Nuclear energy is a highly competitive energy option for the production of baseload electricity, the OECD's Nuclear Energy Agency (NEA) and the International Energy Agency (IEA) have concluded in their latest joint study into generating costs.
The report, Projected Costs of Generating Electricity, is the seventh in a series of such studies and was released today in Paris by IEA executive director Nobuo Tanaka and NEA director-general Luis Echavarri. It comprises the latest data for 190 power plants from 17 OECD countries as well as from Brazil, China, Russia and South Africa on the costs of electricity generation for a wide variety of fuels and technologies, including coal (with and without carbon capture), natural gas, nuclear, hydro, on-shore and off-shore wind, solar, biomass, wave, tidal and combined heat and power (CHP).
The analysis was closely overseen by an international expert group on electricity generating costs with more than 50 representatives from 19 OECD member countries, the European Commission and the International Atomic Energy Agency (IAEA). Experts from Brazil, India and Russia also participated.
Assuming a carbon price of $30 per tonne of carbon dioxide (CO2), the study provides results for two real interest rates of 5% and 10%. When financing costs are low (5%), nuclear energy followed by coal with carbon capture are the most competitive solutions. With higher financing costs (10% case), coal-fired generation followed by coal with carbon capture and gas-fired combined cycle turbines (CCGTs) are the cheapest sources of electricity.
The cost of capital "is essentially a function of the risk faced by each option for generating electricity - market risk, technology risk, construction and regulatory risk," says the publication. It adds, "With their high capital costs, low-carbon technologies such as nuclear, renewables and carbon capture and storage (CCS) are particularly vulnerable. Smart government action, however, can do much to reduce these risks."
With regards nuclear energy, the study says it "delivers significant amounts of very low-carbon baseload electricity at stable costs over time." However, it notes that nuclear must "manage high amounts of capital at risk as well as the cost of decommissioning and waste disposal together with social concerns about safety and proliferation."
The price of carbon is a decisive factor in the competition between conventional fossil-fuel and low-carbon technologies, the IEA and NEA say. Coal, the study notes, is competitive "in the absence of a sufficiently high carbon price."
The study concludes that "nuclear, coal, gas and, where local conditions are favourable, hydro and wind, are now fairly competitive generation technologies for baseload power generation." However, it adds that "their precise cost competitiveness depends more than anything on the local characteristics of each particular market and their associated cost of financing, as well as CO2 and fossil fuel prices."
The IEA and NEA suggest that "there is no technology that has a clear overall advantage globally or even regionally. Each one of these technologies has potentially decisive strengths and weaknesses." They add, "The future is likely to see healthy competition between these different technologies, competition that will be decided according to national preferences and local comparative advantages."
Launching the report, Echavarri commented: "In a period when many countries are looking to invest in electricity capacity while working to reduce carbon emissions, it provides an indispensable basis for any discussion about electricity generation choices."
Tanaka added, "To bolster competitiveness of low-carbon technologies such as nuclear, renewables and CCS, we need strong government action to lower the cost of financing and a significant CO2 price signal to be internalised in power markets."
Welcoming the conclusions of the study, Santiago San Antonio, director general of Foratom, the trade body for the European nuclear power industry, said: "The results of this study confirm that nuclear energy plays - and will continue to play - a vital role in Europe's energy mix. Its findings support the option that has been chosen by an increasing number of countries across Europe to extend the operational duration of their nuclear power plants or invest in nuclear new build."
Researched and written
by World Nuclear News