Renewable Energies versus Nuclear Power:
Comparison of Financial Support
Gustav Resch,
Demet Suna
(e-think)
Vienna, 16 April 2015
NURIS 2015
... a study done on behalf of the
Vienna Ombuds Office
for Environment,
conducted by e-think and
Austrian Institute of Ecology
- accessible at: www.e-think.ac.at
e-think – energy systems for the future
e-think is a private non-profit research institution based in Vienna. Its aim is to advance
research in the field of energy economics at its interface with environment and human society.
Through technical, economic and environmental assessments e-think contributes to the
transition towards sustainable energy systems.
e-think‘s main areas of competence are:
•
Analyse socio-economic aspects of energy use
•
Model energy systems and develop scenarios
•
Assess impacts of energy policies
•
Develop effective and efficient deployment strategies for RES in electricity, heat and
transport
•
Promote energy efficiency in buildings, mobility, electrical and industrial applications
e-think’s activities encompass (i) research in interdisciplinary cooperation, (ii) implementation
and (iii) communication of research results. e-think is a spin-off of the Energy Economics
Group of Vienna University of Technology and, thus, practises strong cooperation in energy
economics and modelling.
24.04.2015
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2
Content
(1) Motivation and key research question
(2) Method of approach
(3) Factsheet: Hinkley Point C
(4) Comparing financial support
•
Static approach
•
Dynamic approach
(5) Conclusions
24/04/2015
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3
(1) Motivation and key research question
Motivation and key research question
The European Union is divided on the issue of electricity production…
• While there is consensus that generation technologies need to be low on
greenhouse gas emissions, the question of whether to use renewables or
nuclear to meet this power demand is highly controversial.
• Both options still require financial support and this is not going to change
in the near future.
 This raises the question of where our money should be
invested in order to achieve greater economic efficiency:
into support for renewable energies (RE) or support for
nuclear power plants?
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(2) Method of approach
Method of approach: … 5 countries in focus
Renewable energies were compared with the nuclear option by looking at the
quantities of power they can both generate and the level of financial support
this requires.
 This mirrors the extra costs which must be borne
by the end consumer or society.
Analysed countries:
•
•
•
•
•
•
United Kingdom,
Germany,
France,
Czech Republic,
Poland
(and EU28 )
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(2) Method of approach
Method of approach: … 5 countries in focus
Renewable energies were compared with the nuclear option by looking at the
quantities of power they can both generate and the level of financial support
this requires.
 This mirrors the extra costs which must be borne
by the end consumer or society.
Analysed renewable
energy technologies:
• Biomass,
• Wind energy
(onshore and
offshore),
• Hydropower, and
• Photovoltaics
Photography: © Gustav Resch, Demet Suna
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(2) Method of approach
Method of approach: Static and dynamic comparison
• The static approach compares the current (as of 2013) level of incentives
for renewables with the state support mechanism for Hinkley Point.
• The dynamic approach, in contrast, also considers additional factors
including future cost reductions achieved through increasing technological
experience and aspects of market integration of variable renewables like
solar and wind power. Distinct scenarios have been calculated up to 2050; the
nuclear option is added from 2023 onwards (planned start-up for Hinkley Point C).
• The dynamic calculation applies a detailed model-based analysis using
the Green-X-model (www.green-x.at).
This model takes into account a multitude of factors
including costs, potentials, regulatory frameworks, diffusion
constraints like non-cost barriers, electricity prices and
energy demand, all of which have a strong impact on
the economics of power generation.
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(3) Factsheet: Hinkley Point C
New milestone in nuclear state aid: Hinkley Point
It is planned to construct two additional reactors at Hinkley Point. The EU estimates the
total capital needed for construction at € 43 billion. The UK government intends to
grant state aid for this project; in accordance with EU state aid rules, the suggested
state aid scheme was submitted to the EU Commission for approval as public funds
would be used for a company.
 Central part of the state aid scheme: Contract for Difference, running for 35 years.
 The state commits to compensating any difference between the electricity market
price (reference price) and the negotiated Strike Price…. a long term price guarantee
which, in principle, is analogous to the feed-in tariffs commonly used to support
renewable energies.
 The Strike Price for the first unit to be constructed has been set at € 108 per MWh
(with each subsequent unit receiving € 104 per MWh), plus an index adjustment.
Calculated over 35 years, the duration of the Contract for Difference, this adds up to a Strike
Price in 2058 of approximately € 329 per MWh (in nominal terms).
 On top of this, the plant operator will be granted a state loan guarantee for all
loans the company takes out on the financial markets to construct the nuclear
power plant.
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(3) Factsheet Hinkley Point C
Hinkley Point C: Main characterisitics at a glance
Total capacity
MWe
3,260
Electricity generation
TWh/a
26
(two units)
2023
Planned start of operation
Financial support (gross)
€/MWh
108
Duration of support
Years
35
(Contract for difference / Feed-in tariff)
Table: Main characteristics of Hinkley Point C
(Source: based on
• European Commission (2013): State aid SA. 34947 (2013/C) (ex 2013/N) –
United Kingdom Investment Contract (early Contract for Difference) for the
Hinkley Point C New Nuclear Power Station; Brussels, 18.12.2013.
• European Commission (2014): State aid: Commission concludes modified UK
measures for Hinkley Point nuclear power plant are compatible with EU rules.
Press Release, Brussels, 8 Oct 2014.)
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(4) Comparison of financial support
Static approach: Nuclear power (Hinkley Point C) vs. Wind onshore (new
installations as of 2013)
– Comparison of remuneration levels (gross support)
120
100
105.6
105.0
99.4
90.8
€/MWh
80
60
Net support
89.9
79.9
UK
FR
DE
PL, CZ
40
range of remuneration
20
average remuneration
average wholesale electricity price
0
Hinkley Point C Wind onshore
(UK)
UK
Wind onshore
CZ
Wind onshore
FR
Wind onshore
DE
Wind onshore
PL
Figure: Comparison of planned (nuclear power, Hinkley Point) and actual (wind onshore, new
installations as of 2013) remuneration levels (and wholesale electricity prices) for nuclear power
and wind onshore in analysed countries
(Source: Own calculations based on Steinhilber et al. (2011) und Held et al. (2014))
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(4) Comparison of financial support
Static approach: Nuclear power (Hinkley Point C) vs. Wind onshore (new
installations as of 2013) – Comparison of required yearly net support
for producing the same amount of electricity as expected for Hinkley Point C
1,400
1307
1307
1,200
M€/a
1,000
1087
1059
934 918
Required annual
net support in the
case of nuclear
power*
926
923
897
Required annual
net support in the
case of wind
onshore*
800
600
390
400
Note:
*for producing the
same amount of
electricity as expected
to be generated in
Hinkley Point C
200
0
UK
CZ
FR
DE
PL
Figure: Comparison of required annual net support for nuclear power and
for wind onshore in analysed countries
(Source: own calculations)
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(4) Comparison of financial support
Static approach: Nuclear power (Hinkley Point C) vs. renewable energies (new
installations as of 2013) – Comparison of yearly electricity
under similar budgetary constraints (net support as for Hinkley Point C)
generation
Higher
electricity
generation
compared
to Hinkley
Point C
Lower
electricity
generation
compared
to Hinkley
Point C
Figure: Comparison of expected annual electricity generation of Hinkley Point C with feasible
volumes from wind onshore in analysed countries (Source: Own calculations)
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(4) Comparison of financial support
Static approach:
key findings
• Under the same budgetary conditions it is almost always
possible to generate more electricity from renewable
sources today (2013) than from nuclear power in the future
(from 2023 onwards).
• Small hydropower and onshore wind plants are the least
expensive methods of generating electricity
• Offshore wind farms and photovoltaics*, however, are the
least economic options under current circumstances (as of
2013) within the assessed countries
* PV used as centralised generation option,
assuming that electricity is sold at wholesale markets
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(4) Comparison of financial support
Nuclear power (Hinkley Point C) vs.
renewable energies – Scenarios of future electricity
supply in United Kingdom
Dynamic approach:
Biomass
Wind onshore
RES-E demand share
Hydro small-scale
Wind offshore
Photovoltaics
Other RES-E
400
100%
93.2%
350
TWh/a
80%
79.3%
300
70%
250
60%
200
50%
47.0%
40%
150
100
Comparison of future electricity generation
from renewables and from nuclear power
(Hinkley Point C) in the United Kingdom
(Source: own assessment (Green-X))
90%
30%
23.9%
10.8%
20%
2050
2040
0%
2030
0
2020
10%
2012
50
Technology breakdown of future electricity
generation from renewables in the United
Kingdom according to the Green-X scenario of dedicated RE
support (Source: own assessment (Green-X))
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(4) Comparison of financial support
Nuclear power (Hinkley Point C) vs.
renewable energies – Scenarios of future electricity
supply in the European Union
Dynamic approach:
Biomass
Wind onshore
RES-E demand share
Electricity generation from selected new RES-E (installed 2011 to 2050)
Electricity generation from Nuclear (Hinkley Point C)
2500
Electricity generation in the period 2023 to 2050
90%
78.4% 80%
2500
TWh/a
1000
60%
52.1%
50%
1500
1000
500
70%
66.0%
2000
1500
40%
36.2%
23.4%
30%
20%
Comparison of future electricity generation
from renewables and from nuclear power
(Hinkley Point C) in the European Union (EU28)
(Source: own assessment (Green-X))
2050
2040
2030
0%
2020
0
10%
2012
2049
2047
2045
2043
2041
2039
2037
2035
2033
2031
2029
2027
2025
2023
500
2021
TWh/a
Photovoltaics
Other RES-E
3000
2000
0
Hydro small-scale
Wind offshore
Technology breakdown of future electricity
generation from renewables in the European
Union (EU28) according to the Green-X scenario of dedicated
RE support (Source: own assessment (Green-X))
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(4) Comparison of financial support
Comparing the future development of
remuneration and wholesale electricity prices / market values
… schematic illustration ...
€/MWh
Dynamic approach:
Average remuneration for
nuclear power (Hinkley Point C)
Average remuneration for
renewables
Net support for
nuclear power
Wholesale
electricity
prices
(Hinkley Point C)
Net support for
renewables
Average market value of
renewables
2015
2023
… Years …
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2050
16
(4) Comparison of financial support
Comparing the future development of
remuneration and wholesale electricity prices / market values
Dynamic approach:
Net support in the
case of RE
€/MWh
100
75
Range across
assessed countries
Net support in the
case of Nuclear
125
Average market value for
selected RES-E
Average remuneration for
Nuclear (Hinkley Point C)
50
Wholesale electricity price
(Market value for other RES-E
and Nuclear)
2050
2045
2040
2035
2030
2025
2020
2015
25
0
Average remuneration for
selected RES-E
Future development of remuneration levels and corresponding market values of the assessed RE
technologies (as aggregate) and of nuclear power across assessed countries and at EU28 level
according to the Green-X scenario of dedicated RE support (Source: Own assessment (Green-X))
Two conflicting trends:
 Remuneration (gross support) for renewables is below the one for nuclear power (Hinkley Point C).
 Expected market values for renewables are below those for nuclear power
… and this gap increases over time
17
(4) Comparison of financial support
Dynamic approach: Nuclear power (Hinkley Point C) vs. renewable energies –
Comparison of cumulative (2023-2050) electricity generation and
net support in the United Kingdom
6000
5000
TWh/a
Cummulative (2023 to 2050)
support expenditures
Wind offshore
Wind onshore
Photovoltaics
Hydro small-scale
Biomass
4000
606%
4920
more
electricity
Cumulative
electricity generation (left)
vs.
cumulative net support
3000
2000
1000
0
(right)
702
Nuclear
RES-E
(selected)
in the United Kingdom
from 2023 to 2050
(Source: Own assessment (Green-X))
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billion € / a
Cummulative (2023 to 2050)
electricity generation
Nuclear (Hinkley Point C)
80
70
60
50
40
30
20
10
0
Nuclear (Hinkley Point C)
Wind offshore
Wind onshore
Photovoltaics
Hydro small-scale
Biomass
69.3
547% higher
support
expenditures
10.7
Nuclear
RES-E
(selected)
18
(4) Comparison of financial support
Comparison of cost-effectiveness:
(specific) net support
Dynamic approach:
Specific net support for Nuclear (Hinkley Point C)
18
16
14
15.3
17.1
17.1
16.7
16.7
15.3
Specific net support for selected RES-E
14.0
12.5
€/MWh
12
10.8
9.3
10
8.3
8
6
4.3
4
2
0
United Kingdom
Germany
France
Poland
Czech Republic
EU28
Comparison of overall cost-effectiveness: Specific net support for assessed RE technologies and
nuclear power by assessed countries and at EU28 level according to the Green-X scenario of
dedicated RE support (Source: Own assessment (Green-X))
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(4) Comparison of financial support
Comparison of cost-effectiveness:
Cost savings (%) due to renewables
% - cost savings compared to nuclear power
Dynamic approach:
0%
-10%
United
Kingdom
Germany
France
Poland
Czech
Republic
EU28
-8.4%
-20%
-24.8%
-30%
-40%
-37.1%
-39.1%
-50%
-51.6%
-60%
-70%
-80%
Cost savings due to RE
-74.5%
Comparison of overall cost-effectiveness: Cost savings due to renewables compared to nuclear
power by assessed country and at EU28 level according to the Green-X scenario of dedicated RE
support (Source: Own assessment (Green-X))
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(5) Conclusions
Key findings
• Generating electricity from a variety of renewable sources
is more economical than using nuclear power
• Across the EU end consumers can save up to 37% on their
electricity costs – in some Member States even up to 74% when plans to build nuclear power plants are shelved in
favour of renewables
• In order to achieve these goals it is vital that we act quickly,
but with care, to create the infrastructure and regulatory
framework this requires, or to adapt that which already
exists
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THANKS FOR YOUR ATTENTION!
Contact: Dr. Gustav Resch, e: [email protected], w: www.e-think.ac.at
The study „Renewable Energies versus Nuclear Power – Comparing Financial Support“ can be
accessed at www.e-think.ac.at (Summary & comprehensive final report)
www.e-think.ac.at
References:
Held, A. et al. (2014): Indicators on RES support in Europe. Intelligent Energy Europe Project DIACORE (Policy Dialogue on
the assessment and convergence of RES policy in EU Member States), Fraunhofer ISI, Karlsruhe, Germany.
Steinhilber, S., Ragwitz, M., Rathmann, M., Klessmann, C., Noothout, P. (2011): Indicators assessing the performance of
renewable energy support policies in 27 Member States (Intelligent Energy Europe Project RE-Shaping (Shaping an effective
and efficient European renewable energy market), Fraunhofer ISI, Karlsruhe, Germany.
www.e-think.ac.at