An Economic Framework for Choosing Between Energy OptionsJohn Freebairn
Melbourne Institute of Applied Economic and Social Research
Framework or Principles
Choose option(s) with lowest social cost per unit output
If a completely defined market, leave decisions to private sector investors who have the information
But, Australian energy markets are not complete Consumers should pay a price equal to marginal
social cost as a part of the answer
Social Costs
Construction costs expressed as annual fixed costs
Operating costs, including fuel Costs to society of wastes (external costs) Costs of plant closure
Note: Areas of uncertainty include technology, input costs, government policies
A Case Study Example
New base load electricity generation plant, say a 500 MW capacity unit
OptionsQueensland conventional black coal units built over
last few years. (Data from Paul Simshauser, Australian Economic Review, Sept. 2004, and June 2006)
A prospective nuclear plant. (Data from nuclearinfo.net)
Conventional Black Coal
Cost item (and assumptions) (Construction cost of $1.3 m
per MWh) Fixed capital cost (30 year,
.85 use, 5% and 10% capital return)
Fixed operating cost Operating cost External cost (0.8
CO2/MWh, carbon tax of $0, $20 or $?)
Cost in $/MWh
$11.4 or $18.5
$3$10
$0 , $16 or $?
Nuclear Energy
Cost item (and assumptions) (Construction cost of $1.3 m
or $6.7 m per MWh) Fixed capital cost (30
year, .85 use, 10% capital return)
Fixed operating cost Operating cost External cost (≈ 0
CO2/MWh, nuclear waste with US fee of $2.7, Sweden $6.7, and ?)
Cost in $/MWh
$ 18.5 or $95.3 $?
$0.7
$2.7, $6.7 or $?
Some Conclusions
Relative social costs of black coal and nuclear base load electricity in Australia uncertain Comparative social cost of GHG versus disposal of
nuclear waste. Both demand a clear policy scenario. Nuclear higher capital cost and lower operating cost Nuclear construction cost, and RRR uncertain
Need to get external costs into consumer prices
Uranium Information Centre
Nuclear Power - a topical option?
Ian Hore-Lacy
Uranium Information Centre &Head of Communications, World Nuclear Association
August 2006
www.uic.com.auwww.world-nuclear.org
Total 441 operating nuclear power reactors, 25 under construction, late 200516% of world electricity, total 368 GWe.
Locations approximate
Drivers overseas:
• Basic economics today, including increased fossil fuel prices
• Prospect of carbon emission costs
• Insurance against future fuel price increases
• Energy security - geopolitical
Most demand is for continuous, reliable supply on a large scale= base-load
Wind energy production during a fine summer week- each line a day
From 650 MWe of wind turbines in western Denmark
MWe
Danish Wind Energy Assn.
Diablo Canyon nuclear power plant, USA
0
100
200
300
400
500 TWh
1950 1960 1970 1980 1990 2000
541TWh
Hydro
Nuclear
Fossil
12%
78%
10%
French electrical mix evolution
Oil crisis 1973
Unit 1 (Fessenheim 1) 1977
Unit 58 (Civaux 2) 1999
58 units in operation on 19 sites
FESSENHEIM
GRAVELINESS
FLAMANVILLE
PALUEL
ST-ALBAN
NOGENT/SEINE
CHOOZ
CATTENOM
ST-LAURENT
CHINON
CIVAUX
DAMPIERRE
BLAYAIS
BELLEVILLEBUGEY
GOLFECH
CRUAS
TRICASTIN
PENLY
PALUEL
900 MWe (34 Units)1300 MWe (20 Units)1500 MWe (4 Units)
80% of electricity 80% of electricity from nuclear from nuclear
powerpower
The nuclear reactor fleet in France
The cheapest The cheapest KWh in EuropeKWh in Europe
Electricity generation costs, with emission trading case: Finland
13,8
5,3 7,6 10,2 13,0
40,17,2
3,5
7,46,5
8,2
10,0
2,723,4 13,1
23,17,0
44,3
50,1
17,9
19,6
16,2
14,9
22,8
27,3
42,4
23,7
54,2
44,3
39,2
0
10
20
30
40
50
60
Elspot2000
Elspot2001
Elspot2002
Elspot1-5 2003
Nuclear Gas Coal Peat Wood Wind
euro/MWh Emission trade20 €/t CO2Fuel costs
O&M costs
Capital costs
Generation costs without investment subsidy and the return of electricity tax (wood
and wind)
Operating hours 2200 hours/year
R.Tarjanne&K.Luostarinen 03.07.2003Lappeenranta University of Technology
Operating hours 8000 hours/yearReal interest rate 5,0%
March 2003 prices
0
20
40
60
80
100
120
Hard Coal Lignite Gas Nuclear Wind A Wind B
Co
sts
of
gen
erat
ed e
lect
rici
ty [
€/M
Wh
]
Added costs forCO2-charge 40€/tCO2
Costs for CO2-charge 20 €/tCO2
Added costs ofmax. Back-up
Min. Back-up-Kosten
Variable O&M
Fuel costs
Fixed O&M
Capital Costs
Impact of a carbon value on levelised generation costs at 7,5% discount rate
Institute of Energy Economics and the Rational Use of Energy (IER) University of Stuttgart 2006
Fuel Assembly for Nuclear Reactor
A safety record unmatched by any major technology!12,000+ reactor-years civil, similar for naval
Kashiwazaki Kariwa 6 & 7, Japan
Main 3rd generation nuclear reactors:
Areva NP EPR - 1600 MWe Westinghouse AP1000 - 1100 MWe General Electric ESBWR - 1400 MWe Korea HNP APR - 1400 MWe Mitsubishi et al APWR - 1500 MWe AECL ACR-1000 - 1000 MWe OKBM VVER-V448 - 1500 MWe Eskom/INET PBMR - 165/195 MWe
Generation IV ReactorsNeutron spectrum
Coolant,
Temp
pressure Fuel Uses
Gas-cooled Fast Helium
850 C
High U-238+ Electricity & hydrogen
Lead-cooled Fast Lead
550-800 C
Low U-238+ Electricity & hydrogen
Molten salt Medium Fluoride,
700-800 C
Low Thorium, U-238+
Electricity & hydrogen
Sodium-cooled Fast Sodium
550 C
Low U-238 & MOX
electricity
Super-critical Fast or slow Water
550 C
Very High U-235 electricity
High-temp gas-cooled
Slow Helium
1000 C
High U-235 Hydrogen & electricity
Transport & Hydrogen Economy
Plug-in Hybrid Electric Vehicles Then hydrogen in fuel cells Now: 50 million tonnes per year
hydrogen, future: 1000 Mt/yr + Now: steam reforming of natural gas High temperature electrolysis of water Thermochemical production from water
using nuclear heat - needs 950ºC
www.uic.com.au
Particulate Fluids Processing CentreA Special Research Centre of the Australian Research Council
WHAT SHOULD WE DO WITH OUR NUCLEAR WASTE?
Peter Scales Department of Chemical and
Biomolecular Engineering University of Melbourne
Particulate Fluids Processing CentreA Special Research Centre of the Australian Research Council
Some Nuclear Waste Questions
If we go down the nuclear route, will we also develop nuclear re-processing facilities?
Will we process and encapsulate our waste away from the biosphere in a sophisticated manner or will we leave the last step or critical steps to our children?
We have the engineering and scientific know how, but: do we have the political will to achieve an acceptable
solution? will we pay the cost up-front?
Particulate Fluids Processing CentreA Special Research Centre of the Australian Research Council
Reprocessing Cycle
U, Pu
2%
Particulate Fluids Processing CentreA Special Research Centre of the Australian Research Council
Waste From Fuel Reprocessing
Intermediate Level
Not self heating
Steps envisaged:
slurry dewatering
stabilization in grout
disposal (encasement)
High Level
2% volume, 90% radioactivity
Self Heating
Steps envisaged:
dewatering
calcination
vitrification
storage (50 years)
disposal (encasement)
Particulate Fluids Processing CentreA Special Research Centre of the Australian Research Council
HLW
Dewatered, calcined, immobilised in glass (vitrified), poured into stainless steel container and welded lid
HLW vitrification flask
Sellafield, UK
Particulate Fluids Processing CentreA Special Research Centre of the Australian Research Council
HLW Storage Facility
HLW
HLW
Air convectionHeat exchanger
Sellafield, UK
Particulate Fluids Processing CentreA Special Research Centre of the Australian Research Council
ILW
Encapsulated in a highly fluid grout
Minimal voidage
Typically stored above ground Sellafield, UK
Particulate Fluids Processing CentreA Special Research Centre of the Australian Research Council
My View
A comprehensive and timely solution to waste handling is essential to the viability and sustainability of nuclear
power.
No waste solution = No nuclear power
Hanford’s 177 Waste Tanks
quake prone Plate boundary
zones
seismically ‘quiet’ intraplate setting
1960+, M5+
we record 800-900 quakes a year in Oz, including 1-2 M5+
large parts of northern Europe, Africa and Canada have not had a M5+ quake in the last 50 years
1960+, M5+
Rank‘stable’ region
seismicmoment
relativeinstability
1 India 3.3 x 1023 3.7
2 China 1.2 x 1023 1.3
3 North America 1.0 x 1023 1.2
4 Australia 8.9 x 1022 1
5 Africa 4.0 x 1022 0.4
6 Europe 2.5 x 1022 0.3
7 South America 1.1 x 1022 0.1
8 Asia 8.1 x 1020 0.01
9 Antarctica 1.9 x 1020 0.00.
from a seismological point of view Oz does not seem to be “the most stable”!
(the proviso is that these calculations have very large uncertainties)
more stable
less stable
seismologicallyoptimum
1960 -1985, M>3
1988,M6.7Tennant Ck
1960 -1988, M>3
radioactive heating to 230°C due to elevated Uranium
concentrations
cold water injection, steam recovery
the ‘geothermal’ option:Nature’s safe nuclear solution?
Deans Lecture series 2006.2
Martin Sevior Associate Professor School of Physics University of Melbourne
http://nuclearinfo.net
http://nuclearinfo.net
Extent of the Challenge
Nuclear Power world wideNuclear Power is used in many countries around the world.
Many Countries see an expanded role, a few have announced a phase-out, only one, Italy has completed a phase-out.
It’s use is highest in France (77%), Belgium(60%), Sweden (50%).
Sweden and Germany have official phase-out policies but both are controversial.
http://nuclearinfo.net
US experience No new orders since the 1970’s. Over 19 “expressions of interest” since
2005. All proposals have significant local
support. Industry invited communities to bid for the
opportunity. No NIMBY effect as yet.
http://nuclearinfo.net
Intellectual Infrastructure US Nuclear plants had poor (60%)
availability before 1990. Not helped by fractured industry. Each plant was different and independently
operated. Since then a variety specialist companies
have operated the fleet. Also development of experience and “best
practice” techniques.http://nuclearinfo.net
Intellectual Infrastructure The US Nuclear Regulatory Commission
has a vital role in the US Industry. Operating a Commercial Nuclear Plant is a
challenging task. Critically evaluating design and operation
is an exacting task. (1000 page report on the Safety of new designs)
Developing procedures and guidelines is a detailed an exacting task.
http://nuclearinfo.net
Intellectual Infrastructure Plenty of smart people in Australia or who
would migrate (return) to Australia. But all this takes time. We won’t know how the next generation of
Plants stack up until they’re built anyway. Should closely watch international scene
while building up own expertise.
http://nuclearinfo.net
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