Modelling Of Global Nuclear Power Systems Using A Real Options Approach

  • Wung Liu

Student thesis: Phd


This thesis is intended to contribute to policy analysis on nuclear energy planning, and also as a contribution to applied mathematics. From point of view of nuclear policy analysis, this thesis is not designed to offer realistic detail on nuclear engineering itself, which is of second order relative to our chosen problem. The goal is to address some large scale problems in the management of the world stocks of two important nuclear fuels, Uranium (an economically finite natural resource) and Plutonium (the result at first of policies for Uranium burning, and later of policies on fast reactor breeding). This thesis assumes, as a 'political' working hypothesis, that at some future time world governments will agree urgently to decarbonise the world economy. Up to that point, assuming no previous large progress towards decarbonisation, basic world electricity consumption will have continued to grow at its historic average of 1.9% compound. This rate is hypothetically a combination of slower growth in the developed world and faster growth in the developing world. On this hypothesis, a necessary but not sufficient condition for decarbonising the economy would be the complete decarbonisation of future basic electricity demand, plus the provision of sufficient extra decarbonised electricity supply to take over powering all land transport. The demand for electricity for land transport at any time is assumed to equal (in line with historical experience) an increment of approximately 20% above the contemporary basic world demand for electricity. The hypothetical scenario for achieving this model of decarbonisation, without major stress to the worlds economic and social system, is to expand nuclear power to meet the whole of basic electricity demand. This would leave intermittent renewable sources to power the intermittent electricity demands of road transport.This thesis explores the above hypothetical future in various ways. We first list published forecasts of future Uranium use and future Uranium supply. These suggest that presently known Uranium reserves can meet demand for many decades. However on extrapolating the cumulative demand for Uranium that results from the above working hypothesis, we find that if a dash to decarbonise world electricity supply begins immediately, this would consume a very large multiple of presently known Uranium reserves. Sustaining that decarbonisation for only a few more decades of demand growth would consume further large multiples of the known Uranium supply. A delay in the start of the dash for decarbonisation by only a few decades greatly increases the cumulative Uranium demand needed to reach decarbonisation even briefly.Therefore the sustained achievement of decarbonisation, in a world economy of the historical type, requires such large Uranium resources that a successor fuel cycle is required. This thesis models only the case of a Uranium-based fast reactor fuel cycle, since this cycle can in principle consume all the cumulative past and future Plutonium stockpile, and can then meet its own Plutonium needs for a long period (hundreds or thousands of years), allowing ample time for economic adjustment. However a commercially effective fast reactor technology is some decades away.Up to this point, the thesis has only added two physical factors to the existing debate on Uranium needs: namely cumulative growth of electricity demand at its historic rate, and a political choice for 100% physical decarbonisation of the electricity supply.The mathematical and economic contribution of the thesis then begins. We ask the following questions:1. Under what circumstances would profit-maximising investors (or an economically rational centralized economy) actually choose to build enough reactors to decarbonise the world electricity supply?2. Would the need for investors to make a profit increase or decrease the life of the economically accessible Uranium reserves?3. What is the effect of accelerating or delayin
Date of Award1 Aug 2013
Original languageEnglish
Awarding Institution
  • The University of Manchester
SupervisorPeter Duck (Supervisor) & Sydney Howell (Supervisor)


  • PDE
  • Real Options
  • Finite-difference
  • Uranium
  • Plutonium
  • Nuclear Power Systems

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