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MICROCOPY RESOLUTION TEST CHART
NATIONAL BUREAU OF STANDARDS -1963
ORNA up-2534
NOV < 9 1966
2.25.1.00.
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CON4-660934.4
MASTER

Philippine Special Frind Project
An Illustration of a Feasibility Study
by
J. A. Lane
For presentation at the IAEA
International Survey Course on Economic
and Technical Aspects of Nuclear Power
Vienna, Austria, September 5-16, 1966

RELEASED FOR ANNOUNCEMENT
IN NUCLEAR SCIENCE ABSTRACTS
LEGAL NOTICE
This report was prepared as an account of Government sponsored work. Neither the United
States, nor the Commission, nor any person acting on behalf of the Commission:
A. Makes any warranty or representation, expressed or implied, with respect to the accu-
racy, completeness, or usefulness of the information convained in this report, or that the use
of any information, apparatus, method, or process disclosed in this report may not Infringe
privately owned rights; or
B. Assumes any liabilities with respect to the use of, or for damages resulting from the
use of any information, apparatus, method, or process disclosed in this report.
As used in the above, "person acting on behalf of the Commission” includes a .y em-
ployee or contractor of the Commission, or employee of such contractor, to the extejt that
such employee or contractor of the Commission, or employee of such contractor prepares,
disseminates, or provides acce88 to, any information pursuant to his employment or contract
with the Commission, or his employment with such contractor.
Introduction
Figure 1 shows a map of the Philippine Islands. As seen here,
these consist of two major islands Luzon and Mindanao and a group of
smaller islands in between which are collectively called the Visayas.
The characteristics and electrical power needs of these three geo-
graphical areas are as follows:
1. Mindanao has an area of more than 98,000 square kilometers
and a population of about 7 million people; however, the annual con-
sumption of electricity by these people is relatively small (65 kwhr
capita). This demand for electricity is largely met by the 50 MW
Maria Cristina hydroelectric plant on the Agus River plus 18 Mw of
diesel electric plants. Fortunately for Mindanao, even though power
needs are increasing rapidly, the hydroelectric potential of the Agus
River at 800 MW is sufficient to meet these needs at low costs for the
next 20 years.
2. In the Visayas, on the other hand, the hydro electric potential
ver, the annual consumption of electricity at 17 kwhr/
capita is even lower than in Mindanao even though the population is
higher (10 million). Because of the numerous islands concerned and
the difficulty of connecting these with any sort of a transmission grid,
it is apparent that future electricity requirements will be met by con-
structing small diesel-electric units on each of the major islands in the
group other than by interconnected hydro or thermal steam plants.
3. Unlike Mindanao and the Visayas, however, the demand for
electricity in Luzon is already quite large and is growing rapidly.
At the present time, Luzon with an area of more than 100,000 square
kilometers and a population of more than 15 million people uses 3,600
million kilowatt hours of electricity per year. About 85% of this is
sold in Manila which has a per capita consumption of about 2000 kwhr
year. This compares favorably with use of electricity in most of the
developed countries in the world.
The growth in the rate of consumption of electricity in Luzon,
moreover, has been increasing at a rate of about 13
Background Information Leading to the Pre-Investment Study of Power in
Iuzon
Because of the rapidly growing demand for electricity in Luzon
and the ever increasing dependency on imported fue is, interest in
finding more economical ways of producing power has always been high.
In this context, nuclear power has long been considered as a possible
alternative to conventional plants and as far back as 1956, a study
was made of a small nuclear plant for the Manila area. Because of the
small size of this plant, however, it could not compete with oil-fired
plants. In 1960, the Philippine Government invited a mission from the
International Atomic Energy Agency to investigate the feasibility of a
nuclear power for the Luzon Grid. The report of this mission, entitled
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"Frospects of Nuclear Power in the Philippines" indicated that the
prospects were attractive enough to give the matter serious consideration.
As a follow up of this recommendation, in December 1962, the
Philippine Government submitted a request to the United Nations Special
Fund for assistance in undertaking a pre-investment study of power in
Luzon. This request was approved in June 1963 and the study formally
got underway in February 1964. The IAEA was named executing agency for
the project and he Philippine Atomic Energy Commission was delegated
the responsibil..ty for coordinating the work by local agencies. A sum
of $70
,000 was budgeted for the project about two-thirds of which was
provided by the Special Fund and the remainder by counterp
The plan of operation that was adopted involved an initial Phase A
effort to investigate the future market for power in Luzon during the
next decade and establish whether available resources of hydroelectric
power, coal, geothermal, or oil and gas are sufficient to meet the
demand. The decision of whether or not to consider nuclear power under
Phase B of the study was held open until the results of Phase A were
krown. These indicated that most of the future power needs in Luzon
would have to be supplied by imported fuels, therefore, nuclear power
was included in the Phase B study. This was aimed at establishing the
optimum power expansion program up to 1975. As a supplement to the
main power study, the project also included the training of Philippine
scientists and engineers in nuclear technology, & survey of possible
sites for nuclear plants, and the preparation of draft legislation
covering the acquisition and regulation of future nuclear installations.
Phase A Studies
Market Survey - The survey of future power requirements was carried
out by a U.S. consulting engineering firm (Gilbert Associates, Inc.) with
the help of local utility companies. This involved a field survey of
almost 100% of the towns in Luzon and an actual physical count of the
number of potential residential, commercial and public customers in the
towns which will be accessible to the Luzon Grid during the next decade.
By applying appropriate factors based on experience for the annual kwhr
use by each type of customers, the total annual sales were forecasted.
Industrial uses of electricity were projected on the basis of the anti-
cipated growths of 23 different groups of industries. Projected street
lighting requirements and miscellaneous uses were then added to estimate
the total future energy and capacity requirements of the Grid. The re-
sults indicated that the generation of electricity on the Grid will in-
crease from 3.6 billion kilowatt hours in 1965 to more than 12 billion
kilowatt hours in 1975. The installed name-plate capacity required to
meet this demand will increase correspondingly from 670 MW (670,000
kilowatts) in 1965 to about 2670 Mw in 1975.
Existing Power Supply System - The two principal electric utility
systems are the Manila Electric Company (Meralco) and the National Power
Corporation (NP ) which jointly supply more than 99% of the electricity
consumed on Luzon. These two companies play complementary roles in the
4.
disposition of power. Meralco, an investor owned utility supplies
electricity to consumers in and about the Manila Metropolitan area and
transmits power to a few nearby utilities for resale. Meralco sales
in 1965 ancunted to 884, of the total for Luzon. Four-fifths of this
energy 18 generated in Meralco owned oil-fired steam plants. The re-
mainder 18 purchased from NPC's hydro generated power. Besides supply-
ing to Mexalco, NPC also sells electricity to more than 100 small utilities
serving the rural areas of Luzon. Because of this intertie between
Meralco and NPC, the Luzon Grid can be considered an integrated system
with Meralco supplying about 70% and NPC 30% of the energy.
The second part of Phase A involved studies of local energy re-
sources in Luzon, namely, hydro, coal, geothermal, and oil or gas.
following summarizes the results of these studies:
The
Hydro Resources - An analysis of hydro electric resources in
Luzon was carried out by a hydropower expert from Sweden. This involved
an estimate of the overall hydropotential on the island and a review of
poss. ble hydro development projects which could come into operation
within the next decade. After discovering that information necessary
for a proper analysis of the overall hydro potention on the island was
unavailable, a rough estimate of this was computed from rainfall and
topography records. This indicated a total hydro potential of 20
billion kwh/year might be expected to be economically feasible. This
amount of energy corresponds to an installed electrical capacity of
about 4000 to 5000 MW.
Unfortunately, many difficulties stand in the way of developing
this hydro power in the forseeable future. First, there is a long lead
time to obtain adequate stream flow and geological data; second, almost
all potential hydro sites are inaccessible and would require the es-
tablishment of roads and other facilities; third, the most important
river basins are far from the load centers and long transmission lines
would be needed; and fourth, all of the future hydro projects considered
so far involve large capital investments and cannot be justified for
power production only. Thus, it was concluded that during the next
decade, hydro development in Luzon will be confined to the projects
&lready underway.
Coal - Exploratory drilling operations were carried out in the
two most promising coal areas near Luzon, and in each case about 3 million
tons of recoverable coal sufficient to support two 25 MWE plants were
identified. Even if such small plants were economic, their contribution
would be small relative to future needs.
Geothermal - Many areas exist in Luzon which show evidence of geo-
thermal activity. Drilling operations and geological exploration of the
most promising of these areas at Tiwi (near Legaspi) indicates the
existence of underground high pressure.steam, which might be used for
power production. The exploratory program, however, has not been carried
far enough to establish the potential capacity of this site or of other
sites in Luzon. In view of the further exploration required, it is
- 5.
unlikely that geothermal power will contribute significantly to Luzon's
power needs during the period in question,
011 and Gea - The search for oil and gas in the Philippines has
been underway for many years and about $30 million were spent in the
1950's on drilling operations. So far no commercial reserves have been
uncovered, and exploration activities have practically ceased. This
means that the possibility of discovering a large source of oil or gas
in the near future is remote and continued reliance must be placed on
imported oil. The present outlay of foreign exchange for imported crude
oil (which is refined loca?ly) is about $60 million.
Findings of Phase A
To summarize the results of Phase A studies, these indicated that
local energy sources, namely hydro, can meet only a su
the future power needs in Luzon. The remaining portion will have to
be provided by thermal team plants. The projected distribution of
the power supplied to the Luzon Grid is given in Table 1.
Table 1
Power Requirements of Luzon Grid
1965
System Input, millions of Kwhr
Total Installed Capacity, Mwe(1)
Hydro Capacity, MWE
Thermal Steam Capacity, MWE
3,660
670
230
440
1970
6,730
1,580
450
1,130
1975
.22,060
2,670
550
2,120
(1) Name plate rating only (maximum capability 10% higher).
Commitments and advance planning by the power companies in Luzon
made by 1965 provide for adding 690 MWE of new oil-fired capacity by
1970; however, the 1000 MWE of thermal steam capacity to be added to
the Grid during 1970-1975 has not yet been ordered.
The two important conolusions that can be reached from these
figures are first that about 1000 MWe of nuclear or conventional thermal
steam capacity will be added to the Luzon Grid between 1970 and 1975,
and second that during this period, the Grid will become large enough
to warrant the construction of plants in the 200-300 MW size range.
Phase B Studies
The findings of Phase A paved the way for Phase B of the project
which was initiated in February 1965. The main purpose of this phase
of the work was to determine the most economic method of meeting the
future power requirements in Luzon during the next decade.
-
6
-
Capital Costs of Nuclear and Conventional Plants
A contract was awarded to Burns and Roe of New York to prepare costs ot'
nuclear and conventional plants of 200 MW, 300 MW and 400 MW sizes. A
100 MW oil-fired plant was also considered in order to compare estimated
costs with actual costs of constructing 100 MW oil-fired plants in the
Philippines. Burns and Roe estimated these costs by contacting vendors
throughout the world who in turn submitted estimates of the costs of all
major plant equipment delivered in the Philippines. costs of constructing
the plants were then added, using appropriate factors to correct for dif-
ferences in labor costs between the Philippines and the United States.
The resulting direct costs were then adjusted to allow for engineering
services, contingencies, and interest during construction. Estinates of
costs of other items associated with the plant, such as the substation
and switchgear, housing for enployees, spare parts, transportation and
customers costs, were also obtained and added to the cost of the plant
itself. Three types of puclear plants of proven technology, namely,
boiling water, pressurized water, and heavy water, were considered along
with a conventional oil-fired plant similar to Meralco's 200 MW Tegen
Station. All costs were based on a site in Bataan which was selected.
as a result of the site surveys that were undertaken. Both indoor and
outdoor type plants were considered.
Capital costs for representative indoor type plants are given in
Table 2.
Table 2
(in millions of dollars)
Conventional
Nuclear
(oil-fired)
(Light Water)
MW = 200 300 200 200 300 400
Main plant
23.8 33.9 42.2 33.7 44.0 52.8
patatea temell)
Associated items
2.4 3.0 3.2 3.8 4.7 5.4
Total
26.2 36.9 45.4 37.5 48.7 58.2
Import Taxes and in-
terest during construc-
tion on same
3.8 5.4 5.18 5.5 7.4 8.8
Total
30.0 42.3 52.2 43.0 56.1 67.0
"Substation and switchgear, housing, transportation, customers
costs.
All individual costs are expressed in U.S. dol.lars; however, the
Burns aná Roe estimate actually separated foreign exchange costs from
the local costs. Excluding taxes, it was found that local costs amounted
of the total costs for all of the cases considered.
-
07-
In extrapolating power plant cost data from manufacturing countries
to the developing countries, it is generally found that she net costs in
a developing country are higher. The estimates prepared by the consulting
firm indicate that this is not the case in the Philippiucs. Both conven-
tional and nuclear plants are expected to cost no more in the industrial
sectors of Luzon than in most parts of the United States. In fact, con-
ventional plants may cost even less, in spite of higher interest during
construction, the extra charges for ocean freight, and import taxes which
are 10% and 20%, respectively, of the cost of imported items. This is
explained by several favorable factors, including the locally available
low cost but skilled and trained labor force which is highly productive.
Added to this is the experience developed by the two major utilities in
building and managing a number of power projects.
The cost estimates for conventional plants, prepared by Burns and
Roe, Closely check with the actual figures for Tegen I and estimates for
Tegen II and other plants. In fact, on the whole, Burns and Roe's esti-
mates are rather conservative as they allow for a large amount of con-
tingencies.
Nuclear Fuel Costs
Nuclear fuel cycle costs were calculated from reactor manufacturer's
fuel elment design data, core loadings, and fuel management programmes
using economic ground rules applicable to nuclear plants put into opera-
tion after 1970. These 80-called projected costs", tales into considera-
tion anticipated reductions in fabrication costs, reprocessing and other
costs as a result of anticipated expansion of the U.S. nuclear power in-
dustry and other industries throughout the world during the period 1970
to 2000. Fuel cycle costs based on these projected economic factors
were derived by following all costs associated with each batch of fuel
from the time the plant starts up in the early 1970's to the end of its
30 year life and putting these on & present worth basis using appropriate
discount factors. An IBM computer code was developed which optimized the
reprocessing cycle over the life of the plant and provided the input data
for a second code which performed the present worth calculations.
Fuel Oil Prices
The average price of fuel oil delivered to Meralco in 1965 was
$16.95/mt or 41.7 million Btu's. This includes 4.34 million Btu's
for customs duty, special import and specific taxes, without which the
price is 37.4¢/million Btu's. The special import tax of 1.7% is ex-
pected to be abolished in 1966, reducing the price to 41¢/million Btu's
with duty and special tax. The current fuel oil supply contract between
Meralco and the local oil refineries covering the period January 1966
to March 1969 fixes the price at $16.95 per ton, assuming no price
escalations and changes in Governmental taxes and duties occur.
Comparative Power Costs in Nuclear and Oil-Fired Plants
Power costs in nuclear and oil-fired plants, based on the economic
data developed by Burns and Roe, were compared on the basis of both
public and private utility ownership of the plants in question. In
the former case, plant capital costs were based on 8% interest during
construction. The annual fixed charges were calculated on the basis
of 10% composite cost of money plus 1.7% for sinking fund depreciation,
property taxes and conventional. plant insurance. An additional 0.3%
was applied to nuclear plants to cover nuclear insurance. This lead
to a total fixed charge rate of l1.74 and 12% for conventional and
nuclear plants for publicly-owned utility plants. For investor-owned
utilities, capital costs were based on 10% interest during construction.
The annual fixed charges were calculated on the basis of 13% composite
cost of money plus 2.6% for depreciation, taxes and insurance. The
same factor of 0.3% was used to cover nuclear insurance. The fixed
charge rates in this case amounted to 15.64 and 15.9%, respectively,
for conventional and nuclear plants. An 80% plant factor was used in
all cases.
The results of the calculations are summarized in Table 3. It
is seen that, with present oil prices and projected nuclear fuel cycle
costs, nuclear plants are competitive for base load operation for all
sizes considered.
Table 3
Comparative Power Costs in Nuclear and
Oil-Fired Plants in Luzon
Power Costs, mills/Kwh
Nuclear
Oil-Fired
Public Ownership Basis
300
400 200 300
200
200
Fuel (1)
Fixed Charges
3.22 2.79 2.49 2.19 2.06 1.90
Operating & Maintenance 0.34 0.27 0.23 0.26 0.21 0.19
1.60 1:59 1.59 3.55 3.40 3.36
Total
5.16 4.65 4.31 6.00 5.67 5.45
Investor Ownership Basis
Fixed Charges
4.99 4.32 3.87 3.40 3.20 2.96
Operating & Maintenance 0.34 0.27 0.23 0.26 0.21 0.39
Fuel(2)
1.70 1.69 1.69 3.90 3.73 3.69
Total
7.03 6.28 5.79 7.56 7.14 6.84
(+) "Projected" nuclear fuel costs, oil at 37.4 cents/106 Btu (tax free
basis).
(2) "Projected" nuclear fuel costs, oil at 41.1 cents/106 Btu (lax in-
clusive basis).
- 9.
The influence of varying fuel oil prices in Luzon was also con.
sidered. In this case all investment, fuel and operating costs asso-
ciated with any given plant during its 30-year lifetime were put on a
present worth basis. In this regard, discount factors of 10% and 13%
representing the composite costs of money for public and private owner-
ship, respectively, were used. The difference in total present worth
of all costs, then, indicated the savings for a nuclear plant over an
oil-fired plant. The results are shown in Table 4, which indicate that
publicly-owned nuclear plants can compete with fuel oil at 30€) 106 Btu
in all sizes considered. Privately-owned 200 MW units, on the other
hand, are competitive with oil at 37 cents per million Btu, whereas
300 MW and 400 Mw nuclear plants are competitive with oil at 33 cents/
106 Btu and 314/106 Btu, respectively.
Table 4
37.412)
Present Worth of Saving for Nuclear Plants
in Luzon Grid for varying Fuel Oil Prices(I)
Present Worth of Total Savings in
Investment & Operating Costs, millions
(Publicly-Owned Utility)
Fuel Oil Price,
cents/206 Btu
200 MW 300 MW 400 MW
40
12.7
22.8
33.2
9.5
18.1
27.0
6.5
13.8
21.3
0.2
4.8
9.5
(Investor-Owned Utility)
4.3
12.0 19.6
10.4
17.5
3.3
8..2
-6.2
-3.8
-1.3
(1) Plants operating at 80% capacity factor
Present fuel oil price - tax free basis
(3) Present fuel oil cost - tax inclusive basis
(4) Negative savings indicate nuclear plant not competitive
41.1(3)
3.2,
35
-1.8
30

System Planning Studies
The comparison of power costs of individual nuclear and conventional
plants of given sizes provides an indication of their relative competi-
tiveness under various conditions. However, this is not sufficient to
etermine the optimum sizes and schedules of additions of such plants to
the Luzon Grid. Such simple comparisons of power costs do not take into
consideration the influence of new units on existing hydro and oil-fired
plants in the Grid. To develop an optimum expansion programme, detailed
system planning studies were carried out by Electricite de France (EDF)
under contract with the IAEA. Four Philippine engineers from the
- 10 -
National Power Corporation, Meralco, and the Philippine Atomic Energy
Commission participated in the studies which include
1. Develop monthly demand and energy requirements for the
Luzon Grid as a whole for each of the years from 1965
to 1977.
2.
Establish the mode of operation of each of the existing
and planned hydroelectric stations in the system so that
they collectively make the optimum contribution to the
Grid Load requirements.
3. Determine the net demand and energy requirement of thermal
(conventional or nuclear plants to 1977 from the total
power demand on the Grid and the contribution of hydro
plants.
4.
Calculate the present worth of capital and operating
costs associated with various alternative programmes
of adding thermal plants to the Grid under varying
economic assumptions.
In order to cover the entire range of economic conditions which
might be encountered, the system planning studies were carried out for
the forty eight combinations of the following parameters:
oil prices:
30, 35, 40 cents per 106 Btu
nuclear plant costs: B&R estimates, B&R estimates + 10%
nuclear fuel costs: present day costs, projected costs
interest rate:
10%, 13%
load growth projection: Case I (median projection), Case II
(minimum projection)
The results showed that for the first plant added to the Grid in
1971, when conditions tend to favor nuclear plants, the optimum size
of such plants is 300 MWE or higher, whereas under conditions favoring
oil-fired plants, the optimum size is about 250 MWE. Taking these two
optimum sizes under consideration, the plants which will yield maximum
savings under the given conditions are shown in Table 5.
Similar calculations were carried out for the subsequent new plants
to be added to the Grid from which it was found that under conditions
which lead to a choice of a nuclear plant as the first unit after 1971,
the next two units should also be nuclear. Under conditions favoring
the construction of a 250 MW oil-fired plant in 1971, on the other
hand, subsequent units should also be oil-fired. At least as long
as these conditions remain unchanged.
- 11 -
Table 5
Choice of First Unit to be added to the Grid in September 1971
Fuel Oil
Cost Cents
per 106 Btu
20%
Interest Rate
Nuclear Fuel Cost
Projected Present
130
Interest Rate
Nuclear Fuel Cost
Projected Present
Capital Cost
Nuclear Plants
40
Nuclear
Nuclear
Nuclear
Nuclear
Burns and Roe
Estimate
Burns and Roe
Estimate + 10%
Nuclear
Nuclear
Nuclear
011-Fired
Nuclear
Nuclear
Nuclear
Oil-Fired
Nuclear
Oil-Fired
Oil-Fired Oil-Fired
35
Burns and Roe
Estimate
Burns and Roe
Estimate + 10%
Burns and Roe
Estimate
Burns and Roe
Estimate + 10%
(to) Case I load growth.
30
Nuclear
Oil-Fired
Oil-Fired Oil-Fired
Oil-Fired
Oil-Fired
Oil-Fired Oil-Fired
Proposed Grid Expansion Program for 1971-1975
Using the results of the system studies as a basis it is evident that
if the price of oil in the Philippines continues at its present level
through September 1971, it is apparent that the most economic unit to be
added to the Grid at that time would be a 300 Mw nuclear plant. If the
same economic conditions continue to prevail, subsequent new units added
up to 1976 would also be nuclear. In order to meet the Case I load growth
projection to 1976, a total of 1000 MW of nuclear capacity would be
necessary consisting of two 300 Mw units followed by a 400 Mw unit. The
scheduling of such units and situation regarding reserves for a brownout.
criterion of one year out of ten is summarized in Table 6.
Table 6
Optimum Expansion Program for the Luzon Grid 1971-1975
First Unit
300
Size of Unit, MW
Date of Operation
Sept. 1971
Can Meet Thermal Peak Demand Until Sept. 1972
Total Installed Capacity, MW
1900
System Maxinium Demand, Mw
1540
Thermal Maximum Demand, Mw
1100
Total Reserve, MW
360
Reserve for Thermal Generation, MW 330
Second Unit
300
Sept. 1972
Oct. 1973
2200
1775
1330
425
400
Third Unit
400
Nov. 1973
Sept. 1975
2700
2170
1640
530
490
- 12 -
As shown in this table, the first two units would have to be con-
structed only one year apart. For this reason, it might prove wise to
order two identical units from the same manufacturer for installation
on the same site. This approach would certainly result in considerable
savings not only because of lower prices from the equipment suppliers
but also because of savings in site preparation and civil works.
Regarding the third unit to be added to the Grid, no firm decision
on this will be necessary until about the end of 1969. At that time
tion on oil prices and load growth would be available
as a basis for selecting the size and type of unit to be added.
to be added to the Grid after 1970 appears to have a sound basis, it must
be pointed out that the assumed economic conditions could change. For
example, the price of fuel oil could drop considerably leading to the
choice of conventional plants for subsequent units.
The proposed power expansion program for Luzon is plotted in
Figure 2.
Financial Analysis of the Proposed Expansion Program
In order to establish the overall economic advantages of adding
1000 MWE of capacity to the Luzon Grid, the construction expenditures
and associated operating costs of the nuclear plants were compared with
those for equivalent oil-fired capacity. Figure 3 shows the on-line
schedules for these two alternate programs. The associated construction
costs are given in Table 7. Nuclear fuel cost savings relative to oil
at 41.1¢/million Btu (after allowing for initial fuel investment costs)
are shown in Table 8 along with the additional operation, maintenance,
and insurance costs. The net annual savings effectively act as cash
generated by the utility out of power revenues and this can be used to
reduce the outstanding capital investment as shown in Figure 6. It is
seen from this figure that the outstanding investment in nuclear plants
matches that for the oil-fired plants in mid 1974. To find the effective
"break even" dates of the two programs, however, all costs must be dis-
counted back to the date of start of construction. Using a 10% discount
factor, it was found that the additional investment in nuclear plants is
compensated for by lower annual operating costs by 1979. Thus, it appears
that the time during which the nuclear plant program can be considered
an investment risk relative to oil-fired plants is relatively short.
After 1979, of course, the nuclear plants would represent a decidedly
lower investment risk than the oil-fired plants.
Implementation of the Program
An analysis of the economy of the Philippines and of the financial
position of the two major utility groups indicates that even though foreign
exchange is in short supply, raising of the capital expenditures for the
proposed program ($182 million) can be achieved. It was not the purpose
of the study to recommend that either Meralco and/or NPC undertake to
3000
ORNL - DWG 66-8348
--
-
-
.-
C
-
-
TABU
C
2500
-
TREAL INSTALLED
SAPACITY
-
TOTAL
RESERVE
NUCLEAR 3
i
THERMAL CAPACITY
2000
EXISTING OR
COMMITTED
.
PROPOSED
NUCLEAR 2
THERMAL
RESERVE
INSTALLED CAPACITY (Mw)
TOTAL GRID DEMAND
. 13.

NUCLEAR I
.
| GARDNER 3
THERMAL DEMAND
BATAAN 1
GARDNER 2
GARDNER 1
1000
ANGAT
LESS BLAISDELLI
TEGEN 2
500
JAN
1966
JAN
1967
JAN
1960
JAN
1969
JAN
1970
JAN
JAN
1971
JAN
1972
JAN
1973
JAN
1974
JAN
1975
Fig. 2. Optimum Luzon Grid Expansion Program.
• 14 -
ORNL - OWO
-1919

2600
INSTALLED CAPACITY
NUCLEAR
-OIL-FIRED
2000
робош
NET THERMAL DEMAND
1000
500
JAN
JAN
1972
JAN
1973
JAN
1974
JAN
1975
JAN
1976
1971
YEAR
Fig. 3. Thermal Plant Schedules for Three Nuclear Plants Versus
Four Oil-Fired Plants.
- 15 -
Table 7
Construction Costs for Alternate Expansion Programs (+)
Unit
1968
1974
48
Conventional Oil-Fired, $ millions
1969 1970 1971 1972 1973
13.67 16.65 3.93
2.05 11.90 18.15 4.63
2.48 13.67
3.93
2.48 13.67 16.65
15.72 31.03 38.23 34.95 20.58
18.20 49.23 87.46 122.41 142.99
1st (250 MW)
2nd (250 MW
3rd (250 MW)
4th (250 MW)
Annual Total
Cumulative
16.65
2.48
2.48
3.93
3.93
346.92
Unit
1967
1.54
1972
1973
1968
7.76
1.54
1st (300 MW)
2nd (300 MW)
3rd (400 MW)
Annual total
Cumulative
Nuclear, $ millions
1969 1970 1971
29.60 13.40 4.80
7.76 29.60 13.40
1.36 7.24 32.30
38.72 50.24 50.50
49.56 99.80 150.30
7.71
4.80
19.60
24.40
174.70
1.54
1.54
9.30
10.84
7.71
182.41
(+) Exclusive of fuel investment.
Table 8
Fuel Savings and Additional Annual Operating costs
For Nuclear Expansion Program, $ millions
Net Annual
Savings
Year
Extra Operating
Costs
0.10
0.36
0.60
Fuel Cost
Savings
0.79
4.64
8.41
14.03
14.98
15.63
15.34
15.26
15.15
15.05
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
0.92
0.62
0.62
0.62
0.62
0.62
0.62
0.69
4.28
7.81
13.12
14.36
15.01
14.72
14.64
14.53
14.43
- 16 -
ORNL - DWG 66-8320

NUCLEAR PLANTS TOTAL
CONVENTIONAL PLANTS TOTAL
XNUCLEAR PLANTS NET
CUMULATIVE INVESTMENT (dollars x 40)
1967
69
74
73
77
79
81
75
YEAR
Fig. 4. Cash Investment Flow Analysis for Four 250 MW Oil-Fired
Versus Iwo 300 Mw and One 400 MW Nuclear Plant.
- 17 -
build nuclear plants, however, the economic studies certainly point
toward such a decision. In this regard, it should be mentioned that
the proposed program is based upon integrated operation of the Luzon
Grid as a single system; therefore, close cooperation of the two
utility groups is necessary to implement this program. In other words,
the use of available hydro power for peaking purposes and nuclear plants
for base load operation is necessary to minimize total generating costs.
Thus, free exchange of power between the systems concerned is clearly
most advantageous to the country as a whole.
With regard to the requirements for technical manpower to operate
and maintain auclear power stations, the country can train the needed
staff in parallel with the construction of its first nuclear power
station by using the facilities of the Philippine Atomic Energy Com-
mission, the power plants of local companies, and by sending people
abroad.
Besides effecting the aforementioned economic gains, the use of
nuclear power could help to diversify the sources of energy used for
meeting Luzon Grid power requirements and reduce dependence on one
particular form of energy, namely, fuel oil. Any competition from
nuclear power plants could also have a restraining influence on future
prices of fuel oil for conventional stations.
Introduction of nuclear power technology would require a re-
orientation in scientific and technical education in the country.
With proper planning it could have a stimulating effect on the develop-
ment of science and technology in the Philippines.
If Efter reviewing the Study the Philippine Government and the
utilities concerned arrive at the conclusion that the proposed program,
including nuclear plants, is economically attractive', then a decision
in principle should be made to go ahead with the introduction of nuclear
power at the earliest opportunity. Since the completion of a nuclear
project requires a lead time of five years, it is essential to make this
decision before the end of 1966.
International bids should be invited from nuclear and conventional
power plant suppliers on the basis of firm prices and warranties re-
garding the performance of the plants. Then, on the basis of actual
quotations, a detailed economic comparison should be made to confirm
if the conclusions regarding the economic merits of nuclear plants
as indicated in this study are still valid. If the nuclear plant shows
advantage and necessary financing has been arranged, a contract for
building a nuclear plant may be entered into.

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