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Effect of Depreciation Method for Long-Term Tangible Assets on Sustainable Management: From a Nuclear Power Generation Cost Perspective under the Nuclear Phase-Out Policy

Author

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  • SungSig Bang

    (Department of Business and Technology Management, Korea Advanced Institute of Science and Technology, 291 Daehak-ro, Yuseong-gu, Daejeon 34141, Korea)

  • SangYun Park

    (Department of Business Administration, Pai Chai University, 155-40 Baejae-ro, Seo-Gu, Daejeon 35345, Korea)

Abstract

The Korean Government has been implementing a nuclear phase-out policy since 2017. Nuclear power plants accounted for 30.0% of the total power generation in 2016; this figure fell to 25.9% at the end of 2019, and the average Capacity Factor (CF) of a nuclear power plant approximately dropped from 89.1% to 69.2%. The nuclear phase-out policy presents severe consequences for the sustainable management of the nuclear power industry. Accordingly, the purpose of this study is to analyze the effect of a decrease in the nuclear capacity factor under the nuclear phase-out policy on the depreciation cost per unit using the Straight-Line Method (SLM) and Decelerated Depreciation Method (DDM) and to provide recommendations from a sustainable management perspective. The results show that the decrease in CF of nuclear power plants has a negative impact on sustainable development of the nuclear power industry. DDM is more beneficial than the SLM during this initial stage of depreciation under the nuclear phase-out policy. In addition, in the early stages of projects or immediately after attracting large-scale investments, DDM can offer more positive signs for stockholders by calculating a smaller net loss or a higher net profit.

Suggested Citation

  • SungSig Bang & SangYun Park, 2021. "Effect of Depreciation Method for Long-Term Tangible Assets on Sustainable Management: From a Nuclear Power Generation Cost Perspective under the Nuclear Phase-Out Policy," Sustainability, MDPI, vol. 13(9), pages 1-15, May.
    • Handle: RePEc:gam:jsusta:v:13:y:2021:i:9:p:5270-:d:550740
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    References listed on IDEAS

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    1. Sungki Kim & Hong Jang & Ruxing Gao & Chulmin Kim & Yanghon Chung & Sungsig Bang, 2017. "Break-Even Point Analysis of Sodium-Cooled Fast Reactor Capital Investment Cost Comparing the Direct Disposal Option and Pyro-Sodium-Cooled Fast Reactor Nuclear Fuel Cycle Option in Korea," Sustainability, MDPI, vol. 9(9), pages 1-14, August.
    2. Kyung-Shin Kim, 2018. "Changes in Risk Perception of Seoul National University Students in Nuclear Power under Opposing Government Policy," Sustainability, MDPI, vol. 10(7), pages 1-14, July.
    3. Sungki Kim & Wonil Ko & Sungsig Bang, 2015. "Analysis of Unit Process Cost for an Engineering-Scale Pyroprocess Facility Using a Process Costing Method in Korea," Energies, MDPI, vol. 8(8), pages 1-23, August.
    4. Nam, Hoseok, 2020. "Impact of nuclear phase-out policy and energy balance in 2029 based on the 8th Basic Plan for long-term electricity supply and demand in South Korea," Renewable and Sustainable Energy Reviews, Elsevier, vol. 122(C).
    5. Stephen Zeff, 2014. "The IASB and FASB Stumble over the Annuity Method of Depreciation," Accounting in Europe, Taylor & Francis Journals, vol. 11(1), pages 55-57, June.
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    Cited by:

    1. Alvaro Rodríguez-Prieto & Ana María Camacho & Carlos Mendoza & John Kickhofel & Guglielmo Lomonaco, 2021. "Evolution of Standardized Specifications on Materials, Manufacturing and In-Service Inspection of Nuclear Reactor Vessels," Sustainability, MDPI, vol. 13(19), pages 1-25, September.

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