Key Issues
Uranium Fuel Supply Adequate to Meet Present and Future Nuclear Energy Demand
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U.S. Eases Import Restrictions On Russian Uranium
In January 2008, the United States and the Russian Federation amended the 1992 U.S./Russian Suspension Agreement that limited imports of Russian low-enriched uranium (LEU).
The amended suspension agreement will give the Russian Federation limited access to the U.S. market starting in 2011 and extending through 2020. The agreement limits Russian exports to 16,559 kilograms (442,000 pounds U3O8) of LEU in 2011 and gradually expands the limit to 514,754 kilograms (13.7 million pounds U3O8) in 2020. The Commerce Department will amend the limits as indicated based on changing demand projections.
Although the amended agreement retains limits on Russian LEU imports, it will increase the amount of uranium available to U.S. electric companies for nuclear plant fuel.
Uranium Prices Likely To Remain High
Applying the basic laws of supply and demand, analysts expect that the price of uranium will remain higher than prices earlier in this decade. Prices over this period have escalated in the wake of many announcements regarding new nuclear power plant construction. Market speculation feeds upon itself when sellers perceive that prices will rise and that they can receive a higher price for goods in the future.
Market forces will eventually result in a moderation of uranium prices as exploration and production increase and as inventories are released. Demand for uranium is increasing about 1 percent a year, according to market analysts.
In the United States alone, 17 companies and consortia have announced plans to file license applications for as many as 30 new nuclear power plants over the next few years. Other nations plan to build numerous reactors as well. Given the increased competition for uranium supplies, some companies may maintain larger inventories of uranium and enter into longer-term contracts with suppliers to lock in quantity and price.
Fuel a Small Part of Nuclear Plant Production Cost
Even with a significant increase in uranium price, nuclear energy has the lowest production costs of any large-scale source of electricity, with the exception of hydroelectric power plants. In 2006, the production cost of nuclear-generated electricity was 1.72 cents per kwh, compared with 2.37 cents per kwh for coal, 6.75 cents per kwh for natural gas and 9.63 cents for oil.
Nuclear fuel accounts for 26 percent of the overall production cost (fuel plus operations and maintenance expenses) of nuclear energy, versus 78 percent for coal, 92 percent for natural gas and 87 percent for oil.
The cost of uranium (without processing) constitutes only 10 percent to 13 percent of the cost of a kilowatt-hour of nuclear-generated electricity. The large increases in uranium prices over the past three years only increase the overall production cost of electricity generated at nuclear power plants by a few tenths of a cent per kilowatt-hour. Even with further increases in the price of uranium, the cost of nuclear-generated electricity will remain low and competitive with other electricity sources.
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