Nuclear Politics

Costs Of Nuclear ‘Comparable’ To Other Baseload Technologies, Report Says

By Lubomir Mitev
31 August 2015

31 Aug (NucNet): The costs of nuclear energy “remain in line” with the costs of other baseload technologies, says a report by the International Energy Agency (IEA) and Organisation for Economic Cooperation and Development’s Nuclear Energy Agency (OECD/NEA).

The report, ‘Projected Costs of Generating Electricity’, estimates that the average levelised cost of electricity (LCOE) for a nuclear station is comparable to that for coal and lower than that of a natural gas-fired power station.

LCOE is the long-term price at which the electricity produced by a nuclear station will have to be sold at for the investor to cover all their costs.

The report’s estimate assumes a seven percent discount rate. The discount rate refers to the expected rate of return foregone by bypassing other potential investments. In other words, it is the rate of return investors could potentially earn in financial markets.

The highest LCOE for a nuclear power station with a seven percent discount rate is in the United Kingdom, where it is $100.75 per megawatt-hour (MWh) and the lowest is in South Korea, where it is $40.42 per MWh. The mean is estimated at around $82 per MWh.

The report says that, due to the high capital intensity of nuclear power stations, a 10 percent discount rate is more appropriate. At this discount rate, nuclear power is more expensive than both coal and natural gas-fired power stations.

The report says the LCOE for nuclear power has increased slightly but remains “roughly on par” in comparison to the previous edition of the report, published in 2010.

Taking into account a 10 percent discount rate, the report says the average LCOE for a nuclear station increased from about $90 per MWh in 2010 to $115 per MWh in 2015.

The report says a large number of existing nuclear stations are reaching their initial design lifetimes and extensive refurbishments, safety upgrades and lifetime extension programmes are likely to take place within the next 20 years.

In its reference scenario, the report estimates that the LCOE of a nuclear station which has undergone a lifetime extension programme is between €23 per MWh and €26 per MWh.

These results for the LCOE “compare favourably” with other electricity generation sources and “deserve attention”, the report says.

The report looks at the future prospects of energy technologies and says that by 2030 the focus in nuclear energy will fall on small modular reactors (SMRs) and prototypes of Generation IV reactors.

“SMRs can target niche markets and countries with small electricity grids that require baseload power,” the report says.

In the best-case scenario, SMRs are expected to have total electricity generation cost equal to large nuclear power stations if all competitive advantages of SMRs are realised, the report says. Those advantages include serial production, optimised supply chains and lower up-front financing costs,

The report suggests that to open up the market for SMRs, governments and industry should work together to identify target markets and accelerate the deployment of SMR prototypes in those markets.

For Generation IV technologies, the report calls on governments to assess the long-term benefits of developing such designs.

The report says public-private partnerships need to be put in place between governments and industry in order to develop demonstration projects for the application of co-generation technology in nuclear stations. Co-generation is where a power station produces both electrical power and heat for residential and commercial heating requirements (“district heating”), resulting in an increase in the station’s efficiency.

Pen Use this content