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Nuclear and renewables: back-up and grid costs

By Dave Elliott

A study by the OECD Nuclear Energy Agency (NEA), Nuclear Energy and Renewables: System Effects in Low-carbon Electricity Systems, looks at the interactions of variable renewables and “dispatchable” energy technologies, such as nuclear power, in terms of their effects on electricity systems. The report focuses on “grid-level system costs”, the subset of system costs mediated by the electricity grid, which includes the costs of extending and reinforcing transport and distribution grids, as well as connecting new capacity, and the costs of increased short-term balancing and maintaining the long-term adequacy of supply.

While all technologies generate system costs, those of dispatchable generators are seen as at least an order of magnitude lower than those of variable renewables. The study says that “the system costs of variable renewables at the level of the electricity grid increases the total costs of electricity supply by up to one-third, depending on country, technology and penetration levels”. While grid-level system costs for dispatchable technologies are claimed to be lower than $3/MWh, they can reach up to $40/MWh for onshore wind, up to $45/MWh for offshore wind and up to $80/MWh for solar.

The UK data are as follows.

The back-up cost is: zero for nuclear; $4.05/MWh for wind at 10% market penetration, $6.92 at 30% penetration; $26.08 and $ 26.82 respectively for PV solar.
Balancing cost is put at $0.88 (@10%) and $0.53 (@30%) for nuclear; $7.63(@10%) and $14.15 (@30%) for both wind and solar.

Grid connector costs are: $2.23/MWh for nuclear, $3.96 for on-land wind, $19.81 for offshore wind, $15.55 for PV.

Grid reinforcement and extension costs: zero for nuclear; $2.95/MWh (@10%) and $5.20 (@30%) for on-land wind; $2.57 (@10%) and $4.52 (@30%) for offshore wind; $8.62 (@10%) and $5.18 (@30%) for solar.

Totals: nuclear $3.10/MWh (10%), $2.76 (30%); on-land wind $18.60(10%) and $30.23 (30%); offshore wind $34.05 (10%), $45.39 (30%); PV solar 57.89 (10%) and 71.71 (30%).

So at 30% penetration, they say wind can cost at least 10 times more, PV 20 times more than nuclear! Are they right? The nuclear costs look very low. In its 2010 study of the cost of maintaining adequate frequency response via the grid, Balancing Services Use of System, the National Grid estimated that “the risk imposed by six additional 1800 MW [nuclear] power stations on the system could increase from £160m to £319m”. That works out at about $3.2/MWh, assuming an 80% load factor. Not $0.53–0.88.

And some of the figures for renewables look very high. The extra cost for onshore wind back-up and balancing services has been put by Milborrow at up to $4/MWh for contributions to supply of up to 20%, and up to £11.3/MWh for a 40% contribution. Not ~$21 (at 30%)! In any case, the cost will depend on what measures are used to ensure balancing – output from gas plants is only one option, e.g. interconnector links with the continent could lead to wider system benefits, exporting excess UK wind power. A big £bn p.a. income gain. By contrast, having nuclear on the grid imposes some costs. If it has to be run 24/7 then some output from renewables may have to be curtailed (i.e wasted) at low energy demand times. It is possible to vary the output from nuclear plants to some extent, but that too imposes operational losses and costs.

The NEA says that, currently, grid-level costs are absorbed by consumers through higher network charges and by the producers of dispatchable electricity in the form of reduced margins and lower load factors. It says “Not accounting for system costs means adding implicit subsidies to already sizeable explicit subsidies for variable renewables. As long as this situation continues, dispatchable technologies will increasingly not be replaced as they reach the end of their operating lifetimes, thereby weakening security of supply.”

It adds “Maintaining high levels of security of electricity supply in decarbonizing electricity systems with significant shares of variable renewables will require incentives to internalize system costs, as well as market designs that adequately remunerate all dispatchable power production, including low-carbon nuclear energy.”

So it comes down to the simple message that renewables are a bad idea and if we persist in using them, then technologies like nuclear will need extra support and protection!

Of course, you could argue that if you don’t have nuclear then the problems are much less – it is not too much use for balancing after all, and there are plenty of good balancing options. The NEA, however, is unable to contemplate heresies like this. It simply says “significant changes will be needed to generate the flexibility required for an economically viable coexistence of nuclear energy and renewables in increasingly decarbonized electricity systems”. Although actually it sees co-existence as problematic: “In systems that currently use nuclear energy, the introduction of variable renewables is likely to lead to an increase in overall carbon emissions due to the use of higher carbon-emitting technologies as back-up.”

Really? Surely when wind is high, we won’t be burning gas, so even if there are some emissions from gas plants run when wind is low, there will still be a large overall carbon saving. There is certainly a cost to providing back-up, although it can clearly be exaggerated. Most of the back-up plants needed for now and for a couple of decades ahead already exist, so it’s just their occasional use of fuel that costs extra. Longer term we might need a few more, though that won’t be just for balancing – we may need them anyway to replace old plants. In a report to the Committee on Climate Change in March 2011, consultants Poyry noted that, in a scenario with renewables supplying up to 94% of UK electricity by 2050, new peaking plants would not be needed until after 2030, and that by 2050 around 21 GW would be needed. And, over time, we can switch to balancing with biogas and green gas generated from excess wind to avoid all fossil emissions, as was suggested in the Pugwash report:

Developing radically new systems, along with smart grids and supergrids, will certainly cost money, but will balance supply and demand, provide us with a way to switch to renewables, reduce the use of ever more costly fossil fuel and avoid the costs and risks of nuclear. Not something NEA would like!

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