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Nuclear, one of the cheapest sources of low-carbon electricity according to IEA figures

Sep 3, 2015

Projected Costs Of Generating Electricity

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FORATOM welcomes the publication on 31 August by the International Energy Agency (IEA) and OECD/Nuclear Energy Agency (NEA) of the study, entitled Projected Costs of Generating Electricity-2015. The study shows that nuclear is one of the cheapest sources of low-carbon electricity. It also notes a clear shift to low-carbon technologies and away from fossil fuels compared to the 2010 study, which sheds a positive light on the energy sector ahead of the COP21 talks in Paris next December.

The study calculates the levelised cost of electricity (LCOE) of different energy sources according to three different discount rates of 3%, 7% and 10%. It is based on generation costs at more than 180 plants in 22 countries, including three non-OECD countries, Brazil, China and South Africa. The study focuses on the expected costs of power plants being built now and expected to be completed by 2020.

Compared to the figures of the previous report five years ago, the LCOE for new base-load power stations has not increased significantly. The LCOE for nuclear energy has slightly risen, but remains rather stable. The LCOE for renewables on the contrary has declined sharply over the last five years.

The report indicates that electricity generated by new nuclear power plants (NPPs) when financing costs are low (at a 3% discount rate) is cheaper than the electricity produced by other sources of energy both base-load and renewable.

However, like other low-carbon technologies nuclear remains highly capital intensive and a higher discount rate is therefore more plausible. Despite the high capital costs (at a 10% discount rate), nuclear energy still compares favourably with the cheapest form of renewable energy: onshore wind. The LCOE for a NPP ranges from $51 per MWh in Korea to $136 per MWh in the UK, while the lowest LCOE for an onshore wind plant is $52 per MWh in the US and the highest $223 per MWh in Japan.

In addition, taking into account a discount rate of 7%, nuclear and coal are the cheapest sources of electricity with a LCOE of around $80 per MWh, followed by gas and onshore wind (around $100 per MWh), solar ($130 per MWh), and offshore wind ($160 per MWh). It must be noted that this varies from country to country.

In some countries (United States, Canada, Europe, Russia, Japan), a large number of existing nuclear plants are reaching their initial design operational duration (30 or 40 years) and extensive refurbishment and safety upgrade programmes are expected to be carried out within the next two decades.

The report estimates the LCOE for a nuclear station, which has been upgraded in order to extend its operational duration, falls to between €23 per MWh and €26 per MWh. This compares “favourably with other electricity generation sources and should deserve attention”, the report says.

The demonstration that nuclear is one of the most affordable low-carbon technologies gives a positive signal to investors. Nuclear power is a competitive, reliable and base-load source of energy, which makes a significant contribution to the EU’s energy policy goals. It currently provides 27% of Europe’s electricity and 53% of its low-carbon electricity.

For further information, please read the press release of the IEA.

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