Construction Cost Overruns and Electricity Infrastructure: An Unavoidable Risk?

Construction Cost Overruns and Electricity Infrastructure: An Unavoidable Risk? I Introduction</h5> Those outside the construction industry may be surprised to learn that the cost of building power plants has escalated in recent years. The Power Capital Costs Index, which tracks the expense of power plant materials and components, showed an increase in North America by a factor of 2.26 between 2000 and 2013, and in Europe by a factor of 1.93 over the same period ( IHS Costs and Strategic Sourcing, 2014 ). These expenses exclude other “soft costs” such as contingency fees, risk premiums, land, and permitting ( Severance, 2009 ). The nuclear energy industry has been particularly hard hit, with material, labor, and engineering costs for nuclear power plants jumping more than the average over the same period, meaning a plant that cost $4 billion to build in 2000 would cost almost $12 billion today ( Findlay, 2010 ).</P>But how do the risks of construction cost overruns compare across different forms of electricity infrastructure? How do utility-scale renewable sources of electricity such as wind farms and solar facilities perform compared to thermal plants, nuclear reactors, and hydroelectric dams? Where do high-voltage transmission networks fall on this continuum of overrun risk?</P>This article answers such questions by http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Electricity Journal Elsevier

Construction Cost Overruns and Electricity Infrastructure: An Unavoidable Risk?

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Publisher
Elsevier
Copyright
Copyright © 2014 Elsevier Inc.
ISSN
1040-6190
eISSN
1873-6874
D.O.I.
10.1016/j.tej.2014.03.015
Publisher site
See Article on Publisher Site

Abstract

I Introduction</h5> Those outside the construction industry may be surprised to learn that the cost of building power plants has escalated in recent years. The Power Capital Costs Index, which tracks the expense of power plant materials and components, showed an increase in North America by a factor of 2.26 between 2000 and 2013, and in Europe by a factor of 1.93 over the same period ( IHS Costs and Strategic Sourcing, 2014 ). These expenses exclude other “soft costs” such as contingency fees, risk premiums, land, and permitting ( Severance, 2009 ). The nuclear energy industry has been particularly hard hit, with material, labor, and engineering costs for nuclear power plants jumping more than the average over the same period, meaning a plant that cost $4 billion to build in 2000 would cost almost $12 billion today ( Findlay, 2010 ).</P>But how do the risks of construction cost overruns compare across different forms of electricity infrastructure? How do utility-scale renewable sources of electricity such as wind farms and solar facilities perform compared to thermal plants, nuclear reactors, and hydroelectric dams? Where do high-voltage transmission networks fall on this continuum of overrun risk?</P>This article answers such questions by

Journal

The Electricity JournalElsevier

Published: May 1, 2014

References

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