The cost of German solar versus nuclear
Yesterday, an article compared the cost of German solar to the cost of Finland's new nuclear plant, and it led to a bit of commotion on Twitter. In our latest installment of "Do the math!", we show how the author makes a compelling case for the British to cut their current offer for a new nuclear plant by two thirds.
The Energy Collective is a website that calls itself "the world's best thinkers on energy & climate." Nonetheless, I recently found one of their articles to be poorly researched – based on an article a year older than the author thought and on a study funded by the Koch brothers, who support climate change denial publications in the US.
This time, someone from the Breakthrough Institute compares the cost of German solar and the cost of new nuclear based on estimates for a new plant in Finland. He claims that, "Proponents of Germany's Energiewende … argue that solar and wind can make up the difference in lost [nuclear] capacity."
Unfortunately, that's not what proponents of Germany's Energiewende argue. I've said it before, and I'll say it again: Germans are switching to wind, solar, and biomass, and they do not believe a switch to renewables will work unless they drastically lower their consumption. So once again, a bogeyman is being dispelled.
There's some fancy math at work in proving that what Germany is not attempting will be expensive. The author impressively includes the degradation (lower output from aging) of solar panels in his calculation and estimates the cost of electricity from the new Olkiluoto nuclear plant going up in Finland at a price tag of 15 billion dollars (including, though he doesn't mention it, roughly 2.4 billion as a loan from BayernLB, a bank whose majority stakeholder is the state of Bavaria, at an interest rate of 2.6 percent).
His conclusion? German solar now costs 32 cents per kilowatt-hour, compared to only seven cents from the upcoming plant in Finland. So solar will cost more than four times as much, making the thing that Germany is not doing far more expensive.
While I poured over his math for nuclear, I could not help but wonder, however, why he bothered. We already know what a kilowatt-hour of new nuclear will have to cost for EDF to build a new plant in the UK: around 9.5 pence per kilowatt-hour. That's roughly 0.114 euros or closer to 0.15 dollars – so the French firm is asking the British government for more than twice as much as Mr. Trembath says nuclear power in Finland will cost.
Then it occurred to me – Trembath is stealthily displaying his skills for the British government! You see, the two new reactors planned for Hinkley Point C will have a total capacity of 3,200 MW at a price tag of 14 billion pounds, or around 22 billion dollars. Olkiluoto will have only half of that capacity (1,600 MW) but apparently cost 15 billion dollars, putting the cost of a MW in Britain at only 73 percent of the cost in Finland. So according to his math, the British should only be paying 73 percent of half of what the Finns will pay – not the 15 cents being discussed, and not the seven cents in Finland, but 73% of seven, or around 5.13 cents.
Mr. Cameron, you need to get Trembath to London fast!
But back to solar in Germany – as my colleague Felix Matthes tweeted yesterday, the cost of solar is plummeting. Trembath takes figures from 2000-2011 for solar and compares them to future theoretical estimates for a new plant not yet in operation. At present, though, the feed-in tariffs for newly installed arrays in Germany are dropping by 1.8 percentage points per month. On June 1, the highest price will be 0.15 euros for the smallest rooftop arrays, with the lowest price dropping to 0.104 euros – equivalent to a range of 0.19-0.13 USD.
The first new solar arrays in Germany are thus already cheaper than what EDF is asking for to build new nuclear in the UK. That price for nuclear will be locked in for decades, whereas solar keeps getting less expensive.
Of course, at a monthly reduction of 1.8 percent, it will take the smallest solar arrays some time before they cost only 0.15 USD (EDF's offer for Hinckley). An entire year, in fact – in June 2014, the most expensive feed-in tariffs for new PV arrays in Germany will cost 14.75 US cents (11.71 euro cents) at current reduction rates. Who knows what solar will cost seven or eight years from now, when Hinckley Point C is finished?
Finally, the first feed-in tariffs for solar built years ago will expire after 20 years next decade, so we will have solar at less than 10 cents per kilowatt-hour replacing decades-old solar at 50 cents per kilowatt-hour. By 2030, lots of really cheap solar will have replaced the old expensive stuff in Germany, but if you build a nuclear plant now, you will be stuck with it (at 15 cents per kWh) until mid-century. Nuclear does not ramp down well, so it is not compatible with intermittent wind and solar. If you are waiting until solar gets cheap to build it, you need to get rid of nuclear now. (Craig Morris)