The cost of new nuclear
In the next few weeks, the future of nuclear in the UK could be decided. French electricity provider EDF is essentially asking for guaranteed prices – feed-in tariffs – for the electricity generated by new nuclear plants it would like to build. French energy expert Bernard Chabot took a look at the figures.
The English-speaking world continues to focus on "decarbonizing" its energy sector rather than switching to renewables. The difference is that nuclear is considered a source of low-carbon electricity, so it fits into decarbonization plans.
Nonetheless, the prospects for nuclear in the UK are uncertain at the moment even though the British government seems committed to building new nuclear plants. The problem is bankability; electricity from new nuclear plants (as opposed to existing facilities) will apparently be above market prices.
The nuclear sector has essentially responded by essentially asking for feed-in tariffs, though they do not use the word. How do they reach their estimates? Our colleague Bernard Chabot did the math to discover what constant selling price of electricity (in constant power purchase of 2013 pounds on 40 years of operation) would be required to attract private investors in a reference case based on an investment cost of seven billion pounds (as quoted recently by EDF Energy in UK) to build a new 1.6 GW EPR nuclear plant.
At an internal rate of return of 10.29 percent (real), he found that a price of 101 pounds per megawatt-hour is required for 7,000 full hours of operation per year, an ambitious target for a first series of EPRs to be in operation during 40 years.
In another scenario, representative of former state-owned utilities investments in the previous century, Chabot puts the estimated IRR at 7.54 percent (real) and comes out with a price of 79 pounds per megawatt-hour, which is still equivalent to nearly 0.10 euros per kilowatt-hour – far more than is paid for wind power onshore at the moment.
Chabot also provides an idea of how this tariff of 101 constant pounds of 2013 per MWh translates into nominal pounds with a hypothetical inflation rate of only 2 % from 2013 to 2060: starting at 120 current £/MWh around 2020 and ending at 260 current £/MWh (a whopping 30 c€/kWh) around 2060.
At that rate, nuclear is more expensive than offshore wind, but will also soon to be much, much more expensive than a wide range of photovoltaic arrays. If wind and solar are used in combination with dispatchable electricity from natural gas, we would have an affordable power supply system with a relatively low carbon emissions and no nuclear risks. (Craig Morris)