In response to Anonymous' Feb 3, 2022, 9:41:00 AM comments.
A big problem in comparing SSK and SSN prices is:
1. SSK prices often involve a profit margin for exporting to a foreign customer, while SSN prices have ALWAYS been to one's own navy (entailing more, literally Secret, unaccounted prices).
2. Australia is the FIRST FOREIGN CUSTOMER EVER for a whole foreign designed class of SSNs. This is an UNPRECEDENTED situation.
3. Even the UK's first nuclear submarine HMS Dreadnought (launched 1960) was mainly UK designed, except for the US provided S5W reactor.
4. As well as SSNs what price the on-shore, UK or US provided, Training Reactor maybe at Australia's main submarine base at HMAS Stirling, near Perth, Western Australia or more likely at Australia's existing nuclear reactor facility at Lucas Heights, Sydney.
5. What price Australia literally having to train a whole generation of naval and civilian nuclear experts (maybe up from 5 a year to 100 a year) through to 2050? This would be at whole new nuclear faculties in Perth, Adelaide, Canberra and Sydney universities.
6. Yes SSKs costs have many variables with SSK size being one of them. But price comparing SSKs with SSNs on size has never been convincingly done (to my knowledge).
7. Is Anonymous talking prices all in the same year? or initial estimates in Year 1 with final price at typical SSK commissioning in Year 15 or, for an Australian SSN launch, in Year 20? Raw price of construction only, or for training and spare parts, or whole 60 year life of program costs?
8. What largely Secret price for all safety measures including a new Defence Nuclear Safety Organisation for Australian SSNs?
9. France making the Attack class a lower/third priority after France's new SSNs and even lower than France's not yet conceptualised or built new SSBN class troubled Australia. Such prioritisation effectively handicapped the Attack class build program for Australia.
10. The situation, dynamics and pricing for Australia's future SSN are too distant to be predictable. The first SSN may only be launched in the 2040s.
I have nothing to add to the pricing controversy, but have to note that other than deciding of the SSN is at all affordable (yes or no question) price has very little to do with SSN vs SSK.
ReplyDeleteIf the mission requires fast long distance travel (war with China), SSK is not an option. If RAN is to do the mission, SSN is the only choice, and cannot be done at all in less than maybe 20 years.
If the mission is short range delivery of special forces to Timur in the next 10 years, SSK is the only choice.
Cost comparisons are only meaningful if the items procured are for a similar purpose. I think we would all do better by discussing the relative likelihood of the relevant scenarios. For a peace seeking democracy (such as it is) the scenario is dictated by the opponent. The real options are usually pretty limited, if they exist at all. Lets concentrate on identifying the likely (dictated) scenarios.
Personally, I think by far the dominant scenario is a Chinese adventure in the South China Sea in less than 5 or maybe 10 years. If that does not happen, off the shelf SSK's will do just fine, and any serious danger is unlikely. But that is just my opinion, and I am a bear of very small brain (See Winnie the Pooh.) Pete, Burocratus, Anonymous, and other smart people: What do you think?
ReplyDeleteThis is a framework treaty with additional protocols negotiated at a later date. (The cost of the customer's equipment is not included) Dolphin-2AIP - 593 million euros. (Steffen Seibert, Merkel government spokesman) Dolphin-2AIP+ (INS "Dragon" with VMPL etc etc...)- plus 140 million ~ 840 milliom euros. (שינוי הייעוד, הגודל והוספת המערכות לא באים בחינם והם גררו תוספת של 140 מיליון אירו על המחיר הבסיסי) The change of designation, size and addition of the systems do not come for free and they have led to an increase of 140 million euros on the base price. In 11/2021 it was already ready to leave the assembly hall, at the last minute it was decided to make some slight improvements and add more elements, so the exposure was postponed to the first half of 2022. Regards...
Hello
ReplyDeleteI can't agree with your point #9. Delays were only coming from LM and Australian sides, the latter changing his request many times...
Hi Anonymous [at Feb 3, 2022, 5:37:00 PM]
ReplyDeleteI agree. The rapidly increasing threat to Australia from China would be the main reason Australia has chosen nuclear propelled subs.
China is likely saturating the South China Sea with undersea sensors. Meaning that Australian subs running diesels and exposing snorkels in or near that sea could increasingly draw a Chinese weaponised response in time of conflict.
Also the UK and US chose to offer reactor technology to Australia in 2021, something they probably didn't do in 2016.
Pete
Thanks Oleg7700
ReplyDeleteAs your Feb 3, 2022, 6:39:00 PM comment seems very much about the Dolphin-2AIP
would you like me to move it to
https://gentleseas.blogspot.com/2022/02/diamond-hull-patent-dolpin-3-type-212cd.html
or to https://gentleseas.blogspot.com/2022/02/israels-dolphin-3-dakars-to-have-type.html ?
Regards
Pete
Hi Pete
ReplyDeleteSomme confusion between "value"(relevant to the customer), "price"(the invoice) and "costs "(total cost of ownership for the customer and production cost for the supplier(indirect/direct fixed/variable..ect).The value is by definition higher than the price..
As pointed by the first Anonymous at 5 37 pm you cannot compare the "value" of an SSK and an SSN
In the first case Australia defend itself in the Coral sea, Timor sea or Andaman.Extremely effective if linked to the right alliances with India, Singapour, Indionesia ,NZ or France! (in New Caledonia) that provides the naval facilites to alleviate the range issue as well as naval aviation air bases. A tough call for China ,or anybody, N subs due to
narrow straits and limited seas depths
In the second case Australia is in a position to challenge China somewhere in the Bashi strait or off Okinawa, may be even closer , off Hainan..
Now from a cost standpoint, the direct cost of an SSN is somewhat higher than an SSK of similar size but may be 20% at most (as pointed in the Fr budget for Barracuda). However this direct cost is completely dwarfed by the indirect cost associated with the fuel cycle /dismantling/nuclear expertise....This cost is huge ,probably 2 orders of magnitude higher.
You have to "piggy back"/share extensively that cost with allied countries "sunk costs"at huge political cost (UK, India to some extent) or to the civilian N power industry (France or China,Brazil with difficulties,very likely SK, Japan if politically decided). In any
casse SSN is a 25/40 years endaveour
Pete
ReplyDeleteYou raise good questions, most of which I cannot answer. I'll have a go at some.
1 to 5 - pricing and AUKUS being the first SSN export pricing case - Obviously the US/UK SSN program has valuable IP which was developed over decades and costing the RN and USN many billions to learn. THis cost could be spread over 200 or so SSNs and SSBNs built to date. What margin might they charge the RAN for SSN technology IP? I don't know.
I would suggest that the best approach for the RAN is simply to acknowledge the value and offer what it has of value in return. In this case I think that is basing. If facilities at HMAS Stirling and Fleet Base East are upgraded to support UK and US SSNs, that is of real value to the RN and USN. On current unit prices for the SSNs (Astute and Virginia) currently being sold to the RN and USN,those prices appear to be comparable to the project budget already described for the Attack Class, ignoring the premium for local manufacturing cost.
7. All the prices I quoted were in current dollars, or the year I quoted them for. I converted to Australian dollars on current exchange rates. Ignoring the cost of sustainment and nuclear fuel cores (so SSN CAPEX only) I would still say current quoted prices (to their own governments) of SSNs as at 2021 are as follows:
French Barracuda (Suffren) SSN = 1.7 billion Euro = $2.8 billion A$
UK Astute (program average) SSN = 1.6 billion pds = $3.1 billion A$
US Virginia (Block 4) SSN = $2.8 billion USD = $3.9 billion A$
US Virginia (Block 4) SSN = $3.5 billion USD = $4.8 billion A$
8. The cost of the Australian nuclear safety regulatory regime will be additional. I don't know what it will cost but I note: ARPANSA has 140 stall overseeing 47,000 workers in the radiology industry now, with an annual budget of $30 million in 2020. If we assume ARPANSA had to be doubled in size to oversee another 2,500 SSN sailors plus 5,000 SSN construction workforce, that is another $30 million per annum, or $1 billion over 30 years, less than the cost of running a single SSK per annum.
9. On timing, we know that Naval was 3 years late getting Suffren launched, with another 5 to go plus the French SSBNs. I agree that, assuming that the RAN was NAval Group's third priority, they are not in a position to build SSNs for the RAN in a timely manner.
10. One of the biggest costs in getting SSNs operational in the past was obtaining the necessary amount of highly enriched uranium (HEU) to build reactor cores. This problem has largely passed. Uranium removed from surplus nuclear bombs since the end of the cold war is sufficient to build reactor cores for new SSNs for the USN and RN. This saves a lot of cost.
Stewardship of the US nuclear stockpile costs $4.5 billion US ($6.3 billion A$). That supports 80 nuclear ships and subs or $200 million per year per SSN. Our proportionate share might be a tenth, or $600 million per annum ($800 million $A). This is a high cost, $24 billion over 30 years, but within the proposed $90 billion delivery csost of the Attack Class program over 30 years. Including ARPANSA, nuclear stewardship for 8 RAN SSNs would be $25 billion over 30 years for nuclear stewardship and regulation. See:
https://www.brookings.edu/the-hidden-costs-of-our-nuclear-arsenal-overview-of-project-findings/
These are only assumptions based on comparable current Australian and US costs, but I think are realistic to get an idea of OPEX Costs for SSNs for the RAN. Crew will be extra.
Hi Anonymous [Feb 4, 2022, 12:20:00 AM]
ReplyDeleteIt is not in doubt that SSNs are vastly more capable in most circumstances (like moving more discretely over large distances rapidly) compared to SSKs.
Therefore SSNs will have much more strategic and Alliance value to Australia AND be priced accordingly.
Yes the Australia would need to pay the high "indirect cost associated with the fuel cycle /dismantling/nuclear expertise....This cost is huge ,probably 2 orders of magnitude higher." We might compare this to the cost of submarine Diesels.
Australia would need to consider and be billed for a portion of the "sunk costs" (like research and development of SSNs) that the UK and US have paid over the last 50+ years.
SSN costs for Australia are unknowable now, but will be high, and become clearer by 2040.
Regards
Pete
Hi Anonymous [at Feb 4, 2022, 1:17:00 PM]
ReplyDeleteThanks for all your comments and pricings. I'll revisit those issues next week so will include your comments in an article then.
Meanwhile, where you calculate "US Virginia (Block 4) SSN = $3.5 billion USD = $4.8 billion A$"
Is that, in fact for Virginia (Block 5s)? This is also noting the Block 5s may be the latest Virginias when Australia gets further into choosing a final design.
The Block 5s may have the "problem" of having such a vertical launch capability that they could better be called SSGNs - something Australia may not be after.
Regards
Pete
Pete
ReplyDeleteThis is further to my previous reply. Upon reading further, with apologies,I see that I misunderstood two aspects of the Brooking Report. On the one hand the quoted cost of "nuclear stewardship" included all elements of US defense nuclear activity, including air force missiles. The SSBN component was only about 1/3 of this cost. OThe SSN stewardship cost would also be less than that for SSBNs. On the other hand, the report was dated 1998. To allow for inflation from then to now, costs would need to be increased 50% to 60%. This means the real cost for stewardship of SSNs will be less than I estimated, perhaps 75% of my total, say $25 to $30 billion in total, not $35 billion. Obviously, these figures are all comparators only, not actual estimates. I have been unable to find any more up to date public figures for whole nuclear program costs.
Pete
ReplyDeleteSorry you are correct re: Block 4 costs - the second figure is the Block 5 cost, not Block 4. It is otherwise correct, off the 2020/21 USN advise to the US Congress.
Aargh, I am rushing too much. The revision I just sent you referred to a 75% reduction in stewardship costs. I forgot to say that the first figure was also in US dollars, hence should have been converted to $35 billion A$. So the guesstimate of $25 billion $A for stewardship across the 30 years looks as close as I can predict now.
Pete
ReplyDeleteA final comment on the cost of establishing support infrastructure for SSNs. The largest cost will obviously be establishing the institutions and staffing them. Physical infrastructure will also be required at each fleet base and ASC. A useful guide to the cost of the latter can be obtained from looking at the cost of recent comparable projects.
In the UK Devonport Dockyard no.10 dock is being upgraded to nuclear standards to enable the sustainment of future Dreadnought class SSBNs there. This is reportedly costing approximately £1 billion or $2 billion A$. By comparison, the upgrading of the ASC submarine shipyard was contracted for $1.2 billion in 2018 for the Attack Class build. This suggest another billion $ or so may need to be spent to bring it up to a nuclear engineering standard.
https://www.navylookout.com/upgrading-the-royal-navys-nuclear-submarine-support-facilities/
https://www.plymouthherald.co.uk/news/plymouth-news/devonport-dockyard-1billion-rebuild-allow-6217927
The Stirling and ultimately FBE facilities will probably also need upgrading. So the RAN might be up for $3 to $4 billion in total for this. Not cheap, but this will give Australia the capability to build, maintain and sustain SSNs. Once this work is completed Ran and USN SSNs could be based in Australia, and RAN crews and support personnel could start gaining experience operating and sustaining SSNs. The Perth work (at least) should begin immediately.