NUCLEAR ENERGY AGENCY INTERNATIONAL ENERGY AGENCY Projected Costs of Generating Electricity 2005 Update 1-Beginning Pages.qxp 21/02/05 11:41 Page 10 1-Beginning Pages.qxp 21/02/05 11:41 Page 1 Projected Costs of Generating Electricity 2005 Update NUCLEAR ENERGY AGENCY INTERNATIONAL ENERGY AGENCY ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT 1-Beginning Pages.qxp 21/02/05 11:41 Page 2 ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT The OECD is a unique forum where the governments of 30 democracies work together to address the economic, social and environmental challenges of globalisation. The OECD is also at the forefront of efforts to understand and to help governments respond to new developments and concerns, such as corporate governance, the information economy and the challenges of an ageing population. The Organisation provides a setting where governments can compare policy experiences, seek answers to common problems, identify good practice and work to co-ordinate domestic and international policies. The OECD member countries are: Australia, Austria, Belgium, Canada, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, the Slovak Republic, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States. The Commission of the European Communities takes part in the work of the OECD. OECD Publishing disseminates widely the results of the Organisation’s statistics gathering and research on economic, social and environmental issues, as well as the conventions, guidelines and standards agreed by its members. * * * This work is published on the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of the Organisation or of the governments of its member countries. Publié en français sous le titre : Coûts prévisionnels de production de l’électricité : Mise à jour 2005 NUCLEAR ENERGY AGENCY The OECD Nuclear Energy Agency (NEA) was established on 1st February 1958 under the name of the OEEC European Nuclear Energy Agency. It received its present designation on 20th April 1972, when Japan became its first non-European full member. NEA membership today consists of 28 OECD member countries: Australia, Austria, Belgium, Canada, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Luxembourg, Mexico, the Netherlands, Norway, Portugal, the Republic of Korea, the Slovak Republic, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States. The Commission of the European Communities also takes part in the work of the Agency. The mission of the NEA is: – to assist its member countries in maintaining and further developing, through international co-operation, the scientific, technological and legal bases required for a safe, environmentally friendly and economical use of nuclear energy for peaceful purposes, as well as – to provide authoritative assessments and to forge common understandings on key issues, as input to government decisions on nuclear energy policy and to broader OECD policy analyses in areas such as energy and sustainable development. Specific areas of competence of the NEA include safety and regulation of nuclear activities, radioactive waste management, radiological protection, nuclear science, economic and technical analyses of the nuclear fuel cycle, nuclear law and liability, and public information. The NEA Data Bank provides nuclear data and computer program services for participating countries. In these and related tasks, the NEA works in close collaboration with the International Atomic Energy Agency in Vienna, with which it has a Co-operation Agreement, as well as with other international organisations in the nuclear field. © OECD 2005 No reproduction, copy, transmission or translation of this publication may be made without written permission. Applications should be sent to OECD Publishing: [email protected] or by fax (+33-1) 45 24 13 91. Permission to photocopy a portion of this work should be addressed to the Centre Français d’exploitation du droit de Copie, 20 rue des Grands-Augustins, 75006 Paris, France ([email protected]). 1-Beginning Pages.qxp 21/02/05 11:41 Page 3 1-Beginning Pages.qxp 21/02/05 11:41 Page 4 1-Beginning Pages.qxp 21/02/05 11:41 Page 5 Foreword Foreword This report is the sixth in a series of studies on projected costs of electricity generation. Previous reports in the series were issued by the Nuclear Energy Agency (NEA) in 1983 and 1986. Since 1989, studies jointly carried out by the International Energy Agency (IEA) and the NEA were published by the OECD in 1989, 1993 and 1998. The present study was conducted by a group of experts from nineteen member countries and two international organisations, the International Atomic Energy Agency (IAEA) and the European Commission (EC). The latter provided input data from three non-OECD countries. The plants included in the study rely on tech- nologies available today and considered by participating countries as candidates for commissioning by 2010-2015 or earlier. The report presents and analyses projected costs of generating electricity calcu- lated with input data provided by participating experts and generic assumptions adopted by the Group. The levelised lifetime cost methodology was applied by the joint IEA/NEA Secretariat to estimate generation costs for more than a hundred plants relying on various fuels and technologies, including coal-fired, gas-fired, nuclear, hydro, solar and wind power plants; cost estimates are provided also for combined heat and power plants using coal, gas and combustible renewables. The appendices to the report address a number of issues such as generation technology, methodology to incorporate risks in cost estimates, impacts of integrating wind power into electricity grids and effect of carbon emission trading on generation costs. The study is published under the responsibility of the Secretary-General of the OECD and of the Executive Director of the IEA. The report reflects the collective views of participating experts though not necessarily those of their parent organisations or their governments. Acknowledgements The Joint Secretariat – Peter Fraser and Ulrik Stridbaeck from the IEA, and Evelyne Bertel from the NEA – acknowledges the valuable contribution of the Expert Group which provided data and reviewed the successive drafts of the report. Marius Condu from the IAEA collected input data from non-member countries. The Group was co-chaired by Dr. Gert van Uitert from the Netherlands and Prof. Alfred Voss from Germany. 5 1-Beginning Pages.qxp 21/02/05 11:41 Page 6 1-Beginning Pages.qxp 21/02/05 11:41 Page 7 Table of Contents Table of Contents Foreword 5 Executive Summary 11 Chapter 1 – Introduction 15 Background 15 Objectives and scope 15 Evolution of decision making in the electricity sector 16 Past studies in the series 17 Other relevant international and national studies 18 Overview of the report 20 Chapter 2 – Input data and cost calculation framework 23 Overview of the questionnaire 23 Coverage of responses 24 Methodology and common assumptions 25 Chapter 3 – Generation costs of coal-fired, gas-fired and nuclear power plants 35 Coal-fired power plants 35 Gas-fired power plants 39 Nuclear power plants 43 Cost ranges for coal, gas and nuclear power plants 46 Cost ratios for coal, gas and nuclear power plants 46 Chapter 4 – Generation costs of wind, hydro and solar power plants 53 Wind power plants 53 Hydro power plants 56 Solar power plants 58 Chapter 5 – Generation costs of combined heat and power (CHP) plants 63 Background 63 Characteristics of the CHP plants considered in the study 63 Cost estimation approach 63 Electricity generation cost estimates 65 Chapter 6 – Other generation technologies 69 Distributed generation 69 Waste incineration and landfill gas 71 Combustible renewable 71 Geothermal 72 Oil 72 Chapter 7 – Findings and conclusions 73 Background 73 Scope of the study and limitations in the methodology used 73 Technology trends 75 Coal, gas and nuclear electricity generation 75 Renewable sources, CHP and other technologies 76 Generation cost trends 77 Concluding remarks 78 7 1-Beginning Pages.qxp 21/02/05 11:41 Page 8 Tables Table 2.1 Overview of responses by country and plant type 24 Table 2.2 Exchange rates (as of 1 July 2003) 27 Table 2.3 List of responses 28 Table 2.4 Coal plant specifications 29 Table 2.5 Gas plant specifications 30 Table 2.6 Nuclear power plant specifications 30 Table 2.7 Wind and solar power plant specifications 31 Table 2.8 Hydro power plant specifications 31 Table 2.9 Combined heat and power (CHP) plant specifications 32 Table 2.10 Other plant specifications 33 Table 3.1 Expense schedule for coal-fired power plant construction 36 Table 3.2 Specific annual O&M costs (per kWe) for coal-fired power plants in 2010 37 Table 3.3 Coal price assumptions provided by respondents 37 Table 3.4 Expense schedule for gas-fired power plant construction 40 Table 3.5 Specific annual O&M costs (per kWe) for gas-fired power plants in 2010 40 Table 3.6 Gas price assumptions provided by respondents 41 Table 3.7 Expense schedule for nuclear power plant construction 43 Table 3.8 Specific annual O&M costs (per kWe) of nuclear power plants in 2010 44 Table 3.9 Nuclear fuel cycle costs 44 Table 3.10 Overnight construction costs of coal-fired power plants 49 Table 3.11 Overnight construction costs