Lindsay wrote:
Here are some more rough numbers form those links the price of Emma Maersk was about USD145M
If you had a 100 MW nuclear propulsion system costing USD3,000/kW that would be USD 300M.
So how does that compare to the potential cost savings on fuel, ignoring the benefits of carrying more cargo each year?
IF380 fuel oil at ~ USD600/tonne, 0.26lb/BHPh, 70 MW, at sea 80% of the time. Annual Fuel bill = USD 47M
If the nuclear plant costs say $7/MWh to run for fuel, fuel processing and disposal, that's about $3.4M/year. Potential fuel savings of 43.5M/y, the present value of those fuel savings over 30 years = $411M i.e. 111M better off than burning HFO after paying for the higher initial capital cost.
So it look s economic, but to really be worth while the capital cost of the nuclear propulsion system would have to be quite a bit less than $3,000/kW installed. The upside for the ship owner would come when the price of HFO goes to $1200/t
Assuming that the diesel engine costs $50,000,000 that means that it is a $250,000,000 increase in base capital cost to build the nuclear ship vs. the diesel.
Using your assumed $43,500,000 variable cost savings per year we get the following out to 30 years if we assume a reasonable 9% cost of capital and 36% tax rate:
IRR = 13.5% (currently no where near what my business demands for investment, which is typically > 40% and often closer to 100%)
NPV = $96,100,000
The project is not cash flow positive until year 9, which is way beyond a more typical 3-5 I see for investment (granted most of what I see is more in the $50k-2M sized projects).
Bottom line is that the payback with the above assumptions is only marginal.
However, if the cost of the reactor drops in half (mass production) and the cost of oil doubles, then the results shift to the following:
IRR = 61%
NPV = $621,000,000
The project is now cash flow positive in year 2.
In this case, it would be insane to use diesel.
These simple analysis do not cover the increased revenue/profit from running faster and thus moving more cargo. I would expect that these would be significant contributors to the project valuation; however, I do not know if the sensitivity would make the first case attractive enough or not.