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

with other technologies is under strong influence from this single factor. As it can be seen in Appendix 8
and Table 3.6 the gas price levels projected by the national experts are generally higher than price assumptions
in WEO 2004 (IEA, 2004).
The framework of the present study excludes costs to society of emitting CO 2 when using fossil fuels
because those costs are not borne by electricity generators and consumers as long as the regulations in
place do not internalise them. Such costs will enhance the relative competitiveness of renewable and
nuclear generated electricity compared with gas and particularly compared with coal generated electricity.
The cost of a secure access to fuel, with the infrastructure and the certainty in supply that it requires, tend
to favour nuclear and coal compared with gas. The value of security of fuel supply is difficult to quantify
but is a key factor in national energy policies of many OECD countries.
Technology trends
Like in previous studies, energy sources and technologies for base-load, grid-connected electricity
generation represent a large share of the data provided. A total of 63 coal, gas and nuclear power plants
are included in the study. For those plants, noticeable technology progress is reported as compared to the
data provided for the 1998 study but no technological breakthrough seems to have occurred since 1998
in these technologies.
Availability factor is a main driver for base-load electricity generation costs. Technology progress and
market liberalisation have contributed to increase the availability of power plants through enhanced
design and cost effective operation. Higher availability factors benefit capital intensive technologies, such
as coal and nuclear power plants, more than gas-fired power plants. Availability factors exceeding 75%
were common already for coal, gas and nuclear power plants at the end of the 90s when the previous study
was completed. However, at that time, the expert group felt that 75% was representative of the average
expectation for state-of-the-art power plants over their entire economic lifetimes. Today, industrial
experience has demonstrated that an average lifetime availability factor reaching or exceeding 85% is
achieved routinely for coal, gas and nuclear power plants.
Regarding renewable energy sources for electricity generation, responses to the questionnaire seem to
indicate that wind power plants are the most often considered option (19 plants included in the study),
solar and combustible renewable remaining a marginal option. The number of distributed generation plants
was very limited.
Finally, the importance of combined heat and power (CHP) plants is stressed by the number of
responses including this option with various fuels, coal, gas and combustible renewable. Although a
robust economic analysis of CHP in an international framework is beyond the scope of the present study,
the results presented are illustrative of some of the most important cost factors in this option at the national
level in countries which provided data on it.
Coal, gas and nuclear electricity generation
In most countries which provided data on one or more of the three alternatives (coal, gas and nuclear)
for the study, the least expensive alternatives have levelised generation costs ranging between 25 and
35 USD/MWh at a 5% discount rate and between 35 and 45 USD/MWh at a 10% discount rate. The only
clear exceptions are Japan, Greece and Italy where levelised generation costs estimated with generic
assumptions are significantly higher, and the Republic of Korea and the Republic of South Africa where
those costs are significantly lower. The ranges of total levelised generation costs for the coal, gas and
nuclear power plants included in the study are shown in Figure 3.13 and the cost ratios between the
three alternatives in Figures 3.14, 3.15 and 3.16.
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