The Iranian nuclear program has been astronomically costly for the Islamic Republic.
A 2013 Carnegie Endowment for International Peace report authored by Iran analyst Karim Sadjapour estimated that the total cost of construction, operation, research, and nuclear-related international sanctions totaled around $US100 billion.
In a June 29th conference call, Sadjapour said that bill may really be as much as $US500 billion.
The dollar cost belies other, less quantifiable repercussions of the nuclear program. For example, nuclear-related sanctions have cut Iran off from foreign markets, leading to a demoralising long-term economic trough.
Nevertheless, the social and economic costs of the sanctions has not convinced Iran’s revolutionary regime to scale down its costly support for foreign proxies, or to give up on its nuclear ambitions.
But it fed into a popular discontent that led Supreme Leader Ayatollah Khamenei to give his tacit support to negotiating a final nuclear agreement with the regime’s chief enemy.
There are a few ways of answering whether the cost has been worth it.
From one perspective, Iran’s nuclear ambitions have paid off handsomely, with President Barack Obama holding out the possibility of Iran becoming “a very successful regional power” as an inducement for a final deal.
Iran’s theocratic regime has used its nuclear program to leverage its way into the international mainstream while retaining one of the world’s most complete nuclear fuel cycles in the process.
Furthermore, Tehran will most likely retain a future capability to create a nuclear weapon in a short span of time 10-15 years from now, when the upcoming agreement’s most onerous restrictions are set to expire.
And from a political and strategic perspective, the nuclear program has been a triumph for Iran’s revolutionary regime.
But from another perspective, it’s been a terrible deal for Iran and its people.
Thanks to a new feature from the Bulletin of the Atomic Scientists, it’s possible to determine just how wasteful the Iranian nuclear program has been — assuming one believes the program is entirely for peaceful energy production, rather than diplomatic blackmail or nuclear weaponization.
Earlier this year, the Bulletin debuted its remarkable nuclear fuel cycle cost calculator. This tool allows users to determine how much a single kilowatt hour of electricity would cost based on the input, startup, maintenance, and financing costs of three different configurations of the nuclear fuel cycle.
The “fuel cycle” is the technical term for the full range of technologies and processes related to the procurement, enrichment, storage, reprocessing, and eventual disposal of unstable materials used for nuclear energy.
The tool shows which parts of the fuel cycle most dramatically effect the overall price of nuclear energy. It gives a hands-on look at the components of the fuel cycle, and gives an idea of just how astoundingly complex nuclear energy production really is.
Though some of the variables can be obscure even for armchair nuclear energy enthusiasts, a helpful glossary for the various parts of the fuel cycle can be found here.
Iran’s fuel cycle
While it’s impossible to input the exact parameters of Iran’s nuclear program, it is at least possible to eyeball certain numbers, and to put in more exact figures for the current international market price of uranium enrichment (price per separative working unit) and raw uranium.
It’s also possible to set the parts of the fuel cycle that Iran has not yet developed down to zero. Some figures related to the program are publicly knowable: Iran has a single 1,000 megawatt reactor, built over a period of more than 30 years.
In attempting to vaguely duplicate the conditions of the Iranian nuclear program, a user can glimpse whether the country got a good deal on its enormous investment from an energy production standpoint.
The answer is a resounding no.
For one thing, it turns out that raw uranium and uranium enrichment — the latter of which can be used for nuclear weaponization and is thus the cause of much of Iran’s nuclear-related sanctions — don’t have a terribly dramatic biggest impact on cost.
If Iran wanted to build a nuclear infrastructure, it could have done so by purchasing the entirety of its fuel from a foreign seller.
But one of the factors with the biggest influence on price is also the one most vulnerable to the political climate: interest payments on the financing of the construction of a nuclear reactor.
Here’s the kilowatt price for hour at a 5% interest rate for nuclear-related projects when using the cost calculator’s default parameters:
And how much it is at 10%:
That’s quite a leap.
Iran is under international sanctions and has a reputation for secrecy in how it conducts its nuclear policy — two things sure to scare off any investor.
A 10% interest rate is probably optimistic for a cash-strapped, diplomatically isolated, and somewhat unpredictable Islamic Republic — especially in light of how it’s handled its nuclear affairs over the past several years.
The cost calculator finds that a country with domestic uranium enrichment capabilities, high interest rates, low energy output (a single 1,000-watt reactor), low efficiency, extremely slow reactor construction, and no reprocessing will pay around 68 cents per kilowatt hour (this assumes a price of $US140 per separative working unit and of $US40 per kilogram of uranium):
The default is 8.42 cents per kilowatt hour, while nuclear power in the US costs a little over 10 cents per kilowatt hour, according to the US Energy Information Administration.
Consequently, operating a single 1,000 megawatt nuclear reactor just doesn’t make any practical sense for an isolated state, especially when it has the world’s fourth-largest oil reserves.
Not worth it, unless …
Still, Iran could have theoretically bought about 1.4 trillion kilowatt hours at this inflated cost, assuming it only spent $US100 billion on its nuclear program.
But it could have bought even more if the fuel assemblies were purchased on the international market, eliminating costs connected to domestic enrichment, facilities maintenance, and international sanctions (the US and Japan, which have scores of civilian nuclear plants, also have relatively little domestic enrichment).
The country’s one nuclear reactor, at Bushehr, only came into commercial operation in 2013. And the costs related to the reactor’s operation and construction would have to be distributed far into the future for the country to even hope to reach the 68 cents per kilowatt hour plateau.
Basically, the Iranian nuclear program simply doesn’t make sense from any kind of a pragmatic economic perspective.
Nuclear power is far less expensive than the potentially half a trillion Iran has forfeited in building its program. And one of the costliest factors in establishing mastery over the fuel cycle — interest on the financing for nuclear infrastructure — is hugely sensitive to the kind of political risks that Iran’s regime is fond of taking.
The fuel cycle cost calculator offers a possible insight into Iran’s true intentions for its nuclear program as well as how it might behave after a deal is signed.
It’s possible that for Iran’s leaders, the recognition of what it interprets as the country’s “rights” under the 1970 Non-Proliferation Treaty is a diplomatic victory that justifies the outrageous expense of the nuclear program.
Once a final deal is signed, Iran’s longstanding argument that all nations are entitled to uranium enrichment under the NPT will have been vindicated, radically re-casting the treaty as a greenlight for the proliferation of dual-use nuclear technologies in spite of its name.
Having pocketed this accomplishment, Iran’s regime will have the international prestige that comes with having a legally recognised, industrial scale nuclear program.
The big question
After 30 years of isolation, and after major threats to the regime’s stability during the Iran-Iraq war, the 1999 student protest movement, and the 2009 Green Revolution, the Islamic Republic will have parlayed that program into an unprecedented degree of international acceptance.
And it will remain on the nuclear threshold, somewhere between 8 months and a year away from a bomb even before the deal’s restrictions on enrichment, research, and centrifuge configuration expire.
The question is whether that will have been enough to justify the program’s astonishing cost for its architects in Tehran. If the answer is yes, the world may be heading for a manageable but less than ideal status quo regarding Iran’s program.
And if the answer’s no — if the regime isn’t satisfied with the gains in prestige the nuclear program has bought, of if it ever feels that its existence or hold on power is threatened — Iran may well become the next country to acquire nuclear weapons.
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