Cost estimates for nuclear power in the UK

Current UK Government support for nuclear power has in part been informed by cost estimates that suggest that electricity from new nuclear power stations will be competitive with alternative low carbon generation options. The evidence and analysis presented in this paper suggests that the capital cost estimates for nuclear power that are being used to inform these projections rely on costs escalating over the pre-construction and construction phase of the new build programme at a level significantly below those that have been experienced by past US and European programmes. This paper applies observed construction time and cost escalation rates to the published estimates of capital costs for new nuclear plant in the UK and calculates the potential impact on levelised cost per unit of electricity produced. The results suggest that levelised cost may turn out to be significantly higher than expected which in turn has important implications for policy, both in general terms of the potential costs to consumers and more specifically for negotiations around the level of policy support and contractual arrangements offered to individual projects through the proposed contract for difference strike price.     

The regional electricity generation mix in Scotland: A portfolio selection approach incorporating marine technologies

Standalone levelised cost assessments of electricity supply options miss an important contribution that renewable and non-fossil fuel technologies can make to the electricity portfolio: that of reducing the variability of electricity costs, and their potentially damaging impact upon economic activity. Portfolio theory applications to the electricity generation mix have shown that renewable technologies, their costs being largely uncorrelated with non-renewable technologies, can offer such benefits. We look at the existing Scottish generation mix and examine drivers of changes out to 2020. We assess recent scenarios for the Scottish generation mix in 2020 against mean-variance efficient portfolios of electricity-generating technologies. Each of the scenarios studied implies a portfolio cost of electricity that is between 22% and 38% higher than the portfolio cost of electricity in 2007. These scenarios prove to be mean-variance “inefficient” in the sense that, for example, lower variance portfolios can be obtained without increasing portfolio costs, typically by expanding the share of renewables. As part of extensive sensitivity analysis, we find that Wave and Tidal technologies can contribute to lower risk electricity portfolios, while not increasing portfolio cost.     

Comparative assessment of future power generation technologies based on carbon price development

The long-term assessment of new electricity generation was performed for various long-run policy scenarios taking into account two main criteria: private costs and external GHG emission costs. Such policy oriented power generation technologies assessment based on carbon price and private costs of technologies can provide information on the most attractive future electricity generation technologies taking into account climate change mitigation targets and GHG emission reduction commitments for world regions.Analysis of life cycle GHG emissions and private costs of the main future electricity generation technologies performed in this paper indicated that biomass technologies except large scale straw combustion technologies followed by nuclear have the lowest life cycle GHG emission. Biomass IGCC with CO₂ capture has even negative life cycle GHG emissions. The cheapest future electricity generation technologies in terms of private costs in long-term perspective are: nuclear and hard coal technologies followed by large scale biomass combustion and biomass CHPs. The most expensive technologies in terms of private costs are: oil and natural gas technologies. As the electricity generation technologies having the lowest life cycle GHG emissions are not the cheapest one in terms of private costs the ranking of technologies in terms of competitiveness highly depend on the carbon price implied by various policy scenarios integrating specific GHG emission reduction commitments taken by countries and climate change mitigation targets.     

Cost analysis of solar chimney power plants

Several cost models for large-scale solar chimney power plants are available in the literature. However, the results presented vary significantly, even in cases where the input parameters and the used models are supposedly very similar. The main objective of this paper is to clarify this matter by comparing previous cost models to a newly developed alternative model. Further, the impact of carbon credits on the levelised electricity cost is also investigated.A reference plant is introduced, with dimensions and financial parameters chosen specifically for the purpose of making the results of this analysis comparable to those of previous publications. Cost models are presented for the main components of a solar chimney power plant, i.e. the collector, the chimney and the power conversion unit. Results show that previous models may have underestimated the initial cost and levelised electricity cost of a large-scale solar chimney power plant. It is also shown that carbon credits significantly reduce the levelised electricity cost for such a plant.     

Renewable energy: Externality costs as market barriers

This paper addresses the impact of environmentally based market failure constraints on the adoption of renewable energy technologies through the quantification in financial terms of the externalities of electric power generation, for a range of alternative commercial and almost-commercial technologies. It is shown that estimates of damage costs resulting from combustion of fossil fuels, if internalised into the price of the resulting output of electricity, could lead to a number of renewable technologies being financially competitive with generation from coal plants. However, combined cycle natural gas technology would have a significant financial advantage over both coal and renewables under current technology options and market conditions. On the basis of cost projections made under the assumption of mature technologies and the existence of economies of scale, renewable technologies would possess a significant social cost advantage if the externalities of power production were to be “internalised”. Incorporating environmental externalities explicitly into the electricity tariff today would serve to hasten this transition process.     

A review of the IEA/NEA Projected Costs of Electricity – 2015 edition

The IEA/NEA recently issued their eighth edition of the Study on the “Projected Costs of Generating Electricity” – 2015 edition. The Study is mainly concerned with calculating the levelised cost of electricity (LCOE). The LCOE calculations are based on a levelised average life time cost approach using the discounted cash flow (DCF) method. The analysis was this year, and for the first time, performed using three discount rates (3%, 7%, and 10%). The LCOE can serve as a tool for calculating the cost of different generation technologies. However the Study's usefulness is affected by its narrow base of a limited set of countries that are not necessarily representative. It ignored the negative role of subsidies and did not provide a methodology for selective application of the discount rates and costing of carbon. The global power generation scene is changing. Generation growth in OECD countries has become very limited; simultaneously there is rapid growth of varying renewables (VRE) generation which needs special criteria for assessing its system cost. All this demands a rethinking of the application and usefulness of the LCOE in future generation planning.     

External costs from electricity generation of China up to 2030 in energy and abatement scenarios

This paper presents estimated external costs of electricity generation in China under different scenarios of long-term energy and environmental policies. Long-range Energy Alternatives Planning (LEAP) software is used to develop a simple model of electricity demand and to estimate gross electricity generation in China up to 2030 under these scenarios. Because external costs for unit of electricity from fossil fuel will vary in different government regulation periods, airborne pollutant external costs of SO₂, NO_x, PM₁₀, and CO₂ from fired power plants are then estimated based on emission inventories and environmental cost for unit of pollutants, while external costs of non-fossil power generation are evaluated with external cost for unit of electricity. The developed model is run to study the impact of different energy efficiency and environmental abatement policy initiatives that would reduce total energy requirement and also reduce external costs of electricity generation. It is shown that external costs of electricity generation may reduce 24–55% with three energy policies scenarios and may further reduce by 20.9–26.7% with two environmental policies scenarios. The total reduction of external costs may reach 58.2%.     

全国碳市场背景下电力行业碳价传导机制研究

电力行业作为典型的能源密集型行业,是全世界各地碳市场的重点管控对象。本文对国内外电力市场、碳市场及碳价传导的问题进行了研究,发现欧洲、美国的电力市场更趋近于买方市场,碳价对终端电价的影响较小。而由于中国电力体制的特殊性,电价由政府主管部门进行管控,因而在政府不通过行政手段调节碳成本传递机制的情况下,碳成本将无法向发电企业下游传导,使得发电企业暴露在碳成本波动的风险下。同时,在对碳成本传导机制研究的基础上给出了具体建议。     

Incorporating externalities into a full cost approach to electric power generation life-cycle costing

This study presents a full cost approach to determine the levelized cost of energy (LCOE) of 14 electricity generation technologies. It encompasses costs incurred at all stages of the fuel cycle, including those that are traditionally omitted from economic evaluations of generation technologies. Incorporating these “externalities” increases the likelihood of developing the most economical and sustainable power resource from a societal perspective. The following externalities are included in this analysis: damage from air pollution, energy security, transmission and distribution costs, and other environmental impacts. Incorporating externalities has a large impact on the LCOE and the relative attractiveness of electricity generation options. Results indicate that clean and efficient generation technologies are the most attractive when all options are examined using a full cost, levelized approach.     

Estimating the health damage costs of syrian electricity generation system using impact pathway approach

Based on the simplified impact pathway approach the environmental impacts from airborne pollutant emissions of Syrian electricity generation system have been assessed and the associated external damage costs to human health have been evaluated. The obtained results indicate that the environmental impacts can add considerable external cost to the typical generation cost. The estimated externalities vary between 2.5 and 0.07 US-cents per generated kWh for heavy fuel oil and NG fired power plants respectively. For the fuel oil fired power plants the resulting external cost, arise mainly from Sulphates impact, amounts to about 25% of the present generation costs. These results indicate the advantage of NG fired power plants as clean generation technology and the necessity of supplying oil fired power plants with SO₂ emission reduction technologies.     

A new hybrid ocean thermal energy conversion–Offshore solar pond (OTEC–OSP) design: A cost optimization approach

Solar thermal electricity (STE) generation offers an excellent opportunity to supply electricity with a non-CO₂ emitting technology. However, present costs hamper widespread deployment and therefore research and development efforts are concentrated on accelerated cost reductions and efficiency improvements. Many focus on the latter, but in this paper we rather focus on attaining very low levelised electricity costs (LEC) by designing a system with very low material cost, while maintaining appreciable conversion efficiency and achieving low maintenance cost. All investigated designs were dimensioned at a 50 MW scale production. Calculated LECs show that a new proposed hybrid of ocean thermal energy conversion with an offshore solar pond (OTEC–OSP) may have the lowest LEC of 0.04 €/kWh. Addition of a floating offshore solar pond (OSP) to an OTEC system increases the temperature difference in the Rankine cycle, which leads to an improved efficiency of 12%, while typical OTEC efficiencies are 3%. This higher efficiency leads to much lower investments needed for power blocks, while the OSP is fabricated using very low-cost plastic foils. The new OTEC–OSP design can be located in many sunny coastal areas in the world.     

Cost function estimates,scale economies and technological progress in the Turkish electricity generation sector

Turkish electricity sector has undergone significant institutional changes since 1984. The recent developments since 2001 including the setting up of a regulatory agency to undertake the regulation of the sector and increasing participation of private investors in the field of electricity generation are of special interest. This paper estimates cost functions and investigates the degree of scale economies, overinvestment, and technological progress in the Turkish electricity generation sector for the period 1984–2006 using long-run and short-run translog cost functions. Estimations were done for six groups of firms, public and private. The results indicate existence of scale economies throughout the period of analysis, hence declining long-run average costs. The paper finds empirical support for the Averch–Johnson effect until 2001, i.e., firms overinvested in an environment where there are excess returns to capital. But this effect was reduced largely after 2002. Technological progress deteriorated slightly from 1984–1993 to 1994–2001 but improved after 2002. Overall, the paper found that regulation of the market under the newly established regulating agency after 2002 was effective and there are potential gains from such regulation.     

Modelling the competitiveness of first generation commercial OTEC power plants

First generation OTEC plants are expected to be used mainly for baseload electricity generation in the United States Gulf Coast region. In this application, OTEC plants would compete directly with nuclear and coal-fired power plants. The prospective competitiveness of OTEC is evaluated by comparing the delivered cost of electricity generated by the three types of plant for a geographical scenario typical of the region. The comparison is carried out using a modified version of the cost of energy model developed by the Jet Propulsion Laboratory and current estimates of future construction, operating and maintenance costs for the three power plant types. Four main independent variables are considered in this study: OTEC plant capital costs, real fuel escalation rates, real cost of capital resources, and OTEC plant operating capacity factors. The first two factors are found to be prime determinants of OTEC competitiveness. The values commonly forecasted suggest that OTEC plants are likely to deliver electricity at roughly the same cost as nuclear and coal-fired power plants by the year 2000. By contrast, variations in the real cost of capital resources and in OTEC plant capacity factors are found to have only a minor impact on the competitiveness of OTEC with conventional modes of electricity generation.     

External cost of electricity generation in Baltic States

This article deals with external cost of electricity generation in Baltic States. The costs of electricity generation and distribution are the most important criteria shaping decisions within the electricity system. However, the external cost due to air pollution should also be adequately taken into account seeking to promote new and clean technologies for electricity generation. External costs of electricity generation in the main power plants burning fossil fuel were calculated based on ExternE methodology for Baltic States during EU Framework 6 project CASES. The article presents the first results of external cost of electricity generation in Baltic States.     

Boosting new renewable technologies towards grid parity – Economic and policy aspects

The intensity of market penetration and hence the relevance of clean energy technologies in mitigating climate change will greatly depend on their cost-effectiveness. This paper discusses the economic and policy aspects of speeding up the market of these technologies to reach cost parity. A combination of historical energy market dynamics, technology diffusion and endogenous learning models were employed in the analyses. Starting from giving a preferential position to emerging renewable energy technologies in the energy and climate policy, which also means securing adequate financial resources for their deployment, could lead in the base scenario to a full-cost breakthrough of wind power around 2027 and of photovoltaics in 2032. The combined global market share of renewable electricity in 2050 could reach 62% of all electricity (now 19%) of which wind and solar power alone could account for almost two-thirds corresponding to a carbon saving in the range of 8–16 GtCO₂. However, if the new technologies were downgraded in the energy and climate policy context, the combined impact of solar and wind could remain at no less than 11% which would marginalize these technologies in the fight against climate change. The estimates for financial support to achieve cost parity were very sensitive to the assumptions of the input parameters: in the base case the extra costs or learning investments for solar power were €1432 billion and for wind power €327 billion, but with more conservative input data these values could grow manifold. On the other hand, considering the potentially cheaper electricity from new technologies above the cost parity point and putting a price on carbon could result in a positive yield from public support instead of it being regarded merely as unnecessary spending. The findings stress the necessity of long-term policies and strong commercialization strategies to bring the new energy technologies to breakeven point, but also highlight the complexity of assessing the true costs of making new energy technologies fully competitive.     

Potential impact of (CET) carbon emissions trading on China’s power sector: A perspective from different allowance allocation options

In Copenhagen climate conference China government promised that China would cut down carbon intensity 40–45% from 2005 by 2020. CET (carbon emissions trading) is an effective tool to reduce emissions. But because CET is not fully implemented in China up to now, how to design it and its potential impact are unknown to us. This paper studies the potential impact of introduction of CET on China’s power sector and discusses the impact of different allocation options of allowances. Agent-based modeling is one appealing new methodology that has the potential to overcome some shortcomings of traditional methods. We establish an agent-based model, CETICEM (CET Introduced China Electricity Market), of introduction of CET to China. In CETICEM, six types of agents and two markets are modeled. We find that: (1) CET internalizes environment cost; increases the average electricity price by 12%; and transfers carbon price volatility to the electricity market, increasing electricity price volatility by 4%. (2) CET influences the relative cost of different power generation technologies through the carbon price, significantly increasing the proportion of environmentally friendly technologies; expensive solar power generation in particular develops significantly, with final proportion increasing by 14%. (3) Emission-based allocation brings about both higher electricity and carbon prices than by output-based allocation which encourages producers to be environmentally friendly. Therefore, output-based allocation would be more conducive to reducing emissions in the Chinese power sector.     

The economics of tidal energy

Concern over global climate change has led policy makers to accept the importance of reducing greenhouse gas emissions. This in turn has led to a large growth in clean renewable generation for electricity production. Much emphasis has been on wind generation as it is among the most advanced forms of renewable generation, however, its variable and relatively unpredictable nature result in increased challenges for electricity system operators. Tidal generation on the other hand is almost perfectly forecastable and as such may be a viable alternative to wind generation. This paper calculates the break-even capital cost for tidal generation on a real electricity system. An electricity market model is used to determine the impact of tidal generation on the operating schedules of the conventional units on the system and on the resulting cycling costs, emissions and fuel savings. It is found that for tidal generation to produce positive net benefits for the case study, the capital costs would have to be less than €510,000 per MW installed which is currently an unrealistically low capital cost. Thus, it is concluded that tidal generation is not a viable option for the case system at the present time.     

Internalisation of external cost in the power generation sector: Analysis with Global Multi-regional MARKAL model

The Global MARKAL-Model (GMM), a multi-regional “bottom-up” partial equilibrium model of the global energy system with endogenous technological learning, is used to address impacts of internalisation of external costs from power production. This modelling approach imposes additional charges on electricity generation, which reflect the costs of environmental and health damages from local pollutants (SO₂, NO_x) and climate change, wastes, occupational health, risk of accidents, noise and other burdens. Technologies allowing abatement of pollutants emitted from power plants are rapidly introduced into the energy system, for example, desulphurisation, NO_x removal, and CO₂ scrubbers. The modelling results indicate substantial changes in the electricity production system in favour of natural gas combined cycle, nuclear power and renewables induced by internalisation of external costs and also efficiency loss due to the use of scrubbers. Structural changes and fuel switching in the electricity sector result in significant reduction of emissions of both local pollution and CO₂ over the modelled time period. Strong decarbonisation impact of internalising local externalities suggests that ancillary benefits can be expected from policies directly addressing other issues then CO₂ mitigation. Finally, the detailed analysis of the total generation cost of different technologies points out that inclusion of external cost in the price of electricity increases competitiveness of non-fossil generation sources and fossil power plants with emission control.     

Farm-scale bio-power-to-methane: Comparative analyses of economic and environmental feasibility

Power-to-gas technologies are considered to be part of the future energy system, but their viability and applicability need to be assessed. Therefore, models for the viability of farm-scale bio-power-to-methane supply chains to produce green gas were analysed in terms of levelised cost of energy, energy efficiency and saving of greenhouse gas emission. In bio-power-to-methane, hydrogen from electrolysis driven by surplus renewable electricity and carbon dioxide from biogas are converted to methane by microbes in an ex situ trickle-bed reactor. Such bio-methanation could replace the current upgrading of biogas to green gas with membrane technology. Four scenarios were compared: a reference scenario without bio-methanation (A), bio-methanation (B), bio-methanation combined with membrane upgrading (C) and the latter with use of renewable energy only (all-green; D). The reference scenario (A) has the lowest costs for green gas production, but the bio-methanation scenarios (B-D) have higher energy efficiencies and environmental benefits. The higher costs of the bio-methanation scenarios are largely due to electrolysis, whereas the environmental benefits are due to the use of renewable electricity. Only the all-green scenario (D) meets the 2026 EU goal of 80% reduction of greenhouse gas emissions, but it would require a CO₂ price of 200 € t⁻¹ to achieve the levelised cost of energy of 65 €ct Nm⁻³ of the reference scenario. Inclusion of the intermittency of renewable energy in the scenarios substantially increases the costs. Further greening of the bio-methanation supply chain and how intermittency is best taken into account need further investigation.     

External costs of electricity generation options in Lithuania

This article deals with external cost of electricity generation in Lithuania. The external costs of electricity generation are the most important environmental criteria shaping decisions within the electricity system. External costs of electricity generation were calculated based on ExternE methodology for Lithuania during EU (European Union) Framework 6 project Cost Assessment for Sustainable Energy Systems (CASES). The article presents the methodology and results of external costs of electricity generation in Lithuania. The assessment of external costs provided that future energy policy should be oriented towards the renewable energy generation technologies having the lowest external costs. External costs for electricity generation technologies were analysed in terms of external costs categories, electricity generation technologies life cycle stages and time frame 2010–2030.