) by fulfilling the condition

$$e^{-i_E{T}_E}\approx 0,$$E7

which, in turn, can be performed with a long return on investment. Therefore, in nuclear power, the scheme (5) for investment return is being mainly used by share-holders who, as owners, are quite satisfied with receiving dividends on invested capital for a long time. It should be noted that the amount of nominal money r_E being returned annually to shareholders according to scheme (5) can many times exceed the amount of money r₀ to be returned annually according to scheme (4) for a simple refurbishment of equity capital K invested in the construction of a nuclear power unit:

$$\frac{r_E}{r_0}\approx i_E\bullet T_{E.}$$E8

The situation of short-term return of money by creditors is described by the limit relation (6). Due to the fact that μ in (6) at T → 0 becomes very small, the amount of funds annually returned to creditors r_D tends to grow rapidly. For the energy technologies with a low share of the investment component in the cost of electricity, such as CCGT, an increase in the r_D component does not significantly affect the cost of electricity.

The situation is different for energy technologies with a high share of the investment return component in the structure of electricity cost, to which applies nuclear power. Attraction of credit money, the annual return on which per invested unit is much higher than on equity capital, means a radical increase in the cost of electricity generated during period of the credit repayment T_D and significant problems for entering the competitive market. Thus, for energy technologies with a high share of the investment component in the cost of electricity, short-term credit money is not attractive, and NPP owners—large state or private companies—usually do not apply to them. The problems related to the use of credit money in nuclear power were clearly demonstrated in [13]. To mitigate the harmful effect of short-term credit money, it was suggested in [13] to reduce the amount of return to shareholders during the credit repayment time with compensation of the losses incurred by shareholders after full return of money to creditors. This approach has reduced the cost of electricity in the variant of comparable shares of credit and equity investments, but the need to compensate to the shareholders losses with money depreciating over time, ultimately has led to higher levelized cost of electricity than in the case of only equity investment.

Thus, some features of nuclear energy lead to the formation of a rather narrow range of potential investors interested in the development of the nuclear energy business. There is an existential necessity in significant expansion of this range in order to meet the requests from existing energy markets on the reduction of the unit capacity of power units and the increase in commercial attractiveness of their building. In achieving this objective, all available technical, technological and institutional opportunities should be used. The chapter deals with the issues of improving institutional mechanisms embodying actualizing a transition from the scale of a power unit to the scale of a unit system with enhanced investment attractiveness. The chapter shows that an effective instrument for such a transition can be organization of a matrix cash flow capable to meet interests of stakeholders and creditors better than the linear one of the levelized cost model.

2.2 Cash flow matrix model

It was shown in [14] that the cost-forming mechanisms in an electricity generating system of several power units may differ from those of an individual unit. Under certain conditions, the cost of electricity produced by a power system can be lower than the cost of electricity generated by a unit. The general idea is to distribute the financial burden that falls on a separate power unit spread over multiple units of a high capacity system. It is possible by combining independent units into an economically connected cluster—a structure with centralized management, including the management of joint finances. Investment can be made on the basis of a phased approach in accordance with the plan of power units construction. The fundamental importance for such a system is the separation of investments with a short-term return (credits and accelerated equity return) and a long-term return of the main shareholders’ equity capital.

Figure 1 shows the scheme of investment and return of funds by investors in a financially integrated system adopted for this study. To simplify the analysis of the system cost of generated electricity, it is assumed that the construction of a new power unit of a cluster begins when the credit money invested in the construction of the previous unit has been paid.

Figure 1.

Network cash flow in the financially integrated system.

In the case of sequential commissioning of power units in accordance with the adopted scheme, the value of the unit system cost of electricity c_N generated by the system with N units in the financially connected cluster will be equal to:

$$c_N=\frac{{\epsilon }_{\mathit{DN}}\bullet K_D\bullet i_D}{N\bullet q\bullet \left(1-e^{-i_D{T}_D}\right)}+\frac{K_E\bullet i_E}{q\bullet \left(1-e^{-i_E{T}_E}\right)}\sum _{n=1}^N\left(1-{\epsilon }_{\mathit{Dn}}\right)$$E9

where ε_Dn—the share of short-term money for the unit n (n = 1, 2, …, N); K_E—investment of shareholders (long-term money); K_D—investment of creditors & shareholders (short-term money); i_D—interest on credit and equity capital; T_D, T_E—times for short-term and long-term return.

The systemic effect of reducing the unit cost of electricity in a cluster occurs when N > 1 determined by several circumstances. The main thing is that in accordance with assumptions made above the repayment of the short-term investments for the construction of power units with the numbers less than N has been completed. Therefore, the repayment on the short-term investments to be made for the unit N should be attributed not to the electricity production of one unit but to the electricity production of the entire system of N power units. Then the component r related to the contribution of the short-term return on investment to the electricity cost generated by the power unit number N in the system will decrease by N times comparing to the short-term component r of the electricity cost generated by a single power unit of the same type.

To enhance the effect of short-term return on investment in decreasing the electricity cost due to the mechanism described by Eq. (9), the partial accelerated return of shareholder investment can also be implied. The share of this accelerated return should be carefully verified, as well as debt return, proceeding from the level of the system deployment and the interests of shareholders.

The component of the long-term return to shareholders is represented by the right part of the Eq. (9). It consists of the repayments for all N units of the system when the time of the system building is less than the period for the return of funds to the shareholders. Since the amount of money to be returned to shareholders, as well as the amount of electricity produced by the system, is proportional to the number of power units in the system, there is no explicit dependence of the long-term return on N, in contrast to the short-term return. However, it as follows from the Eq. (9) the return to the shareholders for the system is also less then long-term return of N units not united in financially integrated system due to the gradual replacement the investments with a long-term return by the investments with a short-term return. To carry out calculations of the electricity cost based on Eq. (9), a matrix cash flow model capable to take into account input of nuclear capacities at different times was developed. A flexible cash flow managing in the matrix model of the financially integrated system with a linear cash flow for each power unit and flows of money between the units provides an opportunity to improve efficiency of the equity capital use and, ultimately, increase the shareholders income.

3. Evaluation of economic indicators of the financially integrated system with SMRs

3.1 Rationale for the selection of SMRs as basic power units of the united system

Generally speaking, the synergetic effect arising from the managerial and financial integration of power units into a united system in accordance with the mechanism described by Eq. (9), is universal and occurs both for nuclear and non-nuclear power units of different capacities. However, due to the specific features of power units with a very high share of overnight cost and investment in the electricity cost like wind, solar and nuclear, the managerial and financial integration of the units into a system appears to be most effective, especially in case of small capacities. In nuclear, these types of units are SMRs. Nowadays, there are a lot of research on pros and cons of this direction of nuclear power development. Some SMRs’ features may be put forward as especially important for the building of a holistic system:

• comparatively low initial investment in the construction of a small pilot power unit of a projected system of desired capacity makes feasible launching up of such a system with less financial and infrastructural efforts than launching up a system with a pilot power unit of large capacity;

• manufacturing and assembling main equipment of the SMRs at the factory can provide an opportunity for the short-term debt return due to radically decreasing the time for the equipment fabrication, power units and the whole system commissioning and transportation of the assembled units to the deployment site;

• phased construction of the small power units allows shareholders to adjust the capacity input to the pace of economic development and the growth of electricity consumption in the country or region;

• mass fabrication of small reactors should lead to an increase in the scale of production and income of the industry;

• new business direction with more flexible possibilities for input and return of money may attract a wide spectrum of public and private capital.

The concept of a financially integrated system does not imply the mandatory installation of power units on the same site. An effective strategic planning, financing and coordination can be carried out from one management center while the elements of the system can be geographically distributed.

3.2 Technical and economic characteristics of SMRs

To date, dozens of SMRs projects have been developed in the world, differing in purpose, capacity and neutron spectrum, type of coolant, design and stage of development. Table 1 shows the technical and economic characteristics of a power reactor used in test calculations of the matrix model. The capacity of the reactor is in the upper part of the power range for small reactors. The data were selected based on the analysis of publications on a large number of SMRs projects [7, 8, 9, 10]. The mastered technology of pressurized water reactors which probably will form a first generation of SMRs in the near future served as a reference of a basic power unit for testing a model of a financially integrated system.

Parameter	Range	Value
Installed capacity, MWe	150–300	300
Load factor, %	80–92	92
Life time, years	40–60	60
Construction time of a power unit, years	2–5	3
Overnight capital cost, $/kWe	1200–5000	4000
Operating and maintenance cost, $/MWh	10–20	12
Fuel cost, $/MWh	4–10	8
Number of power units in the system	5–6	6
Span between unit commissioning, years	—	9

Table 1.

Technical and economic reactors characteristics.

The choice of financial data for carrying out test calculations of the financially integrated model is associated with a number of specific features of this model and the general formulation of the problem. There are possibilities for various combinations of financing options from the shareholders and credit institutions with different values of interest and conditions for money return period. A part of the financial data and the variation range of discount rate and equity rate of return used in the test calculations are shown in Table 2.

	Model
Parameter	LCOE unit	Integrated system
Discount rate in LCOE, %	8–12
Rate of equity return, %		8–12
Rate of debt return, %		8
Debt repayment period, years		6
Long-term equity repayment, years	60	60
Short-term equity repayment, years		6

Table 2.

Financing conditions.

3.3 Cost-income model

Due to many degrees of freedom for selection of fractions shareholder and creditor investments and interests on their capital, finding a set of parameters that would provide the best economic performance of the financially integrated system is an extremely difficult task. The values of discount rate (WACC), the debt (credit) rate return, credit repayment period and long-term equity repayment period mainly depend on investment climate in the region of nuclear power building so that their choice is quite a routine. Unlike that, the choice of equity and debt shares, the rate of accelerated equity return defines specific features of the financially integrated system as an object of the competitive environment. The financial parameters should be chosen so as to ensure the stated interests of shareholders and creditors. To confirm the methodological consistency of the system model, it also should be shown that the system cost nowhere exceeds the cost of a single power unit.

The concept of investing adopted in the financially integrated system develops a general idea of the approach put forward in [13]. The idea of a more flexible approach to the management of shareholders’ capital, as interpreted by the authors of the chapter, is implemented in a matrix model of cash flows [15]. The shareholders’ investment return is divided to two parts. The first part is intended to decrease the cost of electricity by making partial returns on shares through payments. The second part is designed to repay to shareholders the difference between the purchase price in the market and decreased cost of electricity generation. The purchase price of the market is taken to be the value of the cost of electricity generated by one unit. Results of this cost-income model application to the test calculations of some economic indicators of the financially integrated system are being discussed in the chapter.

The main cost-cutting mechanisms can be explained by two factors. The first factor is more effective use of money being returned to shareholders since money returned in the short-term period (accelerated shareholder return) is more valuable than ones being returned after a long period of time, when they depreciate heavily. The second factor is the use of credit money which provides a part of electricity generation, while only shareholders receive the full income.

The matrix cash flow model was used for simulation of two scenarios of the system deployment. The shares of equity and debt investing and the rate of return on equity in the test model of the financially integrated system with SMRs for two scenarios of the system deployment are shown in Table 3.

Number of power units			1	2	3	4	5	6
S1K	Long-term equity return	Share, %	90	85	76	66	56	46
		Rate, %	9	9	9	10	10	10
	Short-term equity return	Share, %	6	5	4	4	4	4
		Rate, %	12	11	11	8	8	8
	Debt return	Share, %	4	10	20	30	40	50
S2K	Long-term equity return	Share, %	92	86	82	80	77	74
		Rate, %	4	4	4	4	4	4
	Short-termequity return	Share, %	4	6	6	6	6	6
		Rate, %	12	8	8	8	8	8
	Debt return	Share, %	4	10	12	14	17	20

Table 3.

Shares of equity and debt investing and nominal rate of return on equity in the test model of the financially integrated system building.

The S1S scenario postulates high rates of return on shares (interest on shares in percentages) that can be provided at high electricity selling price, while the S2S scenario postulates lower rates of return at lower selling price of electricity. Various rates of return are adopted in order to explore the possibilities and limits of improving the economic performance of a financially integrated system depending on the price of electricity at the market. As can be seen, the terms of financing in the network model differ not only in the rate of return to shareholders, but also in the timing of return to shareholders as indicated in Table 2.

3.4 Electricity cost

Figure 2 illustrates results of calculations of unit cost of electricity generation at values of equity return rates specified in Table 2. Straight lines represent results obtained with the use of the levelized cost model for one power unit with 12% discount rate (scenario S1U) and 8% discount rate (scenario S2U). These unit costs are compared with the “internal” unit cost of electricity generated by the financially integrated system calculated with the use of the network model with high electricity selling price (scenario S1S) and low electricity selling price (scenarios S2S).

Figure 2.

Unit cost of electricity generation for different scenarios.

As seen in Figure 2, a unit cost of electricity obtained in the test calculation of the financially integrated system with the investing data from Table 3 is lower than the purchasing price of electricity. The cost reduction correlates with the number of the power units in the system—the more units, the lower the cost.

The short-term return plays the main role in this process. A gradual increasing of the debt money share contributes to the related system costs reducing in accordance with Eq. (9). Another cash flows management tool contributed to the decreasing shapes of the cost curves in Figure 2 is an accelerated return of equity capital. The shift of a part of the money to be returned to shareholders in a remote period of time, where they lose their value, to the initial period of the system deploy, where the value of money is much higher, proved to be quite effective for reducing the cost of electricity generation in the system.

As follows from Figure 2, for the case of shareholder and credit investments and reimbursement rates given in Table 3, the relative synergistic effect of reducing cost of electricity in the financial integrating system turns out to be quite close in magnitude at different electricity selling price. The generation cost for a cluster of six units in S1S scenario with high selling price is reduced by 1.9 times compared to the reference cost of electricity for a single unit obtained in S1U scenario. The corresponding decrease in the S2S scenario compared to the reference cost in the S2U scenario is 1.8 times.

A delay in construction of a system after the commissioning of few power units does not lead to significant financial losses for shareholders. As shown in Figure 2, a stop in the construction of the system in the C1K' scenario after the commissioning of the third power unit leads at first even to a decrease in the cost of electricity, since investments in further construction are delayed. The obtained economic indicators appeared to be “frozen” at the level that corresponds to the number of units put into operation. With the continuation of the system deployment, the cost of generating electricity will at first increase because of need for new investments and then again will reach the level corresponding to the number of power units in the system.

3.5 Shareholder income

The option for reducing cost of electricity generation during the deployment of the system may be requested for the purpose of increasing the economic competitiveness of the nuclear electricity production. In this case, the values of equity return rates specified in Table 2 should be kept at the same level. At the same time, if the acceptable cost of electricity in the system is reached (on the first power unit or later) the further reduction of the cost can be used for increasing the income of shareholders by transferring to shareholders the revenue coming from the difference between constant purchase prices in the market and the declining electricity cost generated by the system. The calculations show that increasing of the shareholders income can be significant (Figure 3).

Figure 3.

The shareholder income growth.

With the completion of the system deployment, the initial income can be increased by ∼1.6 times for the S1S scenario and by ∼1.3 times for the S2S scenario. Hence, combining individual units into a system gives an essential economic result. As can be seen, the effect of the income increase can be especially significant in case of high purchase price of electricity. Thus, organization of a financially integrated system with SMRs makes it possible to increase income of the shareholders and provide acceptable conditions for credit capital thus making more attractive the nuclear power business for the financial organization and general public.

3.6 The structure of electricity cost

The main mechanism leading to the growth of shareholders’ income in the system is an increase in the efficiency of equity investment—the ratio of the discounted income of shareholders to the amount of their investment in the project. Calculations show that this indicator is 1.3 for the considered SMR power units not integrated financially in a system. It is about the same for the first unit of the financially integrated system but grows to 5.2 for the sixth unit. A significant increase in the efficiency of equity investment can be explained by reducing the contribution of shareholders to the financing of each new power unit of the system and at the same time increasing their income. Results of calculations of the electricity cost structure for the case of high purchasing price of electricity on the market are illustrated in Figure 4.

Figure 4.

The structure of electricity cost for the first, third, sixth and seventh power unit of the financially integrated nuclear power system.

As follows from the diagram in the Figure 4, the equity share in the cost of electricity generated by one power unit in the S1U reference scenario and the first power unit of the integrated system decreases from 80% to the 37% for the sixth power unit of the system. This trend is a consequence of the process of increasing the share of debt money being implemented in accordance with the roadmap of Table 3 where the fraction of the debt in financing of the construction of the power units has increased from 4% for the first power unit to 50% to the six power unit. At the same time, the fraction of the debt in the structure of electricity cost of the whole system remains rather small comparing to the fraction of equity. This is due to the fact that payments to creditors are formed directly for the current unit of the system while a long-term return to shareholders is passed on to the current power unit from the all previous ones with high fraction of equity. After the completion of the system deployment, there is no more need for investing into new construction but, however, the tails of long-term payments remain. These tails make up a share of 37% of equity in the electricity cost structure after completion of the system construction.

The cost-income model used in the test calculations of the potential of the shareholder income growth under fixed selling cost calculates not only expenses, but also the profit of shareholders additional to the payouts on shares. It can be seen in the Figure 4, that growth of the revenue fraction in the electricity cost can be very significant: from about 18% for the first power unit of the system to more than 40% when the deployment of the system is completed.

The obtained results show some prospects for increasing the efficiency of investing to nuclear power in the option based on a system of SMRs. Implementation of the options discussed in the chapter will require the use of innovative approaches and tools for managing financial flows from various sources of investment: not only from the funds of public (state) or large energy companies, but also from the banks, investment companies and funds, including private. The expansion of the range of nuclear energy investors will contribute to the recognition by public role of nuclear power as an economically viable energy business.

4. Conclusions

Achieving the goals of the innovative development of nuclear power depends not only on technical and technological progress, but also on the creation of new institutional approaches that could have done it possible to increase the commercial attractiveness of the nuclear electricity generation option and expand the number of its stakeholders. The discussion in chapter is focused on the idea of shifting the evaluation of the nuclear power economics from the scale of one power unit to the scale of a holistic system of such units. As an implementation of this idea, the concept of a financially integrated system with several SMRs—a network structure with unified management and finances—is introduced in the chapter. To carry out numerical calculations of the system cost of electricity, a matrix cash flow model was developed.

As was established theoretically and in the analysis of calculated data, the main mechanism for enhancing economic performance of the financially integrated nuclear power system is progressive increase of the fraction of short-term investments, which under sufficiently short times between the construction of reactor units, do not transfer part of the return on investment from the constructed units to subsequent ones, thus reducing the component of the investment return in the cost of electricity with an increase in system capacity. These short-term investments consist of the debt and accelerated return of equity capital. The test calculations have demonstrated that the joint use of the short-term return on debt and equity results in gradual decrease of the electricity cost generated by the system. This effect can be directly used for enhancing the competitive ability of the nuclear option of the electricity generation.

Another option for the use of the effect of the electricity cost decreasing potential of the financially integrated system is increasing of the income of shareholders by transferring to them the revenue coming from the difference between constant purchase prices in the market and the declining electricity cost generated by the system. The perspective for essential increasing the income of shareholders and acceptable conditions for involvement of wide range of credit investors provided by financially integrated power system with SMRs can contribute to positive image of nuclear power as sustainable option of energy supply and economically viable energy business.