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The turnkey era in nuclear power

Burness, H. Stuart and Montgomery, W. David and Quirk, James P. (1980) The turnkey era in nuclear power. Land Economics, 56 (2). pp. 188-202. ISSN 0023-7639. doi:10.2307/3145862.

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The turnkey era is viewed as a temporary deviation from the traditional pattern of conventional contracting that arose because of the informational problems associated with scaling of nuclear reactors to commercial size. General Electric's decision to offer turnkey contracts at a cost competitive with coal units was a decision to invest in a private demonstration program with prospective quasi-rents from later-generation reactors. Competition from Westinghouse kept turnkey prices at levels that increased investment costs for both GE and Westinghouse, and cut into profits in the post-turnkey era. The return to conventional contracting was a natural development, which occurred as soon as the reactor manufacturers had obtained sufficient orders to provide the scaling information they required. The return was natural because the incentive structure of the regulated utility industry encourages risk taking on the part of utilities in their contracting for capital goods. The preference of utilities for conventional over turnkey contracts contributed to the post-turnkey boom in nuclear orders, which occurred before bottlenecks and other difficulties caused such massive cost increases that the economic merits of nuclear power became questionable.

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Additional Information:© 1980 Board of Regents of the University of Wisconsin System. This research was supported in part under NSF No. APR75-16566 and under ERDA No. EY-76-G-03-1305. We wish to thank the Environmental Quality Laboratory at Caltech for its assistance and Roger Noll, Ron Cummings and Paul Joskow for instructive comments. We also wish to thank Dan Bromley and two anonymous referees for their comments and suggestions. The authors are solely responsible for all opinions and conclusions. Formerly SSWP 175.
Group:Environmental Quality Laboratory
Funding AgencyGrant Number
Energy Research and Development Administration (ERDA)EY-76-G-03-1305
Subject Keywords:Turnkey systems, Utilities costs, Power reactors, Cost estimates, Capital costs, Unit costs, Utility rates, Nuclear reactors, Business orders, Nuclear fuels
Issue or Number:2
Record Number:CaltechAUTHORS:20171204-141948072
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Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:83666
Deposited By: Jacquelyn Bussone
Deposited On:03 Jan 2018 00:33
Last Modified:15 Nov 2021 20:13

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