The widely used Levelised Cost of Energy metric isn’t comprehensive enough, says the LSE Grantham Institute. For example, when using variable renewables, the system cost of balancing must be added in, as is also argued forcefully in a blistering attack on LCOEs by Art Berman who goes even further and says ‘The energy transition is collapsing- not in headlines, but in economics…Wind and solar may be cheap at the generator fence, but not at the system level. The gap between those two is where the economic case collapses’.
A somewhat more measured report by the UNECE group based in Switzerland looks in detail the LCOE issue, with all the various extra cost due to the use of variable renewable energy (VRE) sources being explored. While Bermen says ‘What began as a hopeful vision for a cleaner future has become an economic bust. While markets and workers sense the failure, activists and policymakers remain caught in a consensus trance’, UNECE is bit more hopeful about the future, looking for a better way to decide on the right energy mix.
It’s ‘System Cost Breakdown of Electricity’ (SCBOE) framework bridges the gap between plant-level LCOE and total system costs by including the cost of grid integration, reserve capacity, flexibility, and other requirements. So that ought to be reflected in comparisons between options. It does admit that there are also extra system back-up costs associated with non-variable options, but says they are lower. So, although, on the basis of LCOE, renewables come out looking much better than nuclear, that may not be a fair representation of total system costs.
Well, you might suspect that this view would be popular with those with pro-nuclear views. This study was prepared by Quantified Carbon for the United Nations Economic Commission for Europe (UNECE) with support from the World Nuclear Association, and some key authors also have nuclear links e.g. with the Newcleo group. So you might expect a little tiny bit of bias.
However, it’s thankfully not a simple pro-nuclear exercise. As the LSE rightly says, ‘no single technology delivers sustainability, resilience & competitiveness alone’ and the UNECE report agrees. It says that ‘Cost-optimal electricity systems require a balanced mix of generation technologies’. It notes that, ‘different resources play distinct but interconnected roles. Low-LCOE VRE sources (wind and solar) provide low-cost energy supply during favorable conditions, while dispatchable resources such as energy storage and demand side response ensure system flexibility. Furthermore, dispatchable technologies, such as hydropower and gas turbines along with higher-LCOE firm resources, including nuclear, geothermal, and thermal power with carbon capture, together provide system stability capabilities and ensure resource adequacy’
It goes on ‘Crucially, their presence helps lower total system costs by avoiding overreliance on either extreme: too much VRE leads to low utilization and costly integration, while excessive firm capacity raises costs due to higher production costs. Nevertheless, a diversified mix including a significant share of firm generation reduces reliance on fuel import, vulnerability to weather variations and contingencies and increases utilization of the grid which together provides conditions that better drive decarbonization’.
Convinced? They call it a dinner plate model, with a mix of technologies. While they admit that nuclear is costly, they claim that it (and other things) can be useful for balancing renewables. That certainly does seem to be the new nuclear/CCS line….and as such it isn’t too aggressively presented as it sometimes was in the past. Cynically, you could say nuclear (and gas) are now just asking for special treatment for offering special backup service since they have lost some their market to cheap renewables!
So where have we got to? The LSE commentary says, reasonably enough, we now need new metrics: ‘the focus should be on identifying the best mix of technologies rather than the cheapest individual option. By integrating system costs, environmental impacts and locational value into decision-making, governments can avoid costly mistakes and design power systems that are both sustainable and secure.’ Interestingly, they say ‘in practice, this means that a slightly more expensive technology may be favoured if it adds strategic value (e.g. it improves energy independence or grid reliability) - a trade-off that single-number metrics would overlook’. But should we really let nuclear and fossil CCS off the cost hook?
Looking back, this has been a long running issue, with the nuclear lobby often taking a lead. For example, a 2012 study by the Nuclear Energy Agency concluded that ‘the system costs of variable renewables at the level of the electricity grid increases the total cost of electricity supply by up to one third, depending on country, technology and penetration levels. As I noted in my 2016 overview for the UK Institute of Physics, Balancing Green Power, some other studies put the system costs much lower, mainly due to the use improved balancing technologies. And, certainly, there is now quite a range of balancing options, some of which can enhance system flexibility at low cost eg battery storage with PV. The same can hardly be said of nuclear and CCS – if anything their costs seem to be rising. But they do still keep trying to find a role!
Or is that too partisan a view? Some say that nuclear will get cheaper (with SMRs or AMRs in a decade or two) although I’m not one of them! Like NESTA, I’m more inclined to be optimistic about what green energy systems can do. But there are some who say we need to be less polarised in the debate about energy, in relation to nuclear especially. For example, the US Bulletin of the Atomic Scientists has called for a ‘reframing’ of the nuclear debate along what it hopes could be more ‘rational’ lines.
Hard to say what that means exactly: in theory it ought to be possible to resolve conflicts over energy strategy rationally, but in practice, vested interests in the status quo have made it very hard. Given the long running and sometimes bitter battle over nuclear strategy, some might say the Bulletin article is basically calling for a retreat from hard won dents in the nuclear status quo, but you might also say that nuclear hegemony is now weaker- it is losing ground to renewables. Although that doesn’t mean it’s any less risky!
Although there is plenty of room for debatable on the pro’s and cons of the various technologies, what’s not debatable is that is getting urgent, amongst other things, to decide on how to deal with climate change via a revamped energy supply and demand system. And, in that context, the UNECE multi-factors multi-option study is interesting. Although, sadly, it may be rather optimistic to expect conflicting technological, corporate, economic and political interests to evaporate overnight.
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