Update on world generation costs
Every five years the OECD’s International Energy Agency (IEA) and Nuclear Energy Agency (NEA) publish
Projected Costs of Generating Electricity, reporting on electricity generating costs by the major power generation technologies in 24 countries. As previously, the 2020 edition uses the levelised cost of electricity (LCOE) as its main metric, indicating costs at the actual generating plant, but it also presents a complementary metric, the “value-adjusted” LCOE (VALCOE) to account for the impacts of increasing shares of intermittent renewables, notably wind and solar in a system. It acknowledges that LCOE becomes of limited use when comparing dispatchable sources with unreliable ones.
The report notes that low-carbon electricity systems with renewables are characterised by increasingly complex interactions of different technologies with different functions in order to ensure reliable supply at all times. The system costs become increasingly significant. VALCOE is similar to System LCOE. VALCOE integrates energy value, flexibility value and capacity value by technology. It “necessarily depends on the system in which a technology is deployed. Currently, estimates exist (only) for China, Europe, India and North America.” A refinement of the system analysis approach is to be published in 2021.
On LCOE basis new nuclear power is competitive with other low-carbon options, and its value adjustments are less than for intermittent renewables. On VALCOE basis nuclear power will increasingly be the lowest cost option in systems with a high proportion of wind and solar PV. New nuclear power is expected to have the lowest costs of any dispatchable low-carbon technology in 2025. The report notes that extending the operation of existing nuclear power plants, ie long-term operation (LTO), is the most cost-effective source of low-carbon electricity. A chapter on carbon pricing includes a section on US zero-emission credits for nuclear.
One of five "boundary chapters" included in the report notes that the rate of adding nuclear capacity needs to at least double for countries to meet Paris obligations under IEA or IPCC scenarios. Without significant LTO, some 20 GWe per year needs to be added from 2021. But a disincentive is that “in several countries the existing nuclear fleet is impacted by current electricity market designs that that do not appropriately value the attributes of capital-intensive low-carbon technologies [that are] dispatchable such as nuclear and hydro power plants.” This is clearly a policy matter that needs resolving urgently in many countries.
WNN 9/12/20.
World energy needs
Nuclear power vital for ‘net-zero emissions by 2050’ scenario - WEO
The 2020 edition of the International Energy Agency’s
World Energy Outlook – WEO 2020 – has a chapter on what is required by 2030 towards achieving net-zero emissions by 2050, an objective with increasing political consensus. In this NZE2050 scenario primary energy demand falls by 17% between 2019 and 2030, to about 2006 level, even though the global economy is twice as large. CO2 emissions decline by about 60% by 2030, double the reduction in the Sustainable Development Scenario (SDS), but there is only modest increase in nuclear contribution above that in SDS – 40 GWe on top of 140 GWe increase in SDS to 2030, where the need for much increased nuclear contribution is clear.
The main NZE2050 measures on top of those in the SDS are evenly split among electricity generation, energy end use, and behaviour or lifestyle constraints especially in transport sector, but also more working from home. Electrification based on low-emission electricity is one of the key means of reducing emissions in end-use sectors, but the scenario depends heavily on increased solar PV, which has “an outsized role to play”. System costs and issues arising from intermittent renewables are glossed over, and the scenario “places much higher demands on technology innovation than even the SDS.”
WNN 13/10/20.
World energy needs
