Abstract
This study evaluates the economic value of maintaining the Pyroprocessing–Sodium-cooled Fast Reactor (Pyro-SFR) fuel cycle as a strategic option for spent nuclear fuel management in Korea, using a real options framework. The analysis focuses exclusively on fuel cycle costs (FCC), assuming that construction and operation & maintenance (O&M) costs of PWRs and SFRs are identical, because no reliable commercial-scale SFR cost data are currently available. Conventional discounted cash flow (DCF) analysis shows that the Pyro-SFR fuel cycle costs approximately $3.4 billion (0.40 $/MWh) more than the once-through (OT) cycle over the planning horizon. However, when decision-making flexibility is incorporated through a binomial lattice model with uranium price as the underlying stochastic variable, the option to choose between the two fuel cycles during the 2045–2065 decision window reduces total expected fuel cycle costs by $4.8 billion (0.55 $/MWh) compared to a rigid commitment to the OT cycle alone. A key methodological feature is the conservative specification of zero drift for the uranium price process, ensuring that the option value is not inflated by an assumed upward price trend. Terminal fuel cycle costs beyond 2065 are modeled using the Gordon Growth Model to capture the perpetual cost stream. Monte Carlo simulation with 10,000 iterations, using triangular distributions to sample unit cost parameters, confirms the robustness of the result with a mean option value of $4.3 billion and a 95% probability of being positive. These findings demonstrate that the value of maintaining strategic flexibility in fuel cycle policy substantially exceeds the incremental fuel cycle cost of Pyro-SFR technology development, providing a quantitative rationale for continued R&D investment in pyroprocessing technology.