Economics of Nuclear

Cost Report / Nuclear Is ‘Most Affordable Dispatchable Source Of Low-Carbon Electricity’

By David Dalton
9 December 2020

Reactors in long-term operation are even more cost-effective, data shows
Nuclear Is ‘Most Affordable Dispatchable Source Of Low-Carbon Electricity’
Cost reductions stemming from the lessons learnt from first-of-a-kind projects in several Organisation for Economic Cooperation and Development countries could see nuclear power remain the dispatchable low-carbon technology with the lowest expected levelised costs of energy (LCOE) in 2025, a joint report by the Nuclear Energy Agency and International Energy Agency says.

The report, ‘Projected Costs of Generating Electricity’, says the LCOE of nuclear in 2025 will range from about $55-$95 per MWh. This compares to a maximum of almost $100/MWh for coal and about $80/MWh for gas. The cheapest non-dispatchable source of electricity is onshore wind of more than 1 MW, with an LCOE of $40-$50/MWh. Offshore wind is about $80-$110/MWh and utility scale solar PV $40-$80/MWh.

For nuclear plants that are in long-term operation, the cost falls considerably, with an LCOE of less than $40/MWh. Prolonging the operation of existing nuclear power plants is the most cost-effective source of low-carbon electricity. Hydroelectric power can provide a similar contribution at comparable costs, but remains highly dependent on the natural endowments of individual countries.

LCOE captures both capital and operating costs that need to be covered. It is essentially the long-term price at which the electricity produced by a power plant will have to be sold at for the investor to cover all their costs.

The overnight construction cost – essentially the construction costs excluding financing costs – of commercial nuclear energy ranges from $2,157 to $6,920 per kW, but falls significantly to $391 to $629 per kW for plants that are in long-term operation.

The $2,157 to $6,920 per kW range is for nth-of-a-kind plants and compares to $877-$3,022 for onshore wind projects of more than 1MW, $434-$2,006 for utility scale solar PV and $800-$4,382 for coal. Geothermal ranges from $3,851-$10,959 and combined cycle gas turbine gas from $254-$1,109.

The report concludes that the LCOE of low-carbon generation technologies are falling and are increasingly below the costs of conventional fossil fuel generation. It analyses 243 plants based on data from 24 countries, presenting the costs of generating electricity for fossil fuel, nuclear and a range of renewable technologies such as wind and solar, hydro and biofuels.

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