Projected Costs of Generating Electricity - OECD Nuclear Energy ...

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150 USD/MWh at a 5% discount rate and more than 200 USD/MWh at a 10% discount rate. With the lower availability/capacity factors the levelised costs of solar-generated electricity are approaching or well above 300 USD/MWh. Combined heat and power generating technologies For combined heat and power the total levelised costs of generating electricity are highly dependent on the use and value of the co-product, the heat, and are thereby very site specific. The expert group agreed on a pragmatic approach of calculating the levelised costs of generating electricity for this study. At a 5% discount rate, the levelised costs range between 25 and 65 USD/MWh for most CHP plants. At a 10% discount rate, the costs range between 30 and 70 USD/MWh for most plants. Other generating technologies Levelised costs were also computed for the remaining technologies. Considering the low number of responses for these technologies the results cannot be used outside the context of each specific case. Conclusions The lowest levelised costs of generating electricity from the traditional main generation technologies are within the range of 25-45 USD/MWh in most countries. The levelised costs and the ranking of technologies in each country are sensitive to the discount rate and the projected prices of natural gas and coal. The nature of risks affecting investment decisions has changed significantly with the liberalisation of electricity markets, and this has implications for determining the required rate of return on generating investments. Financial risks are perceived and assessed differently. The markets for natural gas are undergoing substantial changes on many levels. Also the coal markets are under influence from new factors. Environmental policy is also playing a more and more important role that is likely to significantly influence fossil fuel prices in the future. Security of energy supply remains a concern for most OECD countries and may be reflected in government policies affecting generating investment in the future. This study provides insights on the relative costs of generating technologies in the participating countries and reflects the limitations of the methodology and generic assumptions employed. The limitations inherent in this approach are stressed in the report. In particular, the cost estimates presented are not meant to represent the precise costs that would be calculated by potential investors for any specific project. This is the main reason explaining the difference between the study’s findings and the current global preference in reformed electricity markets for gas-fired technologies. Within this framework and limitations, the study suggests that none of the traditional electricity generating technologies can be expected to be the cheapest in all situations. The preferred generating technology will depend on the specific circumstances of each project. The study indeed supports that on a global scale there is room and opportunity for all efficient generating technologies. 14
Chapter 1 Introduction Chapter 1 Background This study is the sixth in a series on projected costs of generating electricity carried out and published by the OECD. It has been undertaken jointly by the Nuclear Energy Agency (NEA) for the Committee for Technical and Economic Studies on Nuclear Energy Development and the Fuel Cycle (NDC) and by the International Energy Agency (IEA) for the Standing Group on Long-Term Co-operation (SLT). In order to conduct the study, the two agencies convened an ad hoc group of experts which met three times between December 2003 and November 2004. National experts nominated to participate in the study were drawn from ministries or other governmental bodies, universities, research institutes, utilities and one nuclear power plant manufacturer. Nineteen OECD countries – Austria, Belgium, Canada, the Czech Republic, Denmark, Finland, France, Germany, Greece, Italy, Japan, the Republic of Korea, the Netherlands, Portugal, the Slovak Republic, Switzerland, Turkey, the United Kingdom and the United States – and two international organisations – the International Atomic Energy Agency (IAEA) and the European Commission (EC) – were represented in the ad hoc Expert Group in charge of the study. The IAEA provided generation cost information obtained from three of its Member States not members of OECD – Bulgaria, Romania and the Republic of South Africa. The list of members of the ad hoc Expert Group is given in Appendix 1. Objectives and scope The overall objective of the studies in the series is to provide reliable information on the economics of electricity generation. The study is to serve as a resource for policy makers and industry professionals as an input for understanding generating costs and technologies better. For this purpose, cost data provided by national experts participating in the studies are compiled and used by the joint IEA/NEA Secretariat to estimate generation costs using a commonly agreed methodology and generic assumptions selected by the group for the main technical and economic parameters (e.g. economic lifetime, average load factor for base-load plants and discount rates). The present study uses the reference methodology adopted in previous studies, i.e. levelised lifetime cost approach. However, the group recognised the increasing importance of investment risks in the context of liberalised electricity markets and their potential impacts on technology choices which may not be captured fully with the levelised lifetime cost methodology. Methodological issues associated with incorporating financial risks in generating cost estimates are addressed in Appendix 6. Like each study in the series, the present one aimed at covering state-of-the-art technologies for electricity generation commercially available at the time of publication. Accordingly, emphasis was placed in the present update on including a broad range of generation sources and technologies covering the span of alternatives considered in participating countries for power plants under construction in 2003-2004 and/or planned to be connected to the grids within a decade or so. 15
Page 1: NUCLEAR ENERGY AGENCY INTERNATIONAL
Page 4: ORGANISATION FOR ECONOMIC CO-OPERAT
Page 9 and 10: Table of Contents Table of Contents
Page 11: Figures Figure 3.1 Specific overnig
Page 14 and 15: The introduction of liberalisation
Page 18 and 19: The technologies and plant types co
Page 20 and 21: locations and/or very favourable co
Page 22 and 23: conclusions of the study were used
Page 25 and 26: Chapter 2 Input Data and Cost Calcu
Page 27 and 28: equipped with emission control devi
Page 29 and 30: Table 2.2 - Exchange rates (as of 1
Page 31 and 32: Table 2.4 - Coal plant specificatio
Page 33 and 34: Table 2.7 - Wind and solar power pl
Page 35: Table 2.10 - Other plant specificat
Page 38 and 39: Figure 3.1 - Specific overnight con
Page 40 and 41: exchange rates, the coal prices var
Page 42 and 43: Construction time Gas-fired power p
Page 44 and 45: USD/MWh 70 60 Figure 3.5 - Levelise
Page 46 and 47: O&M costs The specific annual O&M c
Page 48 and 49: Cost ranges for coal, gas and nucle
Page 50 and 51: Ratio 1.9 Figure 3.12 - Cost ratios
Page 52 and 53: Table 3.11 - Overnight construction
Page 54 and 55: Table 3.14 - Projected generation c
Page 56 and 57: Except for the offshore plant in th
Page 58 and 59: At 10% discount rate, the levelised
Page 60 and 61: At 5% discount rate, hydroelectrici
Page 62 and 63: Table 4.4 - Overnight construction
Page 64 and 65: Table 4.6 - Projected generation co
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A CHP plant typically supplies heat
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Table 5.1 - Overnight construction
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Figure 5.2 - Levelised costs of ele
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lower unit capital and operating co
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Table 6.5 - Overnight construction
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cost calculation for some 130 power
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It should be stressed that the plan
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Concluding remarks The lowest level
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Portugal Mr. António B. Gomes EDP
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Table A2.1 - Nuclear plant investme
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Overnight Capital Costs: Constructi
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Table A2.7 - Gas-fired (including C
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Table A2.10 - Wind plant investment
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Cost structure of supported green e
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The highest investment cost arises
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The expected development of the per
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● ● Autoproducers. These firms
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Canada The electricity market situa
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Natural gas - combined cycle gas tu
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Denmark Basic data Denmark has abou
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In the future, both an increase in
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nuclear operator Teollisuuden Voima
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these power generation methods. Two
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Figure 5 - Competitiveness of vario
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2004. It envisages the gradual incr
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Table 4 - Gross electricity supply
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● ● ● ● ● ● ● ● ●
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Electricity generation costs The to
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photovoltaic device. Finally the su
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Table 1 - Installed electric power
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Japan Consumers in Japan are suppli
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BPE will be established not as a bi
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Coal Coal fired power plants have b
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A new sewage treatment plant with a
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The interconnections between Portug
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In order to respond to these basic
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efficient energies and is reducing
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Liberalisation Basic restructuring
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External costs for electricity prod
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At the beginning of plant operation
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and high ash, moisture and sulphur
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The White Paper did not contain pro
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Table 7 shows the projected load fa
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other investment options available
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The impurities contained in coal ar
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“ultra-supercritical” condition
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unmineable coal seams. All three pr
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Light water reactors require enrich
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concerns. Consequently, the natural
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generators and power electronics el
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conventional fossil-fired plants. B
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● ● very effective and is used
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Appendix 5 Cost Estimation Methodol
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into account in the real price of g
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● ● ● ● Factors under the c
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and small power plants. Although th
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The general approach remains useful
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Two US economic analyses of nuclear
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assume future prices follow a rando
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The effects of price risk on techno
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The option to delay is embedded in
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Appendix 7 Allocating the Costs and
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Further Fourier’s law for heat tr
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Figure A7.4 - The energy conversion
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This yields: β = 0.153 α. If α e
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It is emphasised that depending on
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1 st oil shock 2 nd oil shock Saudi
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Table A8.2 - Expected lower and upp
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Reliability in electricity systems
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is also highly dependent on the typ
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In the ILEX study 5 and in another
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an increasing share of wind is the
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able to work out the optimal operat
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Appendix 10 Impact of Carbon Emissi
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costs of generation. The introducti
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price at 3.5 €/GJ are the next fa
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Figure A10.5 - Steam coal price var
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The longer term impact on investmen
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Appendix 11 List of Main Abbreviati
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