Journal article 2026
Nuclear Engineering and Design Vol. 448 · Article 114692
External events can materially change the climate value of nuclear infrastructure, and the timing of resilience investments can matter as much as the investment itself when future grid decarbonization is uncertain.
Nuclear power plants deliver low-carbon electricity over long operating lives, but external events such as drought can reduce availability and undermine expected CO₂ savings. Traditional Life Cycle Assessment generally assumes idealized operation, while conventional Real Options Analysis evaluates uncertainty mainly through monetary returns. This research connects the two approaches by developing a CO₂-based real-options framework that evaluates resilience investments according to their effect on lifecycle carbon performance.
How can the impact of external events on nuclear power plant electricity production be assessed from a CO₂-equivalent perspective while accounting for risk, uncertainty and investment flexibility?
The study combines an enhanced Life Cycle Assessment with Monte Carlo-based Real Options Analysis. The framework is tested through a pseudo-real case of a 1,000 MWe Pressurized Water Reactor located on the Po River in Italy. Drought is used as the external event, and the flexible option is the construction of a backup water reservoir. The model evaluates embodied emissions, avoided emissions, hydrological uncertainty, future grid carbon intensity and the timing of investment using a CO₂-based net present value.
A backup water reservoir can produce positive CO₂-based value across a wide range of plausible hydrological and regulatory conditions by preserving low-carbon electricity generation during drought-related constraints.
In the case study, exercising the reservoir option during plant commissioning produces the highest average CO₂-based returns. As the electricity grid decarbonizes, the emissions avoided by protecting future nuclear generation decline, reducing the environmental value of delayed investment.
Deferring investment can be valuable when hydrological or policy uncertainty is substantial, but it increases the dispersion of possible outcomes. The model also shows that reserve size and regulatory low-flow thresholds are important sensitivities, with an illustrative optimum around 15 days of full-power water reserve.
The research extends Life Cycle Assessment by incorporating operational disruption and extends Real Options Analysis by replacing financial payoff with CO₂-equivalent performance. This provides a more realistic way to evaluate long-lived low-carbon infrastructure exposed to uncertain external events.
For utilities, regulators and policymakers, the model supports climate-informed resilience decisions by showing when an adaptation investment protects enough future low-carbon generation to justify its own environmental footprint. The framework is intended to be transferable to other external events and infrastructure settings.
Paravano, A., Galeotti, G., Neri, A., Cagno, E., & Locatelli, G. (2026). A CO₂-based real options model for assessing the impact of external events on nuclear power plants. Nuclear Engineering and Design, 448, 114692. https://doi.org/10.1016/j.nucengdes.2025.114692
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