Funny how assesments of nuclear versus solar seem to shit all over your claims:Nuclear Vs Solar: Clash of the Numbers
A very interesting and controversial study emerged recently, comparing nuclear and solar costs no less.Nuclear vs Solar – Can Renewable Energy Ever be Cost Effective Enough to Compete?
The study, “Solar and Nuclear Costs – The Historic Crossover“, was prepared by John O. Blackburn and Sam Cunningham for NC Warn, a climate change nonprofit watchdog. The paper, focused on the costs of electricity in North Carolina (US), describes the solar photovoltaics (PV) business, summarising its history of sharply declining prices, along with the very different path taken in recent years by nuclear power, whose costs have been steadily rising.
The conclusion is that as of 2010, North Carolina is witnessing a historic crossover between the price of nuclear power and that of solar PV: the crossover is said to be happening at 0.16 $/kWh. Very important note: these costs are calculated as net figures after subsidies. Where do the numbers come from? The study collected figures from local solar industry sources, to come up with a “capital cost” for solar PV electricity, and relied on a study on nuclear price trends by Mark Cooper, “The Economics of Nuclear Reactors: Renaissance or Relapse?“, for a comparison with nuclear power. The “net prices” are then obtained by deducting from those “capital costs” whatever forms of subsidies, rebates and tax credits are available in the US. This means the conclusions of such study are not about a Levelized Cost Of Electricity (LCOE) comparison, but rather about the final cost to consumers, given the existing incentives. A lot of discussion could be triggered by the method alone, as its results are heavily dependent on the local level of support to either technology. Nonetheless, there are much more interesting data from this paper than just its controversial conclusions. Capital costs of both sources of energy (before subsidies, a sort of levelized cost) are indeed discussed, but what is even more interesting (and as yet most unnoticed by the media) is the scale of the comparison. We’ll see why.
The figures shown for solar energy are explained in the report’s appendix, and calculated for a very small 3kW (peak) PV system with the following parameters: $6,000/kW installed cost, 6% borrowing rate, 25-year amortization period, 18% capacity factor (meaning 1,560 kWh/kWp per year), and a 15% derating factor to account for system losses. From these values, a capital cost of 35¢/kWh results as the current electricity price of a residential PV installation. Then, by taking into account the 30% and 35% Federal and state tax credits (yielding a net system cost of $8,190 from the original $18.000), the authors calculate a net production cost of 15.9¢/kWh.
On the other side, nuclear power costs from new projects under construction or planning around the world are estimated in the region of 12–20$¢/kWhat the plant site, before any transmission charges. Transmission and distribution costs – the authors argue – would raise the delivered costs of new nuclear plants to residential customers to 22¢/kWh. According to the authors, plant cost escalations announced by utilities since Cooper’s paper was published suggest an even higher figure, but 16¢/kWh is eventually considered as a mid-range value, also net of available subsidies, for comparison to the calculated costs of a small residential PV plant. That’s the crossover point.
Photo: Bigod on Flickr.
A critical review
This study, and its conclusions, have caused reactions of all kinds, and weighing in subsidies hasn’t helped finding common ground between advocates of the two different technologies. One response that really drew my attention though, is that from the Italian Nuclear Association (AIN), member of the European Atomic Forum (FORATOM), the American Nuclear Society (ANS) and the European Nuclear Society (ENS). In an official note through the italian media, they point at the use of subsidies as a deceitful means to get to wrong conclusions in favour of PV. Not happy with this, AIN also suggests that the real capital cost of a 3kW PV system would be around 63¢/kWh! As an end to the official response, the nuclear association clarifies what the real costs are for modern nuclear plants under construction: 10 to 15¢/kWh. I find their response even more intriguing than the study itself.
Now, I won’t go in further detail on the issue of subsidies, as I believe that a proper apple-to-apple comparison should be that of levelized costs. This said, I think the study’s results are indeed a bit deceiving, but actually not so much to PV’s advantage. The nuclear association’s official response only adds an amusing note to this clash of the numbers. Why do I suggest that? well, let’s go back to the start. A small residential PV system with a peak output of 3kW is being compared to the figures of a huge centralised nuclear plant (new designs like the EPR reactor have a 1600MW output), some 500,000 times (!) greater in terms of power output (and even more in terms of annual generation, given the different load factors). This is David Vs Goliath.
While I can understand the reasons behind this choice by the authors (aiming at final electricity customers of North Carolina), if a proper comparison were to be made that should be between levelized costs (LCOE) of utility-scale plants on both sides. In this scenario, we find that bigger solar plants, even just at a 100kW rating, already achieve levelized costs below 20¢/kWh in sunny regions (like southern Europe or a good part of the US), with system prices already below €3,000/kW as of Q2 2010 (as witnessed by the German Solar Energy Association BSW). The influential website Solarbuzz posts regularly updated figures on electricity costs for 100kW roof-mounted plants: August surveys show a figure of 19.14¢/kWh. Multi-MW plants, clearly benefiting from some economies of scale with installaton costs now around €2,500/kW, are already in the 15¢/kWh ballpark without the aid of any incentives.
So what about the Italian Nuclear Association’s claims? Their 63¢/kWh figure for a residential PV plant is based on a load factor of 10%, something achievable even under the skies of London and hardly comparable with North Carolina or any sun-friendly region on Earth. Spain and southern Italy can easily achieve 16-18% load factors, sunny States in the US go even higher. Obviously, AIN dare not suggest a comparison with utility-scale PV projects. But they do end giving us an outstanding piece of information. New nuclear appears to have costs up to 15¢/kWh. I don’t recall any ufficial nuclear body admitting such high figures before, but it’s good to finally get some clear numbers after the worrying reports published by the likes of Moody’s and Citi Group in their recent due-diligence on nuclear power. Granted, it may well be that costs for those badly over-running construction sites like the European EPR plants in Finland and France will be even higher, which helps explaining the increasing requests of late for subsidies, incentives and loan guarantees made by nuclear utilities. Gone are the days when claimed levelized costs for nuclear power were about 3-4¢/kWh; it now seems nuclear projects in the developed world will not be completed without a big helping hand from governments and taxpayers.
In a business where quick-to-install, modular renewables like PV are outpacing all economic projections and show costs decreasing by the month (triggered by plummeting incentives and ever higher production volumes), the economic outlook for the once proudly cheap nuclear energy has never been as bleak.
Solar power has long been plagued with unsubstantiated claims that whilst it’s a great source of renewable energy, it’s just far too expensive as a viable source of power on a large scale compared to nuclear. However, particularly over the last 18 months, the cost of solar power has fallen dramatically, for example, in the UK the costs have decreased by about 30% per installed kWh.Wind and solar power are leaving nuclear in the dust
Firstly, why has solar power become so cheap? This is mainly due to increased competition. Many countries over the last two years have introduced generous subsidies to encourage the adoption of solar panels, which have received a lot of attention in the news. This has driven demand from homeowners wanting to find out more about solar power, creating a growing market. Whenever there is a large market, the ability to offer products at the lowest margins possible means that a healthy profit can be made, driving innovation. Manufacturers have streamlined the solar panel production process, and the solar modules themselves offer greater efficiency.
But will solar ever match the low costs of nuclear energy? A recent study from Duke University, ‘Solar and Nuclear Costs – The Historic Crossover’, explains that whilst solar power is decreasing in costs, nuclear power is getting more expensive, and at an increasing rate. They predict that this year is when solar power’s cost per kilowatt hour (kWh) generated will fall to 16 cents, whilst nuclear’s cost will rise above this level.
Construction costs for nuclear power are the reason why ultimately the cost per kWh has been rising. In 2002, the cost per reactor was approximately $3 billion, compared to $10 billion for 2012 – a rate far above inflation. Overall, it seems strange that whilst the construction of one technology is getting cheaper, the other is getting more expensive.
“Regulatory ratcheting” is a term applied to how constantly changing and increasing regulatory demands on nuclear power production are causing the bulk of extra expense. The massive cost increases that result are because nuclear plants take 5-10 years to build, and modifying a project that is already under construction, especially with the complexity of a nuclear reactor, is very wasteful, difficult and time-consuming. With the amount of labour involved in building a nuclear power plant, each day of delay adds an extra $1 million in costs. The regulations involved change so often that it is a vital part of the planning process to anticipate possible future changes and to make sure the plant can be adapted to these guesses. This means that often extra, but unnecessary, features are included in the plants.
Whilst many consider nuclear power plants as a good, low carbon option for power development, very few people are willing to live near one due to the perceived safety risks. This means that there is inevitably fierce local opposition to new plants being built, and intervention groups use hearings and legal strategies to delay the construction, ultimately adding to the costs of the electricity produced. As the regulations become increasingly complicated, the potential for legal intervention rises, and elaborate inspections often can cause a bottleneck in the construction process.
An example of this is the Seabrook plant, built in New Hampshire in the USA. Local interventionists raised legal concerns that the 80 degrees Fahrenheit water being released into the Atlantic by the nuclear plant could harm aquatic life. This lead to a two year delay, and the plant having to construct a costly system to pipe water over two miles away from the shore.
The Duke University study cited earlier has received criticism in the methods used to calculate the impressive figures for solar – the cost of 16 cents/kWh was to the consumer, only after 14c/kWh of subsidy being included in the actual cost of production at 30c/kWh. However, it also didn’t include the huge subsidies given to the nuclear industry, often vital to make sure that over-budget plants get finished rather than abandoned.
It is difficult to conclude precisely when a “historic crossover” will occur. Whilst solar is steadily becoming cheaper, the costs involved with nuclear are very unpredictable because the construction process is much more complicated and heavily dependent on the ever-changing regulations and legal situation. What is clear, however, is that nuclear is overall getting more expensive, and it seems inevitable that the two will eventually crossover and solar will become a viable alternative. The difficulty is predicting when this will happen.
We often hear that wind and solar power are nice, but they can’t deliver the power that we need. So there were probably a few raised eyebrows last week when I was quoted (here and here) saying that “Wind and solar energy are the new Niagara Falls, as they can do a similar job of replacing polluting power from coal or nuclear plants to power a prosperous Ontario in the twenty-first century.”Only renewables - not nuclear - could be too cheap to meter
I was responding to an announcement by the Ontario government that they would be investing in 40 additional wind and solar energy projects, and comparing the green energy investments being made through the Green Energy Act to the decision a century ago to build the generating station at Niagara Falls. That decisions is now universally viewed as a good idea because it powered Ontario’s industrial base through much of the 20th century, but it was very controversial when it was being build due to its high cost (almost four times over budget and at an inflation-adjusted cost per kilowatt hour roughly 50 per cent higher than what we are now paying for wind).
Fast forward a century, and the main debate in Ontario is how green energy may make for nice add-on, but nuclear power should remain the backbone of the system. Greenpeace has argued that green energy is a much better investment than nuclear, but I think it’s interesting to compare the global figures for how much nuclear, wind and solar power have been added over the last few years during what has been billed as a “nuclear renaissance.”
Whether you look at it in terms of how much capacity (maximum output) is added:
Or how much power will be generated over the year:
The short answer is that wind and solar have been kicking some nuclear butt. And this doesn’t account for all the reactors going off-line due to age, so that total nuclear output has been dropping for the last few years.
So the next time a politician tries to tell you that we can’t live without nuclear, tell them we can’t afford to live with it.
"Too cheap to meter": that was the infamous boast of the nuclear power industry in its heyday. It has been catastrophically discredited by history.
Yet the phrase may yet see a new life - not of course for nuclear power - but for renewable energy. As the UK government publishes its draft energy bill on Tuesday, acknowledged by all but ministers themselves as primarily an arcane way of getting new nuclear power stations built, I am in Germany.
Already, on one particularly windy weekend here, the surge of electricity drove the price down to zero. Very soon, due to the 25GW of solar capacity Germany has already installed, hot summer's days will see the same effect: electricity too cheap to meter.
Now hang on, I hear you say, free electricity is actually crazy as it means there's no incentive to invest in new, clean generation capacity, which almost every country needs as the world seeks to cut the carbon emissions driving climate change. Germany's renewable energy policy, which began with a feed-in-tariff in 1990, deals with this by continuing to pay the producer, even when the electricity is sold for nothing.
Crazy again, right? No, says Andreas Kraemer, director of the Ecologic Institute, an energy research policy centre, because the tax benefit to the Germany, via 400,000 jobs in the €40bn-a-year renewables industry is outweighs than the cost of the subsidy. Furthermore, he says, the contribution of renewable energy in cutting peak prices mean the wholesale cost of electricity is 10% lower than it would be without them. "The money flowing out in FITs is less than the money saved by the end consumer," he says. And all the while a clean, sustainable energy system is built.
But real problems do exist, and will intensify as Germany approaches its goal of 100% renewable electricity, from its current 20%. As that comes closer, the policies will have to change. Energy storage, already incentivised in Germany today, will need to be available, as will high-voltage interconnectors to move power around the continent and a smart grid to cleverly match demand to supply. It's an attractive vision: clean energy, securely supplied and coming down in price.
Compare all this with the UK, where the nuclear industry is so embedded in government it supplies staff free-of-charge to work within the energy ministry. Perhaps it's no wonder that even when half of the UK's big six energy companies bale out of nuclear on cost grounds, ministers plough on regardless.
The news that EDF, the French-state-owned giant that runs many of the UK's nuclear plants, wants to extend the lifetimes of their ageing reactors confirms their attraction to the so-called carbon floor price. This leg of government energy policy puts a minimum price on carbon emissions, delivering large windfalls to existing nuclear plants. New nuclear plants will also have to be subsidised, more than onshore wind and possibly more than offshore wind, according to recent analyses, which is shameful for a 60 year-old technology.
"In general in industry," says Kraemer, "when the production of something doubles, the cost falls by about 15%. The only notable exception is the nuclear industry which gets more expensive the more you build." Recent reports, not denied by EDF, put the cost of their new plants in the UK at £7bn each, 40% higher than previously stated.
So while mass-produced renewable energy technologies are pushing the costs downwards, nuclear energy is completing the journey from "too cheap to meter" to "too expensive to count". "It surprises me that something that is completely obvious to people in Germany is suppressed in the UK," says Kraemer.
A final note. I am here with half a dozen of the UK's most senior energy policy academics. When I mention the guarantee repeatedly given by the coalition government that new nuclear plants in the UK will get "no public subsidy", the only response are roars of incredulous laughter. Energy bill payers, who fund all the energy schemes, are unlikely to be similarly amused.
Of course, public opinion and resistance to nuclear solutions are the big nails, cement coverings and steel encasement for nuclear's coffin. But hey, you go on and keep dreaming about your nuclear fantasies, fanboy. I'm interested in the reality of energy solutions, not your wet dreams.