Ron CAMERON Head of the OECD/NEA Nuclear Development Division (Atoms for the Future 2013)
Upcoming SlideShare
Loading in...5
×
 

Ron CAMERON Head of the OECD/NEA Nuclear Development Division (Atoms for the Future 2013)

on

  • 448 views

The Head of Nuclear Development Division at OECD Nuclear Energy Agency, Ron CAMERON, explained the impacts of nuclear energy and renewables on the network costs, using the “Energy triangle”: ...

The Head of Nuclear Development Division at OECD Nuclear Energy Agency, Ron CAMERON, explained the impacts of nuclear energy and renewables on the network costs, using the “Energy triangle”: Security of supply, Low carbon, Affordability.

Statistics

Views

Total Views
448
Slideshare-icon Views on SlideShare
446
Embed Views
2

Actions

Likes
0
Downloads
6
Comments
0

1 Embed 2

https://twitter.com 2

Accessibility

Upload Details

Uploaded via as Adobe PDF

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

    Ron CAMERON Head of the OECD/NEA Nuclear Development Division (Atoms for the Future 2013) Ron CAMERON Head of the OECD/NEA Nuclear Development Division (Atoms for the Future 2013) Presentation Transcript

    • The impacts of nuclear energy and renewables on network costs Ron Cameron OECD Nuclear Energy Agency © 2013 Organisation for Economic Co-operation and Development
    • Energy Mix • A country’s energy mix depends on both resources and policies • The need for energy depends on past actions to provide capacity and expectations of growth for the future • The supply of energy depends on availability of resources, both internally and externally and distribution networks • Hence national situations will lead to different outcomes © 2013 Organisation for Economic Co-operation and Development
    • National Energy Production Mixes Total 62.6 TWh 781gCO2/KWh 188gCO2/KWh Total 541 TWh Total 582 TWh 79gCO2/KWh 461gCO2/KWh CO2 figures from IEA 2010 © 2013 Organisation for Economic Co-operation and Development 3
    • of s w on rb Energy triangle ca Se cu rit y Lo up ply WHAT DRIVES ENERGY POLICIES? Affordability © 2013 Organisation for Economic Co-operation and Development 4
    • Dimensions of Energy Supply Security and Potential Contributions of Nuclear Energy Security of supply External Dimension Internal Dimension Geopolitics, Access to Primary Fuels Adequacy of Generation Capacity Safety and Adequacy of Internatl. Infrastructures Adequacy of Domestic Transport Infrastructure Unanticipated Resource Exhaustion Adequacy of Market Design and Regulation Resilience to Changes in Climate Policy Price Stability Operational Reliability © 2013 Organisation for Economic Co-operation and Development 5
    • Energy triangle on rb ca Se cu rity w Lo of su pp ly LOW CARBON ELECTRICITY? Affordability Current ‘liberalised’ markets send only short term signals which threatens longer term security of supply We need to think in terms of the system effects and costs in a longer term perspective Nuclear power is the only low carbon dispatchable technology, with high availability other than hydro (which is in short supply) © 2013 Organisation for Economic Co-operation and Development 6
    • Nuclear remains important – and countries will need to start seriously investing by 2020 40% 1100GWe 35% 1 000 30% GW 800 25% 600 20% 15% 400 10% 200 0 2009 5% 2020 2030 2040 Other OECD share of global electricity generation 1 200 0% 2050 2DS scenario shows an increasing role for nuclear energy © 2013 Organisation for Economic Co-operation and Development European Union United States Other non-OECD India China 2DS 2DS-hiNuc
    • Competitiveness and affordability Energy triangle Affordability OECD Europe, 137.7 Industry 140 on rb ca Se cu rit w Lo yo fs up ply 150 130 Japan, 116.2 120 110 USA, 95.9 100 90 80 2005 © 2013 Organisation for Economic Co-operation and Development 2006 2007 2008 2009 2010 2011 Q3 2012 8
    • Is Nuclear Competitive? (1) Levelised Cost of Electricity Generation by Region (5% Discount Rate) gives part of the picture Nuclear is already a very cost competitive technology Source: Projected Costs of Generating Electricity, IEA/NEA 2010 © 2013 Organisation for Economic Co-operation and Development 9
    • Levelised Cost of Electricity Generation by Region (10% Discount Rate) But nuclear costs depend strongly on the discount rate Source: Projected Costs of Generating Electricity, IEA/NEA 2010 © 2013 Organisation for Economic Co-operation and Development 10
    • OECD NEA System Effects Study: Key Issues “System costs are the total costs above plant-level costs to supply electricity at a given load and given level of security of supply.” 1. Quantitative estimation of system effects of different generating technologies in particular VaREN: o Costs on the electricity system above plant-level costs (Grid level costs: connection, extension and reinforcement, short-term balancing costs, long-term costs for adequate back-up capacity) o Total system-costs in the long-run (including production) o Pecuniary impacts on nuclear and other dispatchable sources 2. Analysis of institutional frameworks, regulation and policy conclusions to enhance the flexibility and security of supply of power generation and enable coexistence of renewables and nuclear power in decarbonising electricity systems © 2013 Organisation for Economic Co-operation and Development 11
    • The System Effects of Nuclear Power While system effects of intermittent sources are by far the largest, all technologies have some system effects, including nuclear power: •Specific and stringent requirements for siting NPPs o Vicinity to adequate cooling source, Location in remote, less populated areas •Large size impacts minimum grid size and system operations o No plant’s output >10% of lowest demand; high spinning reserves according to N-1 criterion; •Importance of grid stability and power quality for the safety of nuclear installations o Stringent requirements in term of grid availability, frequency and voltage stability 100 •In some countries (France, Germany, Belgium) significant flexibility is required of NPPs: 90 80 70 60 o o o Frequency control, daily and weekly load-following; Good load-following characteristics; No proven impacts on fuel failures and major components; 50 40 30 20 10 0 11/07/2008 Start-up Time 30 /08/2008 19/10/2008 08/12/2008 27 /01/2009 18/03/2009 07/05/2009 26 /06/2009 15/08/2009 Maximum ramp rate Maximal change in 30 sec (%/min) Open cycle gas turbine (OGT) 10-20 min 20-30 % 20 %/min Combined cycle gas turbine (CCGT) 30-60 min 10-20 % 5-10 %/min Coal plant 1-10 hours 5-10 % 1-5 %/min 2 hours - 2 days up to 5% 1-5 %/min Nuclear power plant © 2013 Organisation for Economic Co-operation and Development 12
    • The Short-run and the Long-run • Crucial importance of the time horizon, when analyzing adequacy/back-up costs and impacts on dispatchable generators (no issue for grid costs or balancing costs): • Adequacy/back-up costs : o In the short-run (ex post), in a system where existing capacity reliably covers peak demand, there are no back-up costs for new variable renewable capacity. o In the long-run (ex ante), variable renewable capacity due to its low « capacity credit » demands dedicated back-up, which is not commercially sustainable on its own. • Impacts on dispatchable generators o In the short-run, the pecuniary externalities of subsidized, variable renewables (reduced electricity prices and load factors) will over-proportionally affect technologies with high variable costs such as CCGTs. o In the long-run, the structural re-composition of residual dispatchable capacity will over-proportionally affect technologies with high fixed costs such as nuclear. Issue for investors and researchers: when does the short-run become the long-run? © 2013 Organisation for Economic Co-operation and Development 13
    • Short-Run Impacts 100 In the short-run, renewables with zero marginal costs replace technologies with higher marginal costs, including nuclear as well as gas and coal plants. This means: Gas (CCGT): Lost load 80 Coal: Lost load Nuclear: Lost load 70 Power (GW) Yearly Load •Reductions in electricity produced by dispatchable power plants (lower load factors, compression effect). •Reduction in the average electricity price on wholesale power markets, merit order effect (by 13-14% and 23-33%). 60 Residual load 50 40 30 20 10 0 0 Load losses Gas Turbine (OCGT) -54% -40% -87% -51% Gas Turbine (CCGT) -34% -26% -71% • -27% -28% -62% -44% Nuclear -4% -5% -20% -23% Gas Turbine (OCGT) -54% -40% -87% -51% Gas Turbine (CCGT) -42% -31% -79% -46% Coal -35% -30% -69% -46% -24% -23% -55% -39% -14% -13% -33% • -43% Coal 1000 2000 3000 4000 5000 6000 7000 8000 Utilisation time (hours/year) 30% Penetration level Wind Solar Profitability losses 10% Penetration level Wind Solar Gas (OCGT): Lost load 90 Declining profitability for baseload (gas, coal and then nuclear). Insufficient incentives for new investment; Security of supply risks as gas plants close (HIS CERA estimate 110 GW no longer cover AC and 23 GW will close until end 2014). -23% Nuclear Electricity price variation • © 2013 Organisation for Economic Co-operation and Development 14
    • Long-Run Impacts Gas (OCGT) Coal Renewables Gas (CCGT) Nuclear Capacity Credit 100 90 90 Yearly load 80 80 Residual load: wind at 30% penetration 70 70 60 60 50 50 40 40 30 30 20 20 10 Capacity (GW) 100 10 0 0 Dispatchable Without VaRen Dispatchable Renewables 0 1000 2000 3000 4000 5000 Utilisation time (hours/year) 6000 7000 8000 With VaRen • Renewable production will change generation structure - also for back-up. • Without countervailing measures (carbon taxes), nuclear power will be displaced by a more carbon-intensive mix of renewables and gas. • Cost for residual dispatchable load will rise as more expensive technologies are used. • No change in wholesale electricity prices for penetration levels < 25%. © 2013 Organisation for Economic Co-operation and Development 15
    • System Effects of Different Technologies: Estimating Grid-level Costs System Costs at the Grid Level (average of 6 countries - USD/MWh) Technology Penetration level Nuclear Coal Gas On-shore wind Off-shore wind Solar 10% 30% 10% 30% 10% 30% 10% 30% 10% 30% 10% 30% Back -up Costs (Adequacy) 0.00 0.00 0.04 0.05 0.01 0.00 5.09 7.30 6.39 6.87 17.03 16.30 Balancing Costs 0.61 0.36 0.02 0.00 0.00 0.00 3.86 7.84 4.69 7.84 4.69 7.84 Grid Connection 1.73 1.71 1.03 0.94 0.59 0.51 5.24 6.24 17.23 18.68 14.58 13.71 0.00 2.34 0.00 2.06 0.00 1.09 0.00 0.99 0.00 0.60 0.00 0.51 1.86 16.06 6.28 27.65 1.68 29.99 3.82 37.21 4.19 40.49 13.55 51.40 Grid Reinforcement and Extension Total Grid-Level System Costs • Six countries, Finland, France, Germany, Korea, United Kingdom and USA analyzed • Grid-level costs for variable renewables at least one level of magnitude higher than for dispatchable technologies o o o o Grid-level costs depend strongly on country, context and penetration level Grid-level costs are in the range of 15-80 USD/MWh for renewables (wind-on shore lowest, solar highest) Average grid-level costs in Europe about 50% of plant-level costs of base-load technology (33% in USA) Nuclear grid-level costs 1-3 USD/MWh Coal and gas 0.5-1.5 USD/MWh. Grid-level system costs 400 Plant-level costs 300 Total cost [USD/MWh] o 200 100 0 10% 30% Nuclear © 2013 Organisation for Economic Co-operation and Development 10% 30% Coal 10% 30% Gas 10% 30% On-shore wind 10% 30% Off-shore wind 10% 30% Solar 16
    • Total Costs of Electricity Supply for Different Renewables Scenarios Total cost of electricity supply [USD/MWh] Comparing total annual supply costs of a reference scenario with only dispatchable technologies with six renewable scenarios (wind on, wind off, solar at 10% and 30%) UK Germany Ref. o Takes into account also fixed and variable cost savings of displaced conventional PPs 30% Total cost of electricity supply Increase in plant-level cost Grid-level system costs Cost increase Total cost of electricity supply Increase in plant-level cost Grid-level system costs Cost increase Total cost of electricity supply Increase in plant-level cost Grid-level system costs Cost increase • 10% penetration level 30% penetration level Conv. Mix USA • Wind on- Wind offSolar shore shore Wind on- Wind offSolar shore shore 80.7 98.3 72.4 - 86.6 3.9 1.9 5.8 101.7 1.5 1.9 3.4 76.1 2.1 1.6 3.7 91.3 7.8 2.8 10.6 105.6 3.9 3.4 7.3 78.0 4.2 1.4 5.6 101.2 16.9 3.6 20.4 130.6 26.5 5.8 32.3 88.2 14.3 1.5 15.7 105.5 11.6 13.2 24.8 111.9 4.5 9.1 13.6 84.6 6.2 6.0 12.2 116.9 23.3 12.9 36.2 123.6 11.7 13.6 25.3 91.5 12.5 6.5 19.1 156.2 50.6 24.9 75.4 199.4 79.6 21.5 101.1 123.7 42.8 8.5 51.2 Total costs of renewables scenarios are large, especially at 30% penetration levels: o Plant-level cost of renewables still significantly higher than that of dispatchable technologies. o Grid-level system costs alone are large, representing about ⅓ of the increase in unit electricity costs. © 2013 Organisation for Economic Co-operation and Development 17
    • Impacts on CO2 emissions and electricity price In the short-run, renewables replace technologies with higher marginal cost, i.e. fossil-fuelled plants emitting CO2. • • Electricity market prices are significantly reduced (by 13-14% and 23-33%) Carbon emissions are reduced (by 30% to 50% per MWh) if mix stays the same. In the long-run, low-marginal cost renewables replace base-load technology. • • Similar electricity market prices at penetration levels < 25%. The long-term effect on CO2 emissions depends on the base-load technology displaced (nuclear or coal): o o If there was no nuclear on the generating mix, renewables will reduce CO2 emissions. If nuclear was part of the generating mix, CO2 emissions increase. Short- and long-term CO2 emissions Reference [Mio tonnes of CO2] Short-term Long-Term 59.3 10% Penetration level Wind Solar [%] [%] -31% 2% -29% 4% 30% Penetration level Wind Solar [%] [%] -66% 26% © 2013 Organisation for Economic Co-operation and Development -44% 125% 18
    • New Markets for New Challenges The integration of large amounts of variable generation and the dislocation it creates in electricity markets requires institutional and regulatory responses in at least three areas: A. Markets for short-term flexibility provision For greater flexibility to guarantee continuous matching of demand and supply exist in principle four options that should compete on cost: 1. 2. 3. 4. Dispatchable back-up capacity and load-following Electricity storage Interconnections and market integration Demand side management So far dispatchable back-up remains cheapest. B. Mechanisms for the long-term provision of capacity There will always be moments when the wind does not blow or the sun does not shine. Capacity mechanisms (payments to dispatchable producers or markets with supply obligations for all providers) can assure profitability even with reduced load factors and lower prices. C. A Review of Support Mechanisms for Renewable Energies Subsidising output through feed-in tariffs (FITs) in Europe or production tax credits (PTCs) in the United States incentivises production when electricity is not needed (including negative prices). Feed-in premiums, capacity support or best a substantial carbon tax 19 would be preferable. © 2013 Organisation for Economic Co-operation and Development
    • Lessons Learnt and Policy Conclusions Lessons Learnt The integration of large shares of intermittent renewable electricity is a major challenge for the electricity systems of OECD countries and for dispatchable generators such as nuclear. o Grid-level system costs for variable renewables are large (15-80 USD/MWh) but depend on country, context and technology (Wind ON < Wind OFF < Solar PV). Nuclear is 1-3 USD/MWh. o Grid-level and total system cost increase over-proportionally with the share of variable renewables. With current technologies, 35-40% seems to be the limit of affordability and technical feasibility o Lower load factors and lower prices affect the economics of dispatchable generators: difficulties in financing capacity to provide short-term flexibility and long-term adequacy need to be addressed. Policy Conclusions 1. Account for system costs and ensure transparency of power generation costs. 2. New regulatory frameworks are needed to internalize system effects. (1) Capacity payments or markets with capacity obligations, (2) Oblige operators to feed stable hourly bands of capacity into the grid, (3) Allocate costs of grid connection and extension to generators, (4) Offer long-term capacity payments to dispatchable base-load capacity. 3. Explicitly recognize the value nuclear brings to long term stability and security of supply as the major dispatchable low carbon fuel. © 2013 Organisation for Economic Co-operation and Development 20
    • Conclusions 1. The energy mix is determined by national circumstances and by policy decisions. Policy decisions need to take account of sometimes competing interests. 2. Nuclear power has advantages in an energy mix. For developed countries, it contributes to security of supply, reduction of GHG and provides stability of electricity prices over long periods. For many developing countries, it also meets the increasing demand for energy. 3. However, financing of nuclear power in a liberalised market is challenging because the market sends only short term signals and does not favour actions that require long term commitment. 4. This is compounded by grid operations that permit electricity to be produced when not required and leads to weak wholesale power prices but increasing total costs. 5. In terms of costs, LCOE calculations confirm the overall lifetime competitiveness of nuclear but the industry needs to reduce costs and construction times for new designs. However LCOE is more applicable for social and not private optimality and thus a government role in favouring diverse low carbon sources seems necessary. 6. In particular for nuclear, if system costs were internalised, this would create a more level playing field and nuclear power would be increasingly competitive in comparison to intermittent renewables. Such a process requires more transparency on costs, a move away from subsidisation and greater recognition of the stabilising role of baseload technologies for grid operation. © 2013 Organisation for Economic Co-operation and Development 21