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Nuclear Energy and
                                                           Renewables
          System Effects in Low-carbon Electricity Systems
    “System costs are the total costs above plant-level costs to supply
      electricity at a given load and given level of security of supply.”
    • Plant-level costs
    • Grid-level system effects (technical externalities)
               o Grid connection
               o Grid-extension and reinforcement
               o Short-term balancing costs
               o Long-term costs for maintaining adequate back-up capacity

    • Total system costs
               o Take into account not only the costs but also the benefits of integrating new
                 capacity (variable costs and fixed costs of new capacity that could be displaced)
               o Other externalities (environmental, security of supply, cost of accidents, …)

    • Dynamic effects (pecuniary externalities)
               o Reduced prices and load factors of conventional plants in the short-run
               o Re-configuration of the electricity system in the long-run
ThD - 3 April 2013                                Convention SFEN, Paris                         1
Nuclear Energy and
                                                                Renewables (2)
                            Lessons Learnt and Policy Conclusions
  Lessons Learnt
  The integration of large shares of intermittent renewable electricity is an important
  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)
    o Grid-level and total system cost increase over-proportionally with the share of
        variable renewables
    o System effects of nuclear power exist but are modest compared to those of variable
        renewables
    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 minimize and 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 contracts (contracts for difference, feed-in-tariffs) to dispatchable
          base-load capacity.
  3. Recognize the role of dispatchable low-carbon technologies such as nuclear
  4. Develop flexibility resources to enable the co-existence of nuclear and variable
     renewables in low carbon electricity systems.
ThD - 3 April 2013                                   Convention SFEN, Paris                                       2

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System Effects in Low-carbon Electricity Systems by Thierry Dujardin

  • 1. Nuclear Energy and Renewables System Effects in Low-carbon Electricity Systems “System costs are the total costs above plant-level costs to supply electricity at a given load and given level of security of supply.” • Plant-level costs • Grid-level system effects (technical externalities) o Grid connection o Grid-extension and reinforcement o Short-term balancing costs o Long-term costs for maintaining adequate back-up capacity • Total system costs o Take into account not only the costs but also the benefits of integrating new capacity (variable costs and fixed costs of new capacity that could be displaced) o Other externalities (environmental, security of supply, cost of accidents, …) • Dynamic effects (pecuniary externalities) o Reduced prices and load factors of conventional plants in the short-run o Re-configuration of the electricity system in the long-run ThD - 3 April 2013 Convention SFEN, Paris 1
  • 2. Nuclear Energy and Renewables (2) Lessons Learnt and Policy Conclusions Lessons Learnt The integration of large shares of intermittent renewable electricity is an important 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) o Grid-level and total system cost increase over-proportionally with the share of variable renewables o System effects of nuclear power exist but are modest compared to those of variable renewables 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 minimize and 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 contracts (contracts for difference, feed-in-tariffs) to dispatchable base-load capacity. 3. Recognize the role of dispatchable low-carbon technologies such as nuclear 4. Develop flexibility resources to enable the co-existence of nuclear and variable renewables in low carbon electricity systems. ThD - 3 April 2013 Convention SFEN, Paris 2