1. ECONOMICAL VIABILITY OF THE NUCLEAR OPTION IN MEXICO Instituto Nacional de Investigaciones Nucleares

2. 45,576 MW Installed Capacity Fossil Fuel 66.8% Gas 32% CFE-2005

3. Electricity Generation 215.63 TWh Nuclear contributes with about 5% since 1996 CFE-2005 Gas 52%

4. Forecast for Electricity Gross Consumption An increase of about 60% from 2005 to 2014 2000-2014

5. Required Capacity There should be an addition of 22,126 MW 6,184 MW already Committed 15,942 MW Non Committed 9,764 Technology already specified 6,178 Free Technology

6. The Case for Nuclear High Volatility of Gas Prices Concern for CO2 Emissions Balanced Fuel Mix Economical Competitiveness

7. Levelized Cost Methodology Quantifies the unitary cost of electricity (the kWh) during the lifetime of a power plant The methodology considers the total electrical energy that the power plant will deliver in its lifetime

8. Levelized Cost Methodology Levelized cost is the sum of: Investment cost: which is the one generated during construction Production cost: is the one generated during the life of the plant, it includes Fuel cost and Operation and maintenance costs

9. OECD-2005 Levelized Total Generation Cost Benchmarking Plant Type DR % OECD USD/MWh ININ USD/MWh Min.Max.Min.Max. Gas5376038.7356.36 Nuclear5213123.0331.39 Gas10406341.7959.42 Nuclear10305032.7545.76

10. Scenarios DR % 5 10 Gas Price$/MBTU 4.44 5.20 7.00 Nuclear Construction Cost (Output 1350 MWe) $/kWe 1200 1400 1600

11. Assumptions Plant TypeGasCoalNuclear Lifetime (Years)2540 Capacity Factor (%)80 90 Proper Uses (%)3.17.33.1 Power Output (MWe)5607001350 Thermal Efficiency (%)5237.2434 Construction Time (Years)245 Overnigth Cost (USD/kWe)4501000 1200 1400 1600 Fuel Cost * USD/mmBTU + USD/MWh 4.44 * 5.20 * 7.00 * 1.78 * 6.80 + O&M cost (USD/MWh)2.774.757.83

12. Generation Cost (DR)

13. Capital Cost (DR)

14. Nuclear Generation Cost Assuming Delays

15. Levelized electricity generating cost assuming different capacity factors

16. Cash Flow* Type of Plant Investment Cost USD/kWe Power MWe Annual Gross Energy MWe 0&M Cost x10 6 USD/yr Gas4505603,802,82110 Nuclear Medium 1400135010,359,29276 *Without fuel costs

17. Present Value of the Cash Flow (DR 8%) Gas1 4.44 $/mmBTU; Gas2 5.20 $/mmBTU; Gas3 7.00 $/mmBTU

18. Generating Cost variability Due to Fuel Price Gas price at 0% is 4.44 USD/MBTU and Nuclear Fuel Cost is 6.80 USD/MWh –40% it is about 2.50 USD/mmBTU for the Gas price

19. Summary Even with delays of up to 3 years nuclear is competitive with the gas option, and it is still cheaper when gas price is greater or equal to 7 USD/mmBTU. Considering an 80% capacity factor, instead of 90% results in an increase of 4 USD/MW in the levelized cost.

20. Summary (cont.) When the price of gas is not less than 5.20 USD/mmBTU, the levelized cost of nuclear generated electricity is lower than the cost resulting from using natural gas, as long as construction time is not longer than 7 years.

21. Conclusion Nuclear power is competitive in all the scenarios considered, and it should be given serious consideration in the definition of Mexico’s additional electrical capacity program.