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An Assessment of the Cycle Costs and GHG Emissions for Alternative Generation Technologies

C. Richard Donnelly1, Anibal Carias2, Michael Morgenroth1, Mohammad Ali2, Andrew Bridgeman1, Nicholas Wood2,

Hatch Ltd.1 4342 Queen Street Suite 500 Niagara Falls, L2E 7J7 [email protected] [email protected] [email protected]

Hatch Ltd.2 Sheridan Science & Technology Park 2800 Speakman Drive Mississauga, ON, Canada L5K 2R7 [email protected] [email protected] [email protected]

Abstract

There is significant debate regarding the best choices for supplying in a manner that can reduce greenhouse gas emissions to the maximum extent possible at a reasonable cost while still ensuring grid stability and reliability of supply. Many of these discussions look only at the amount of emissions that are associated with a particular form of energy during the period in which it is operating, ignoring the actual amount of energy created and the emissions associated with the development, maintenance and eventual decommissioning of the . Other studies assess the total life cycle emissions without reference to the amount of energy that can be delivered to the grid and offset sources of energy to maintain grid stability. In this paper, an analysis is performed to look at real life cycle costs and emissions as well as the amount of energy that is actually provided to the system from various renewable alternatives, including , and solar as well as from . These alternative sources are then benchmarked against -fired energy production to establish a normalized assessment of the clean energy alternatives that are currently available

Keywords: Renewable Power, , Green House Gas Emissions, Life Cycle Costs

1

Introduction

Once a choice is made to generate energy of any kind, a series of environmental and social issues arise that need to be addressed in the planning and implementation stages of the project and then throughout the operation and eventual decommissioning of the . In modern energy projects, environmental and social concerns are assessed and, in most cases, properly mitigated. However, dealing with these issues as part of the cost of producing energy is a relatively recent development. In the past, while efforts were made to reduce the impacts associated with energy projects, it was not done in as rigorous a way as it is done today. As water power is the oldest form of , it is perhaps the result of issues that occurred in the past that have given the perception to some that this energy is neither green nor renewable.

Assessing the merits of the available generation sources can be a difficult task. To properly evaluate the available options one must account for a wide variety of issues including development cost, efficiency, reliability of supply, operating costs and costs associated with the eventual decommissioning of the facility in addition to the emissions that result from the production of the materials used in the development and maintenance of the facility and the eventual replacement of the facility when it is decommissioned. Often, those involved in the power generation sector enter into the discussion on the most appropriate energy source with a preconceived bias towards the generation technologies that they are most involved or associated with. Others, outside of the sector, may carry ideological notions that certain forms of energy production are inherently “better” than others. Discussions on just what constitutes a “better” option have been attempted by numerous authors with a wide range of opinion resulting from these assessments.

In this paper, an analysis is performed to look at life cycle costs and emissions as well as the actual amount of energy that is generated from various low emission power alternatives, including wind, water, solar and nuclear power generation. These alternative sources are then benchmarked against coal-fired energy production to establish a normalized assessment of the relative merits of the clean energy alternatives that are currently available.

Low Emission Technologies – Considerations

Any energy generation projects, including those from a renewable energy source, impact the natural and social environments. In the planning of modern projects a comprehensive environmental approval process is used to establish what these effects are and to determine mitigation measures to eliminate or alleviate negative impacts. However, all generation alternatives will have some impact.

Water Power The development of a water power project typically involves relatively high upfront costs and relatively long lead times both to move the project through the environmental process and to obtain the data needed to properly characterize the hydrological and geotechnical conditions of the site. Because of these relatively high initial and construction costs, water power projects are sensitive to financial variables (such as construction delays, interest and discount

2 rates) and generally have longer payback periods. Once constructed however, operating costs for water power are comparatively low and the life expectancy of a well maintained facility can exceed 100 years [1], [3], [5], [8].

In terms of energy production, water power facilities are quite efficient; typically generating electricity between 40 to 70% of the total potential generation capability. The water resource is also predictable which allows water power facilities to provide reliable energy. This reliability is further enhanced for water power facilities designed to store water through fluctuating the upstream reservoir. This allows the energy from the water to be stored for use when the power demands are higher or the unit shut down when energy is not required. This works particularly well with other forms of renewable energy (such as wind and solar) where the energy must be dispatched immediately as it is created. Despite this significant advantage, water power storage capabilities is often viewed as being undesirable due to the impacts the reservoir fluctuations can have on environmental matters such as fish habitat and bank erosion. Indeed, in some jurisdictions it is only run of the river water power that is considered to be a renewable source of power. Many jurisdictions do not view water power as a source of green energy as a result of Green House Gas emissions that can result when the reservoir is created and vegetation decays. Three major factors influencing the amount of GHG emissions that result from decay of vegetation have been found to be a result of the following factors. [1] • The size of reservoir which, understandably represents the largest single factor • Climatic conditions, cold climates result in slower decay • The amount of remaining after reservoir clearing.

The results from two studies performed in , Canada and in Finland in 1996 are summarized in Table 1.

Table 1: Examples of Reservoir Greenhouse Gas Emissions

2 Location g CO2/m /year g CO2 eq. /kWh/year Measurement period Ref Finland 139 – 626 65-72 Year 25 [1] Quebec 180 – 270 34 Years 14,15, and 16 [2]

In the Quebec study it was argued that emissions would reduce continuously over time until they reach zero net emissions after 50 years.

Greenhouse Gas emissions created during the construction of water power facilities represent the largest component of the total Life Cycle Emissions and can vary widely depending on the nature of the facility and the location of the facility (Table 2).

3 Table 2: Typical Water Power Construction Greenhouse Gas Emissions

Location No. of in Study Construction Emissions Ref [g CO2 eq. / kWh] Switzerland 52 6.2 [1] 1 11.24 [1] Japan 1 8.4 [1] Quebec, Canada James Bay 1.2 (concrete filled) [1] 1.3 (earth/rock filled) 3.4 (large), 40.6 (small) [1]

The results of this study indicate that Canadian plants built in the “northern flats” produce less GHG emissions than those built in the “alpine” regions in Switzerland and Germany. This is considered to be a result of increased flooding in the alpine regions for an equivalent sized plant.

The potential adverse social effects of water power generation are strongly dependant on the location of the facility. Water power facilities in urban environments can potentially result in disruption of the surrounding during construction (e.g., due to noise, , traffic, use restrictions) and operations (e.g., noise generation, altered site aesthetics and long term changes in ). Water power developments in non-urban or northern environments can potentially have adverse effects on commercial/industrial stakeholders (e.g., loss of or , alterations in trapping or hunting) and recreational users (e.g., boaters, fisherman, and hunters). Potential adverse effects on the natural environment are predominantly related to aquatic habitat and biota (e.g., loss of habitat due to project footprints, disturbance due to in-stream construction, alterations in fish passage, alterations in habitat due to head pond creation and changes in flows and water levels). Water power developments may have adverse effects on terrestrial vegetation and (due to clearing for site facilities, access roads and lines) and loss of habitat due to head pond creation.

The costs of water power facilities are strongly influenced by the installed capacity. As part of a recent benchmarking study performed by Hatch, using as-built and budgeted costs for the capital expenditures required for the development and delivery of water power plants using data from Hatch’s in-house database and the FERC database the costs, in 2009 USD were determined. Operations and maintenance costs were based on the results of a study undertaken in 2003 by the National Engineering and Environmental Laboratory (INEEL) to provide the U.S. Department of Energy (DOE), policy makers, and the public with documented and peer- reviewed estimates of operating costs for water power facilities. Costs were found to be related to the installed capacity and Hatch has found that actual expenditures at various water power facilities throughout North America fall in line with these benchmark estimates. Accordingly, this was used in this study.

Wind Energy Wind farms typically can be developed more quickly and at a somewhat lower cost per kW than can most water power projects. However, generation efficiency and reliability of supply is typically much lower. As wind farms cannot operate when wind fall above or below certain thresholds, and due to the natural variability of the wind resource itself, electricity

4 generation is generally about half of what one might produce by water power with wind farms generally only providing 25 to 35% of the total generation that could be theoretically be produced if full time generation at maximum efficiency were possible. In addition, on an hourly basis, the wind resource is less predictable than water flow and the energy created cannot be stored. This requires mechanisms to be available within the electrical system to shed energy or consume it as the wind turbines come on and off line. Hence, regardless of the amount of wind energy in a given system, there must be alternative sources of energy to account for the fact that the wind may not be blowing when the demand for energy occurs.

Wind farms have a life expectancy in the order of 20 to 30 years [4], [5]. Studies to assess the complete Life Cycle Green House Gas Emissions for facilities are listed in Table 3. The results do vary but suggest that total emissions are in the order of 10 to 30 g CO2 eq. / kWh.

Table 3: Typical Wind Power Life Cycle Greenhouse Gas Emissions

System Size Total Ref [kW] [g CO2 eq. / kWh] Onshore 8 – 30 [2] Offshore 9 – 19 [2] Switzerland Study 800 14 – 20 [2] Multiple countries 30-6,600 9.1 - 123.7 [3] – Onshore 3000 4.64 Vestas – Offshore 3000 5.23 Japan Case Study 300-400 20.3 - 29.5 [4] Minnesota, US 25,000 15 [5] Wisconsin, US 14 [11]

Most of the GHG emissions associated with the life cycle occur during construction (typically 72% to 90%) [2] In general, offshore wind farms have higher lifecycle GHG emissions than onshore wind farms because they require more concrete for construction.[2] Typically, larger wind turbines have lower lifecycle emissions than smaller ones in the same wind conditions due to the fact there would be a smaller number of installations [2] Even though most turbines are made of similar materials, there can be large variations between studies due to several factors including the energy content of materials, scope and breadth of the studies, the methodology used, the country of manufacture of the components, the estimated service life of components, and choice of a concrete or steel tower [7]. After 20 to 30 years, decommissioning will be typically required that needs to be included in the assessment of both the life cycle costs and carbon emissions.

The main environmental sensitivities associated with wind power are the potential impacts to bird and bat populations if the is not sited correctly. Wind farms require a considerable amount of space (in the order of 40 acres per turbine) to generate the equivalent capacity as a water power. This gives rise to issues associated with the noise if the wind farm is located near habited areas as they normally are. Other impacts include a number of adverse social effects including impaired site aesthetics due to presence of turbines, noise generated

5 during construction, shadow flicker from the operating turbines and minor losses of agricultural land within the project footprint. Other potential adverse effects include vegetation clearing during construction and associated loss/alteration of wildlife habitat, and adverse effects on watercourses due to water crossing requirements and sediment and erosion during construction.

The costs to construct wind power facilities are controlled by four primary elements:

• Generating equipment – approximately 65-75% • Mechanical/civil balance of plant - 12%-14% • Electrical balance of plant, 8%-10% • Project development (owner and consultants) – 4-8% (larger projects have smaller costs as a percent). Generating equipment typically includes the blades, , and tower, as well as commissioning. Mechanical/civil balance of plant includes the construction of turbine foundations, crane pads, access roads, and erection of turbines. Electrical balance of plant includes collection system, substation, , and transmission interconnection. Project development will vary partly due to site specific conditions. The overall development cost includes , environmental studies and permitting, turbine procurement, BOP engineering and construction management. Owner’s costs include public relations, legal fees, land acquisition and costs associated with grid reinforcements. Overall however, due to the fact that the electrical mechanical equipment constitute such a large percentage of the overall costs, the development costs for wind power facilities tend to be relatively constant in the range of 2009 USD 2,500/kW installed. During the life of the wind farm maintenance costs are relatively high. For example, it will typically be necessary to change out all of the blades and gear boxes (for wind turbines that utilize a gear box) within the life of the project. The overall O&M costs are not uniformly defined across the industry but a reasonable average expenditure for the material and labour to service, maintain, repair and operate the wind farm including all routine scheduled and unscheduled maintenance activities as well as sustaining capital net of corporate overhead expenses, corporate taxes and financing costs of capital is in the order of $35/kW-yr.

Solar Power Solar is the most abundant renewable energy resource available. The total amount of energy reaching the earth from the sun is enough to provide for the current annual global 10,000 times over. There are two principal technologies for production of , solar thermal (also known as or CSP) and photovoltaic (PV). The application of solar thermal is restricted to high and direct isolation areas, such as south west US, Middle East and other arid areas around the world. In contrast, Solar PV power may be generated practically anywhere in the world. It is for this reason the current study focuses on Solar PV.

Solar PV power is a sustainable and technologically elegant one-step process. There are no harmful emissions or production of noise during operation. On the other hand, production of PV modules and materials for construction include material transformations and production of waste

6 and emissions, as in any other industrial process. Typical total Life Cycle GHG Emissions are listed in Table 4.

Table 4: Typical Solar Power Life Cycle Greenhouse Gas Emissions

System Size Total Ref [kW] [g CO2 eq. / kWh] Japan Case Study 30 26 - 53.4 [4] Germany 300/1500 100 – 250 [3] 3300 50 - 60 [3] Multiple countries 43 – 73 [5] South West US8 17 – 39 [8] Wisconsin, US 39 [11]

There is a relatively wide range of values reported however, aside from the experience in Germany and Italy, the range falls between 20 and 70 gCO2 eq/kWh. For this study a value of 50.0 was selected as a reasonable average.

Based on solar resource maps for North America, the solar radiation incident on a fixed plane with a latitude tilt angle ranges between approximately 4 – 7 kWh/m2/day in the United States and between approximately 4 – 5 kWh/m2/day. For this condition and a performance ratio of 0.75 (which accounts for the overall system losses) the potential of fixed tilt large scale PV facilities in North America ranges between 1100 – 1900 kWh/kW of installed capacity annually. This PV potential corresponds to a ranging between 12.5% and 21.5%. Through the use of either 1-axis or 2-axis tracking systems larger capacity factors may be attainable, however only fixed tilt systems were considered for this study. The plant life cycle is typically longer than it is for wind power projects but still significantly less than for water power generation, typically 30 years for the modules and longer for the support structures [4], [8]. Demobilization and restoration of project sites at the end of the life cycle is fairly simple and nearly all material used in the plant can be recycled. Since the area- specific power density of solar radiation is relatively low (average approximately 100W/m2) large areas are required. Solar PV installed on roof tops of large industrial buildings uses otherwise unused space. However, the grade ground mounted solar power generation could result in loss of agricultural land, altered site aesthetics and noise during construction. Other potential adverse natural environment effects can include clearing of natural vegetation (e.g., fencerows or woodlots), associated loss of associated wildlife habitat, and adverse effects on watercourses due to water crossing requirements and sediment and erosion during construction.

A very positive social impact of solar PV is that electricity can be produced in remote areas not connected to a grid. In isolated solar powered systems some form of or alternate source is required for backup during the night or cloudy days. There may be adverse impacts associated with energy storage (such as batteries) and backup power source. Since solar PV

7 facilitated distributed power, the reduction of the need for above ground transmission lines has a positive social and environmental impact.

The operation and maintenance costs for this study were estimated based on the Springerville case study which documented five years of operation experience at a utility scaled PV generating plant [11]. O&M costs in this study included costs for operators of the facility, maintenance labour and materials and the administrative costs to provide the facility service, but exclude taxes and royalties, owner’s administrative costs on the corporate level, profit and overhead.

Based on the Springerville case study, the annual O&M costs are equal to approximately 0.12% of the initial capital cost. An additional 0.1% can be added to include the expense of replacing the inverters every 10 years on an amortized basis, due to the shorter lifespan of the inverter. This equates to a total O&M cost of 0.22% including the capital expenditure to replace the inverters every 10 years.

Nuclear Power Nuclear Power is a mature technology for power generation. It is similar to thermal power generation except that fossil is replaced by . As a result, there are no green house gas emissions. However, as in all thermal plants, nearly 60 to 70% of the fuel energy is rejected to the cooling water body for once through cooling or to the atmosphere through evaporative cooling. Energy is produced on a continuous basis, with the exception of maintenance periods, allowing this form of energy to be used as base load. The nuclear units cannot be ramped up or down as is the case with water power and, therefore, nuclear energy cannot be used to deal with the fluctuation in supply caused by the use of solar and wind power in an .

Nuclear power generation can potentially result in adverse social effects including disruption during construction and long term environmental impact from clearing of terrestrial land, loss of wildlife habitat, erosion and sedimentation issues, loss/alteration of aquatic habitat due to shoreline works and cooling water intakes and operations (e.g., fish mortality due to entrainment through the cooling water system and alteration of local aquatic conditions due to thermal plumes from cooling water discharge). Around 300 tons per month of highly radioactive waste is generated by a typical 1000-MW nuclear unit which remains radioactive for thousands of years. Since a permanent disposal solution has not been found, the radioactive waste is currently stored near each plant. The nuclear waste poses by far the greatest environmental impact of a nuclear plant. The costs associated with this issue are very difficult to quantify.

Moderate amounts of low level radioactive waste are also produced and have to be stored at special disposal sites. There is moderate risk associated with transportation and disposal of such wastes. of uranium ore to prepare nuclear fuel has the usual environmental impacts associated with any other mining activity (e.g., loss of land/habitat, GHG emissions from construction equipment, contamination, non-radioactive wastes, etc) and in addition there is the hazard from low level radioactivity from mine tailings. There are also significant risks associated with mis-operation of the facility or improper maintenance. Typical estimates of Life Cycle GHG Emissions from nuclear facilities are shown in Table 5.

8 Table 5: Typical Nuclear Power Life Cycle Greenhouse Gas Emissions

Operation

and Decommissioning System Size Construction Enrichment and Waste Total Ref

[MW] [g CO2 eq. / kWh]

Indian Study 2.8 20.9 0.4 24.2 [3] Swiss / French / German 1000 1 – 1.3 6 – 11 [2] China 9 [2] Multiple 0.74 – 1.3 1.5 – 20 0.45 – 1.4 2.8 – 24 [5] Japan (BWR) 2.8 20.9 0.4 24.2 [4] US (PWR) 1000 1.2 12.4 0.44 15 [5] US and 16 - 55 [8]

Greenhouse gas emissions from pressurized water reactor nuclear power plants are very sensitive to the electricity sourced to enrich uranium. [2] If all the electricity comes from coal burning power plants the lifecycle greenhouse gas emissions can be as high as 80 g CO2 / kWh.[2] The method of enriching the uranium also can affect greenhouse gas emissions. Diffusion technology produces higher lifecycle greenhouse gas emissions than centrifugation.[5] In addition, previous studies on the total amount of lifecycle greenhouse gas emissions for nuclear facilities may be underestimated due to uncertainties regarding the disposal of spent fuel waste.

The expected life of a nuclear facility can be well in excess of 50 years. However, during that period major maintenance involving significant expenditures and shutdowns in excess of two years can be expected. Typical useful life estimates for nuclear facilities often are in the range of 40 years [2], [5]. At this point major expenditures akin to a major re-build are often needed.

When a nuclear reactor has outlived its usefulness, the structure itself remains intensely radioactive for a considerable period and dangerously radioactive for tens of thousands of years. A study done for the U.S. Atomic Industrial Forum has recommended a cooling-off period (after shutdown) of 70 to l00 years in order to reduce the occupational exposures of the men who will eventually be hired to dismantle the structure. It is a difficult, dangerous and very expensive job. In 1978, a U.S. Congressional committee reported that decommissioning costs for reactors may lie in the range of 3 per cent to l00 per cent of the initial capital cost of the plant [12]. AECL and Ex Ontario Hydro estimates favored a cost figure near the lower end of this spectrum, but these Canadian estimates have never been subjected to independent scrutiny. If nuclear-generated electricity is exported to the United States, there will no doubt be provision for a decommissioning fund; but will the fund be adequate to pay for the that must be done, including the transportation and disposal of significant amounts of radioactive debris. For the present study we assume 75% of the initial capital cost at the end of the reactor’s operating life. New nuclear power plants are capital-intensive. However, analysis by generating companies, the academic community, government agencies, and others shows that, even at capital costs in the $4,000/kWe to $6,000/kWe range, [13], [14], [15], the electricity generated from nuclear power can be competitive with other new sources of base load power. In addition, if regional or national

9 programs put a significant price on carbon emissions, nuclear power becomes even more competitive.

During 2009, a Government of Ontario agency requested firm quotes for several nuclear units to be installed at an existing site. The lowest bids were of the order of CAD$11,000 /kW for the CANDU type of reactor. In view of these costs, it was decided to use the higher end of the cost range for the PWR type of reactor even though most of the references consulted seemed to indicate a capital cost in the order of $4,000/kW.

Operating costs for nuclear facilities are affected by many country-specific factors. However, OECD/NEA studies from 1983-2005 (OECD-NEA/IEA 2005 and earlier) show relative stability in the overall generating cost of nuclear power plants. This has resulted essentially from two different factors: Nuclear fuel costs have fallen due to lower uranium and enrichment prices together with new fuel designs allowing higher burn-ups, while O&M costs have now stabilized at levels competitive with other base-load generation. Recently, uranium prices have risen sharply but the impact on electricity costs are relatively minor as the uranium cost is only a small fraction of the total kWh cost (around 5%). In the new millennium, an upward tendency in these prices has become apparent. However, the overall marginal costs of operating nuclear plants are low equivalent to other plants that generate electricity without the need for fuel, such as water power and other renewable technologies. In the United States, average nuclear production costs were 1.72 cents per kWh in 2003, the lowest of any generation technology. The trend has been strongly downwards in real terms since the mid-1980s.

In Europe, levels of 1 cent per kWh have been achieved in both Finland and Sweden. The balance between O&M, fuel and spent fuel (including waste management) costs depends very much on the age of the plant, with a tendency for O&M to rise as plants get older but for spent fuel charges to reduce as the accumulated fund dedicated to this becomes mature.

In Germany, spent fuel charges tend to be higher so marginal costs are usually around 1.4 euro cents per kWh. In France, the combined O&M and fuel cost for EDF’s fleet of plants has also been quoted at 1.4 euro cents per kWh. At such levels, nuclear power plants have been operating well on a sustained basis and are the most competitive non-hydro technology on operating cost grounds.

For the present study the overall operating cost was taken as 2.5 ¢/kWh which is considered to be a reasonably conservative upside estimate.

A significant unknown for nuclear facilities is the subject of used fuel management. Recent developments in the United States illustrate the issue. In June 2008, the Department of Energy (DOE) submitted an application to the NRC for a license to construct the Yucca Mountain repository. Following this submission, the Obama Administration determined that the Yucca Mountain site is no longer an option for a repository and has proposed terminating funding for the license application review despite that over $8-billion of scientific investigation had confirmed the suitability of the site for long-term storage and disposal of used nuclear fuel, and any residual by-products from advanced recycling technologies.

10 In January 2010, the Administration announced the creation of a bipartisan blue-ribbon commission of credible experts to undertake a reassessment of the federal government’s program to manage used nuclear fuel, and to make recommendations for policies and programs for a sustainable long-term program. The commission is required to make an interim report to the Secretary of Energy within 18 months. The interim report will be available for public comment with a final report due six months later. [16]

Framework for Analytical Task In assessing the merits of various alternative energy sources, the economics of electricity generation are an important consideration. If the cost of building and operating the generating plants cannot compete with other technologies so as to generate reasonable profits for their owners, the source of energy is not sustainable. However, the overall assessment of the energy source must include all factors including economics, full life cycle costs as well as environmental and social considerations. It is for this reason that many countries have adopted incentives to permit renewable power to be developed (Table 6).

Table 6: Examples of FIT rates for Various Countries

Unit 2009 US$/kWh Country PV Wind Water Germany [2009 EEG rates] 0.49 varies 0.07 - 0.12 0.68 0.11 0.11 Ontario, Canada [OPA FIT] 0.44 - 0.80 0.13 - 0.19 0.12 - 0.13 South Africa 0.28 0.17 0.13

Traditionally, economic aspects have been considered to be the main measure of evaluating the suitability of particular generating technologies. While energy itself can be a fundamental unit of accounting other than money, it is also important to know which generating systems produce the best return on the energy invested to construct and maintain the asset. To accomplish this goal many evaluators make use of the Energy Payback Ratio (EPR) to determine the most beneficial generating technology. This task forms part of an overall Life Cycle Analysis (LCA) in combination with an assessment of the environmental performance of the generating technology from initial concept through to decommissioning. A complete life-cycle assessment (LCA) requires an accurate accounting of all energy and emissions related to the construction, operation, and decommissioning of the facility. The Process Chain Analysis (PCA) is used to evaluate energy usage at each stage of product manufacture and use. A PCA applied to a , for example, would obtain the total of a material, such as concrete, and estimate the total energy required to manufacture, transport, and pour the concrete. This requires a complete inventory of material and energy balances for each component of the system, as well as final manufacturing and installation.

Some of the input parameters needed in the PCA, in order to establish the EPR, are relatively easily quantified. For example, the surprisingly significant amount of energy required to move a tonne of coal by ship or rail or to move gas long distances by pipeline is well documented in the literature. Other inputs such as the energy required to build a 100-MW power plant of a

11 particular kind, or even to construct and erect a wind turbine are less straightforward to establish However, for a true assessment of the merits of the competing energy technologies, all such energy inputs, in combination with cash inputs by way of capital, need to be amortized over the life of the plant and added to the operational inputs. Finally, the post-operational energy requirements for waste management and decommissioning of the plants must be included.

In order to capture energy costs as well as external costs associated with environmental and health consequences of energy production, which traditionally do not appear in the financial accounts, an alternative method of analysis was formulated. The methodology selected diverges from the typical EPR approach being based on the individual technologies life cycle inputs and outputs and considering all economic costs and the “value” of emissions (Tonnes CO2- equivalent per GWh) (but ignoring any incentives that could be available from governmental agencies). The input data included the capital cost, operating costs (operation and maintenance plus fuel) as well as the “value” of emissions that are generated throughout the life cycle of the different generating technologies. The outputs are the actual energy provided to the transmission system (as opposed to the energy created at the generator’s terminals). By dividing the inputs by the outputs, the “cost” of producing electricity from different technologies can be established with the technology with the lowest “cost” being considered as the most beneficial.

The Analysis The analysis was carried out assuming typical North America conditions with the consideration that the generating plants would be integrated into large electrical grids. The costs and impacts associated with the transmission lines used to connect the generating plants to the grid were not accounted for as this was considered to be a shared and necessary resource regardless of the generation type.

In the analysis, it is also necessary to account for the fact that different technologies offer different levels of reliability and flexibility; key considerations that need to be taken into account. In any system, a reliable electricity supply requires generating electricity at the same time as it is consumed. When this balance between consumption and generation is disrupted, the integrity of the entire power system is put at risk. Several services from generating technologies are required to provide this reliable supply of electricity, namely:

• availability during • capacity to meet hourly and daily demand variation • frequency, voltage and reactive control to keep voltages and flows within the required criteria • regulation, to maintain supply/demand balance.

However, not all generating technologies are capable of providing the above services with the same degree of availability. Certain technologies, such as wind and solar and to a lesser degree run-of-river water power, provide intermittent energy. Therefore, they require back up to compensate for the fluctuations in the amount and timing of energy they deliver to the grid. Generating technologies such as storage water power have the capability of providing energy when it is needed and in the quantities required which offer value to the electrical system. Nuclear power, in and of itself, cannot react to energy fluctuations but do offer a generally reliable source of base load which also has value. In addition, the generated by the reactors

12 is used to power thermal units which can provide some flexibility for peaking. While storage of electricity is possible using such technologies as pumped water storage, compressed gas or storage batteries, provision of required energy needed from such technologies in the absence of reliable base load from conventional energy sources adds to the life cycle costs and emissions.

The variation in the ability of the various technologies to supply energy to the grid is a function of a variety of factors as the nature of the hydrology for a given river, variability of the wind and the solar resource, planned and unplanned outages of the generation technologies, fuel availability and costs, production costs, operational constraints and demand patterns. The actual capacity factor of a particular generation technology is a measure of how much energy was produced divided by how much could have been produced. For the present study the capacity factors assumed are listed in Table 7.

Table 7: Assumed Capacity Factors

Net Sent Out Capacity Technology Capacity Factor (MW) (% ) Wind 100 25-35 Solar (PV) 10 10-15 Water power (run of river) 100 50-65 Water power (storage) 1,000 50-65 Nuclear (PWR) 1,000 90

To determine the most cost effective generating technology it is necessary to normalize the technologies so that they contribute equally to the overall power system reliability. This is usually referred to as the capacity credit for a particular generation alternative. In most systems, storage water power with several generating units has a capacity credit of approximately the total net sent out capacity. Nuclear facilities are typically credited with a capacity of at least 95% of their net sent out capacity. The capacity credit for the other generating technologies under study can be quite complex to determine but, usually, for wind and solar (PV) technologies, they are credited with a per unit capacity credit equal to their actual capacity factor (that is, the overall average amount of time that energy is delivered to the grid). For run-of-river water power plants, the capacity credit is dependent on the firm hydrology and the demand patterns. Often, the peak demand occurs during times of low inflow influencing the capacity credit significantly. Experience has shown that the capacity credit could vary from 30 to 50% of the net sent out capacity. The characteristics of the low emission technologies considered in this analysis are listed in Table 8.

13 Table 8: Typical Size and Capacity factors of Various Low Emission Technologies

Assumed Installed Technology Capacity Capacity Credit (MW) (% of capacity) Wind 100 25-35 Solar (PV) 10 10-15 Water power (run of river) 100 30-50 Water power (storage) 1,000 100 Nuclear (PWR) 1,000 95

There are several alternative means available to evaluate the value of the capacity credit. However, most of them require complex studies to be undertaken and encompass such solutions as storing electricity using a variety of technologies which can react quickly to changes in the energy supplied to the grid. For the purposes of this study, it was decided to use gas turbines as a way of complementing the capacity offered by the particular generating technology as this has been an accepted method and offers a low cost of firming up capacity in a power system. The LCA of emissions created by the different generation technologies was established on the basis of published values in the literature using the published upper and lower bound ranges. The value used to assess the cost of emissions was based on historical market trends in North America which set the value of carbon credits in the range of US$10 to 20/ tonne CO2. As is shown in Table 9, this can vary significantly in markets around the world and will likely increase in North America in the future.

Table 9: The Value of Carbon in Some Selected Jurisdictions

Price per Tonne CO2 Exchange (2010 $US) Chicago Climate Exchange (CCX) 0.10 Chicago Climate Futures Exchange (CCFE) 6.73 European Climate Exchange (ECX) Allowances (EUAs) 19.18 Certified Emission Reduction (CER) 15.41 Montreal Climate Exchange (MCX) 5.71 enveX (Australia) 31.25 Tianjin Climate Exchange (TCX) 2.70

For the evaluation of the capacity benefits, the analysis makes use of credits instead of costs implying that the monetary values of the capacity credits will be subtracted from the overall costs. As an example, for an assumed capital cost of a gas turbine of US$700/kW every kW of a wind turbine with a 30% capacity factor would have a credit of US$210/kW (700 x 0.3). A storage water power plant would have a credit of US$700kW plus credits for future required replacements for the gas turbine which is assumed as having a life of 20 years (the same as wind

14 turbines) versus 100 years for the water power storage plant. For the case of storage water power, using a 10% discount rate, the calculated credit would amount to about US$822/kW. Credits can also be added for the fixed operation and maintenance of the gas turbines. This would add about US$17/kW for wind and US$68/kW for storage water power. The credits for the other technologies were determined in a similar manner. While it is recognized that water power units provide a greater contribution to the overall reliability and security of a system than gas turbines, the approach used provides a reasonable approach to establish comparative rankings of the competing technologies. Other factors that were used in the analysis are outlined in the Table 10.

Table 10: Assumed Characteristics of Various Low Emission Technologies

Generation Technology

Storage ROR Item Water Water Nuclear Coal Power Power Wind Solar (PWR) CFB Net Capacity (MW) 1000 100 100 10 1000 250 Capacity Factor (%) 50-65 50-65 25-35 13-20 90 80 Economic Life (years) 50 50 20 20 40 30 Operating Life (years) 100 100 25 25 60 40 Construction Period (years) 5 3 2 2 7 3 Heat Rate (kJ/kWh) - - - - 10 550 9500 Capital Cost (US$/kW) 3200 3700 2300 4500 6000 2700 Capitalized Investment (US$/kW) 3863 4162 2473 4860 6712 3021 Decommissioning Cost (% of capital) 10 10 5 5 75 10 Fuel Cost (US$/GJ) - - - - 1.0 2.5 Nuclear Waste (US$/MWh) - - - - 1.0 - Fixed O&M (US$/kW) 44 35 35 18 90 65 Variable O&M (US$/MWh) - - - - 2 3

Results of Analysis Based on the aforementioned assumptions the levelized energy cost (LEC) was determined in 2010 US$/MWh assuming constant currency values (no escalation) and a 10% discount rate to establish the net present value of each on a per kW basis including the capital and operating costs minus the capacity credits. In addition to the LEC, costs associated with LCA emissions for each generation technology expressed in tonnes of CO2-equivalent per MWh were determined.

The Cost of Energy The cost of energy production for the various technologies, in relation to the cost of coal-fired generation is shown in Table 11 and graphically in Figure 1.

15

Table 11: Calculated Life Cycle Energy Costs

Storage ROR Levelized Cost in Water Water Coal US$/MWh for Power Power Wind Solar Nuclear CFB Implementation 59.9 80.8 90.4 424.4 74.0 30.1 Operations 4.5 7.3 12.5 8.2 25.0 35.5 Decommissioning 0.0 0.0 0.5 2.0 0.2 0.1 Total Life Cycle Cost 66.4 88.2 103.4 404.6 99.2 65.7

405 120

100

80

60

40

Cost (US$/MWh) 20

0 l lar a ydro o Co Wind S uclear N age Hydro OR H r R Sto

Implementation Operation Decommissioning

Figure 1: Calculated Life Cycle Energy Costs

The results show that all of the technologies have somewhat similar costs with the exception of solar which presently has significantly higher implementation costs due to the relatively high capital cost associated with this source of energy and the low capacity factor. This is consistent with the incentives offered for this form of energy which are two to six times higher than that given to wind or water power projects (Table 6).

Life Cycle Greenhouse Gas Emissions The total life cycle emissions for each of the low emissions technologies and that which would occur from a coal-fired facility are listed in Table 12 and are shown graphically in Figure 2.

16 Table 12: Life Cycle Emissions

LCA Emissions Storage ROR (grams CO2 Water Water Coal equivalent/kWh) Power Power Wind Solar Nuclear CFB Implementation 1.3 0.5 13.7 37.5 1.2 3.6 Operation 13.5 4.5 4.7 12.0 12.4 918.8 Decommissioning 0.2 0.0 0.6 0.5 0.4 52.2 Total 15.0 5.0 19.0 50.0 14.0 975.3

50

/MWh) 40 2

30

20

10

Emissions (g eq.CO 0

o o r r r r d la a d d in o le y y W S c H H u e R N g O ra R to S

Implementation Operation Decommissioning

Figure 2: Comparison of Life Cycle Emissions from Various Technologies

All of the low emission technologies, as would be expected, provide two orders of magnitude reduction on the amount of GHG produced. However, perhaps somewhat surprisingly, run-of- river water power is clearly the best technology in terms of limiting life cycle emissions and both Storage Water power and nuclear are close to wind power in their effectiveness. Solar power, in its current form is the poorest technology by almost a factor of two compared to storage water power and nuclear and by an order of magnitude when compared to run-of-river water power.

The Total Cost of Energy Creation The “cost” of energy generation, accounting for the entire life cycle costs and the costs associated with GHG emissions is shown in Table 13 and depicted graphically in Figure 3. This total cost was based on an assumed carbon credit of USD$10/tonne which is consistent with the current market conditions in North America.

17 Table 13: Calculated Life Cycle Costs for Energy Production Accounting for Emissions

Storage ROR Levelized Cost in US$/MWh Water Water for Power Power Wind Solar Nuclear Investment (US$/MWh) 60 81 91 425 74 O&M (US$/MWh) 8 8 14 17 28 Decommissioning (US$/MWh) 0 0 0 2 0 Total unit costs including emissions and Health Costs 68 89 105 444 103 Assumed Capacity Factor 55% 55% 30% 15% 90%

444 140

120

100 80

60

40 Cost (US$/MWh) Cost 20

0

o r r ea ydro Wind Sola cl Hydr H u R N O R torage S Implementation Operation Decommissioning

Figure 3: Total Life Cycle Costs Emissions from Various Technologies

The results indicate that water power is the most effective means of reducing emissions while still providing a reliable source of energy. Nuclear power and wind power were found to provide a similar level of effectiveness while solar power was found to be the least effective means of producing energy while reducing life cycle emissions.

Comparing Life Cycle Costs to Coal-Fired Generation

To truly assess the impact of the assumed cost of Green House Gas emissions on the life cycle costs for the various low emission generation technologies in comparison with coal-fired generation.

18 As would be expected, emissions from coal fired plants are an order of magnitude higher than renewable plants ranging from about 800 to 1600 g CO2 eq. / kWh [3], [5], [9]. In addition, there are other hazardous emissions associated with coal-fired energy production that result in societal health costs The estimated damages associated with electricity generation from coal depend on many factors. For example, damages per kWh are a function of the emissions intensity of electricity generation from coal (e.g., pounds [lb] of SO2 per MWh), which in turn depends on regulation of power-plant emissions. In 2005, average damages per kWh from coal plants (weighted by electricity generation) were estimated to be 3.2 cents per kWh [22]. In a separate European study the effects of coal on heath was assessed as is summarized in Table 14.

Table 14: Assessment of the Impacts of Coal-Fired Generation on Public Health [23]

Valuation Estimate (mECU/kWh) Damage Category West Confidence Burton Lauffen Grevenbroich Range Level (coal) (coal) (lignite) PUBLIC HEALTH

Mortality Acute effects on mortality 1oPM10 0.491 2.11 2.45 R L 2oPM10 2.71 7.81 5.49 R L Chronic effects on IQ IQ IQ R L mortality

Acute Effects on Morbidity Respiratory admission 1oPM10 0.000191 0.0011 0.0011 R M 2oPM10 0.00101 0.00361 0.0025 R M COPD hospital admission 1oPM10 0.000231 0.00121 0.0014 R M 2oPM10 0.00121 0.00441 0.0031 R M COPD emergency room visits 1oPM10 0.0000211 0.000111 0.000012 R M 2oPM10 0.000111 0.000391 0.00027 R M Asthma emergency room visits 1oPM10 0.0000181 0.0000951 0.00011 R M 2oPM10 0.0000991 0.000351 0.00024 R M

19 Notes: The following abbreviations are used: • Range: L = Local, R = Regional, G = Global • Time scale: S = Short, M = Medium, L = Long o o • 1 PM10 = primary PM10; 2 PM10 = primary PM10 • NQ = Not quantified within this report, though a discussion of effects is given. • IQ = Impacts have been quantified but not yet evaluated

Each set of estimates is given a confidence rating as follows, to reflect uncertainty. Ratings were assessed using both quoted uncertainty and expert judgment: • H = high, correct to well within an order of magnitude; • M = medium, correct to an order of magnitude or less; • L = low, may be in error by more than an order of magnitude; • ! = cases in which estimates are extremely uncertain and no estimation of the potential magnitude of error is possible.

The benchmarking analysis was performed accounting for both the direct GHG emissions costs and the indirect reported health costs.

The results, as listed in Table 15 and shown in Figure 4 clearly indicate that solar power is not as cost effective as wind and water power in reducing life cycle emissions while creating the energy needed. It also shows that it is the value that is placed on Green House Gas reductions that dictate the need for developing low emission alternative energy technologies. As is evident, if one places a relatively low value on the cost of greenhouse gas emissions, equivalent for example as to what one would currently receive in the European or North American carbon markets ($10 to $25 per tonne) from a cost effectiveness point of view water power is a clearly better option than coal while wind power costs are roughly the same as coal. Solar power would not be seen as cost competitive under this scenario.

Table 15: Comparison of the Life Cycle Costs with Coal-Fired Generation

Storage ROR Cost of Water Water Emissions Power Power Wind Solar Nuclear (USD/tonne) 10 75% 99% 117% 493% 114% 25 65% 85% 101% 425% 98% 50 53% 69% 82% 346% 80% 100 39% 50% 60% 252% 59% 250 22% 28% 34% 141% 33% 500 13% 16% 20% 83% 19% 1000 8% 9% 12% 47% 11%

20 300%

200%

` 100% %age of Coal Fired Generation Evaluated Life Cycle Cost of Energy production as a as production Energy of Evaluated Life Cycle Cost 0% 0 200 400 600 800 1000 1200 Value of GHG Reduction (USD/tonne)

Storage Hydro ROR Hydro Wind Solar Nuclear

Figure 4: Comparison of Life Cycle Costs of Various Low Emission Technologies with Coal-Fired Generation

What this analysis demonstrates is actually rather obvious, the true cost of emissions is well in excess of what is currently paid on the open market.

Conclusions

The results of this study demonstrate that the commonly held view that wind and solar power are superior to water and nuclear power in terms of reducing greenhouse gas emission, when viewed over the entire life cycle of the technology, is not necessarily true. Solar and wind power do not generate energy as reliably as water power facilities and, when all of the emission sources are taken into account, actually result is higher overall emissions when compared to water power. The best technology was found to be storage water power with run-of-river water power, nuclear, and wind power all providing similar benefits. Solar power is not competitive with these other forms of energy in terms of greenhouse gas reduction per unit of energy created due to the current low efficiency of this technology.

The study also shows that the current bias against water power in general and storage water power in particular is not founded in science. Of all of the low emissions technologies the analysis indicates that water power provides the most cost effective means of delivering a reliable supply of energy to the with the least amount of emissions. This is not to say that issues can arise with water power projects that should preclude them from being constructed. However, environmental and social issues can also preclude solar and wind power projects from proceeding. Similarly Nuclear power has challenges associated with waste disposal that need to be carefully considered prior to proceeding with this technology but these challenges

21 in and of themselves should not automatically eliminate this important low emission form of energy from the mix.

The overall conclusion here is that it is inappropriate to arbitrarily define any of the low emission technologies as being superior to another without moving through the environmental assessment process to establish what the potential impacts of a project are. For example, storage water power can provide very significant benefits to a system with relatively low emissions compared to technologies such as solar or wind and, in many cases, may have relatively low environmental and social impacts. Therefore, the current practice of eliminating this source of energy from the renewable mix would seem ill-conceived.

Another conclusion from this study is the fact that the current shift towards renewable and low emission power sources and away from generation shows that the true perceived (and likely real) cost of green house gas emissions far exceeds what the market will currently compensate generators for.

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