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

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Short-run marginal costs were calculated based on IEA data by adding fuel price and variable Operating and Maintenance costs for each type of plant. For the construction of our merit order, the case of the EU is taken as an illustration, considering the total installed capacity of the EU15. The purpose is to look at the potential magnitude of the effects, so details of the market operation have been ignored. 5 To analyse the effects of carbon emission allowances on the merit order, allowances at an assumed price of 20 €/tonne of CO 2 have been included. It is still very difficult to make price forecasts and even more so to foresee how prices may develop over time. Figure A10.2 represents an hypothetical merit order based on the total European installed capacity and facilities’ operating costs. The question is whether the merit order is preserved after the introduction of a carbon emission allowance cost or whether certain power technologies become more competitive than others. Short-run marginal cost €/MWh 140 120 Figure A10.2 – European merit order and impact of a 20 €/t CO 2 carbon price Without carbon constraint With carbon at 20 € /tCO 2 GT diesel fired 135 125 100 Oil 80 Gas 67 turbine 56 Gas 48 60 boiler 36 Coal CCGT 44 36 35 34 40 18 27 Nuclear 20 Hydro Wind 10 3 6 10 3 6 Source: IEA Data. Installed capacity Europe Table A10.1 – Cost assumptions for combined cycle gas turbine and coal-fired power plants Unit CCGT Coal Fuel price at plant €/GJ 3.5 1.5 Thermal efficiency % 49 37 Fuel costs €/MWh 25.7 14.5 Variable O&M costs €/MWh 1.5 3.3 Short-run marginal cost €/MWh 27.2 17.9 CO 2 cost €/t 20 20 CO 2 t/MWh 0.412 0.918 CO 2 cost €/MWh 8.2 18.4 500 GW According to the power plant assumptions detailed in Reinaud, 2003 (see Table A10.1), in terms of short-run marginal cost, conventional hydro, wind and nuclear plants are the most competitive on the market. Coal plants with a fuel price at 1.5 €/GJ and combined cycled gas turbines (CCGT) with a gas 5. Concerns about interconnection or transmission costs and constraints have been ignored in order to cnsider the EU power market as a single competitive market. 222
price at 3.5 €/GJ are the next facilities in the merit order. Their relative competitiveness is sensitive to fuel price. Gas prices have to decline to approximately 2.23 €/GJ before the two facilities have the same short-run marginal cost. At gas prices lower than this, CCGT technologies are more competitive. A variation in the carbon emission price has a similar effect on the plants’ competitiveness as a change in fuel prices. There can be a change in merit order when a carbon emission price is included as an additional variable cost because gas has lower CO 2 emission per unit of power produced than coal. At a CO 2 price of 20 €/tonne, the competitiveness order for coal and CCGT power plants reverses. This breakeven price between an existing coal-fired power plant and an existing gas-fired power plant is clearly sensitive to a number of the assumptions: ● Gas prices. Gas prices are volatile. According to the World Energy Outlook 2002, in 2010 the average gas price of European imports is projected to decrease to 2.8 USD/MBtu (or 3.1 €/GJ). This price is nevertheless expected to increase to 3.3 USD/MBtu in 2020. Therefore, as a CCGT would operate for approximately 25 years, the fuel costs would vary considerably which could in turn influence the plants’ competitiveness. ● Efficiency rate. Some analysis suggest that the CCGT starting operation around 2010 could reach an average efficiency rate of 57%, which would bring down the costs for running such a plant as well as lower the carbon dioxide emissions. Similarly, a coal plant starting operation in 2010 could expect an efficiency of 46%. ● Other costs driven by other environmental policies. In the EU, the Large Combustion Plant Directive might also affect the plants’ operating costs. Investment decisions made on implementing fluidised gas desulphurisation at coal plants could have impacts on the plants’ emissions. ● Operating and Maintenance costs. The scenarios for the range of gas prices are based on the average European gas import price from January 1998 to January 2002 (See Figure A10.3). Figure A10.3 – Average European gas import price 1998-2002 USD/MBTu 5 4 3 2 1 0 Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan 1998 1999 2000 2001 2002 Source: IEA Data. Figure A10.4 represents a simplified sensitivity analysis based on varying fuel prices. This was conducted to determine the implications of the variations in gas prices (both short-term volatility and long-term trends) on the short-run marginal cost and on the carbon emission price which equalises the competitiveness of coal and gas plants. 223
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NUCLEAR ENERGY AGENCY INTERNATIONAL
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ORGANISATION FOR ECONOMIC CO-OPERAT
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Table of Contents Table of Contents
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Figures Figure 3.1 Specific overnig
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The introduction of liberalisation
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150 USD/MWh at a 5% discount rate a
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The technologies and plant types co
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locations and/or very favourable co
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conclusions of the study were used
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Chapter 2 Input Data and Cost Calcu
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equipped with emission control devi
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Table 2.2 - Exchange rates (as of 1
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Table 2.4 - Coal plant specificatio
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Table 2.7 - Wind and solar power pl
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Table 2.10 - Other plant specificat
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Figure 3.1 - Specific overnight con
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exchange rates, the coal prices var
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Construction time Gas-fired power p
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USD/MWh 70 60 Figure 3.5 - Levelise
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O&M costs The specific annual O&M c
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Cost ranges for coal, gas and nucle
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Ratio 1.9 Figure 3.12 - Cost ratios
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Table 3.11 - Overnight construction
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Table 3.14 - Projected generation c
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Except for the offshore plant in th
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At 10% discount rate, the levelised
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At 5% discount rate, hydroelectrici
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Table 4.6 - Projected generation co
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A CHP plant typically supplies heat
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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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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
Page 175 and 176: Appendix 5 Cost Estimation Methodol
Page 177: into account in the real price of g
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Page 182 and 183: and small power plants. Although th
Page 184 and 185: The general approach remains useful
Page 186 and 187: Two US economic analyses of nuclear
Page 188 and 189: assume future prices follow a rando
Page 190 and 191: The effects of price risk on techno
Page 192 and 193: The option to delay is embedded in
Page 195 and 196: Appendix 7 Allocating the Costs and
Page 197 and 198: Further Fourier’s law for heat tr
Page 199 and 200: Figure A7.4 - The energy conversion
Page 201 and 202: This yields: β = 0.153 α. If α e
Page 203: It is emphasised that depending on
Page 206 and 207: 1 st oil shock 2 nd oil shock Saudi
Page 208 and 209: Table A8.2 - Expected lower and upp
Page 210 and 211: Reliability in electricity systems
Page 212 and 213: is also highly dependent on the typ
Page 214 and 215: In the ILEX study 5 and in another
Page 216 and 217: an increasing share of wind is the
Page 218 and 219: able to work out the optimal operat
Page 221 and 222: Appendix 10 Impact of Carbon Emissi
Page 223: costs of generation. The introducti
Page 227 and 228: Figure A10.5 - Steam coal price var
Page 229 and 230: The longer term impact on investmen
Page 231 and 232: Appendix 11 List of Main Abbreviati
Page 233: OECD PUBLICATIONS, 2 rue André-Pas
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