by Peter Lang

The cheapest way to decarbonize the British electricity system is with all or mostly nuclear power.

Planning Engineer’s post ‘Renewables and grid stability’ provides an excellent explanation of the issues the electricity networks have to cope with and the impacts of adding variable renewables like wind and solar to an electricity system, but it does not attempt to quantify the costs.

A recent report by the Energy Research Partnership (ERP), ‘Managing Flexibility Whilst Decarbonising the GB Electricity System’ compares the total system costs of decarbonizing the electricity system in Great Britain for various proportions of seventeen technologies. The analysis considers and does sensitivity analyses on important inputs and constraints that are seldom included in analyses intended for informing policy analysts about policy for a whole electricity system. The ERP report has policy-relevance for other electricity systems and the methodology should be broadly applicable.

The ERP is co-chaired by Prof John Loughhead FREng, Chief Scientific Advisor to the UK Department of Energy and Climate Change (DECC). ERP members include a broad spectrum of stake holders from electricity industry, academics, government agencies and NGOs.

Excerpt from the Introduction:

In light of the increasing penetration of variable renewables the ERP undertook to examine issues around grid flexibility and stability. A model was developed to balance not just the need for energy but also ensure the supply of services critical to the operation of the grid. This was used to produce robust modelling of a real GB system across a wide range of scenarios, supported by more stylised analysis to explore the fundamental constraints within which a secure technology mix must lie. This section introduces the main issues facing the GB system and the lessons from other grids, the GB modelling work is described in the following sections.

As well as the high level conclusions there is some guidance offered on specific topics, such as some preliminary work on storage. This work highlights a valuable and necessary approach to considering the GB system as a whole. With less focus on the specifics, the power of this is in setting the direction of travel and defining the solution space.

In the following sections I comment on some of the key points and results from the ERP report. My focus is on the generator technology mix that is likely to reduce CO2 emissions at least cost. I do not discuss here many of the important issues and policy recommendations covered by the report. The report provides necessary background and context for the excerpts discussed below.

The ERP analyses use cost inputs from an authoritative recent study, Parsons and Brinkerhoff, 2013, ‘Electricity Generation Cost Model – 2013 for DECC’ which provides estimates of the costs of the technologies on a properly comparable basis. This information presumably was judged the most appropriate available for the ERP analysis of the GB electricity system at the time the ERP analysis was done.

Cheapest option to decarbonize GB electricity system

Figure 14 of the ERP report shows the annual CO2 emissions savings and the total system cost for each additional 5 GW increment of each technology.

Figure 14: Effect of adding each technology in 5 GW increments in 2012

The report explains Figure 14 (only part of which is shown here) as follows:

Comparison of all Technology Options

The results presented so far have focused on three main technologies for decarbonisation, namely nuclear, wind and gas-CCS. However there were 17 technology tranches modelled within BERIC so a brief comparison was made of the effect of changing the capacity each technology by means of [Figure 14]. The curves emanating out of a central scenario show the change in emissions (x-axis) and Total System Cost (y-axis) of adding another increment of that technology, usually 5 GW. … Figure 14 has the 2012 system as a starting point with carbon priced at £5/t. Most technologies fall in the top left quadrant, which results in abatement at a cost. As a low carbon technology is added, new nuclear for example, emissions are reduced (line steps to the left) but eventually emission reductions become smaller and the line curves upwards as abatement become costly. This is usually as a result of curtailment increasingly limiting the output whilst capex costs remain the same. Hydro and CHP appear to be relatively cheap, the first additions actually saving money and carbon. Closing old coal also reduces emissions albeit at a cost to the system. CCS technologies are shown as high cost and ineffective at reducing emissions, this is entirely a result of the low carbon price in 2012 which was insufficient for them to perform any more than a peaking duty.

In the top right are actions that increase cost and emissions, so ought to be avoided. Closing old nuclear fits into this category, suggesting that life extension should be sought where safe. In the bottom left there is only one curve. This shows increments of 10% reductions in demand. The line assumes that this comes at zero cost. In reality this is probably not the case so actual curves for demand reduction will lie above this curve. Also illustrated are two carbon price lines, for example the one at £70/t delimits technologies that are economic at this price (below the line) from those that aren’t (above the line).”

CO2 emissions intensity and total system cost

Figures 5 and 6 show the CO2 emissions intensity and Figure 11 shows the increase in total system costs with different mixes of new nuclear, wind and gas-CCS. The cost increase is from the total system cost of the existing system plus a £70/t CO2 carbon price. The report states that a £70/t CO2 carbon price would not be sufficient to drive the changes in the electricity system needed to achieve the CO2 emissions reduction targets.

The table below is a compilation from Figures 5, 6 and 11. The first three columns are from Figures 5 and 6; they show CO2 emissions intensity for selected mixes of wind and new nuclear. The fourth column is from Figure 11 (left chart); it is the change in total system cost above the 2012 base, i.e. cost for the existing system plus £70/t CO2 carbon price for each mix of wind and nuclear. The rows are sorted by CO2 emissions intensity, highest to lowest.

The table shows that the cheapest way to achieve the greatest reductions in CO2 emissions intensity of electricity is with mostly nuclear and little or no wind. GB could achieve the 50g/kWh target with 31 GW of new nuclear and no wind or CCS for 3% real cost increase. It could achieve the same emissions intensity as France, 42 g/kWh in 2014, with 32 GW of new nuclear and no wind or CCS for ~4% real cost increase above the base cost.

Note: RTE reports CO2 emissions for 2014 as 24 Mt CO2 and generation as 567.4 TWh which calculates to an 42 g/kWh [link]

Key points

The most significant points I draw from the ERP report with respect to the least cost technology mix to reduce CO2 emissions are:

Weather-dependent renewables alone cannot achieve the UK’s targets for decarbonisation of the GB electricity system.

All or mostly nuclear power gives the lowest CO2 emissions intensity for lowest total system cost.

Hydro (if suitable sites were available) would be the most cost effective at reducing emissions. Since additional hydro capacity is very limited, adding nuclear is the cheapest way to achieve large CO2 emissions reductions. 31 GW of new nuclear and no weather-dependent renewables or CCS would achieve the recommended 50 g/kWh target at lowest total system cost.

32 GW of new nuclear and no weather dependent renewables or CCS would achieve the same CO2 emissions intensity of electricity as France achieved in 2014, i.e. 42 g/kWh. Wind, marine, and CCS are expensive and ineffective. Pumped hydro is very expensive and ineffective. Any other type of energy storage would be more expensive.

The worst option of all is to close old nuclear plants; doing so would increase emissions and total system costs. Their life should be extended if practicable.

To achieve the same CO2 emissions intensity as France in 2014 would require a £70/t CO2 carbon price plus ~4% increase in total system cost.

A £70/t CO2 carbon price alone would not be sufficient to drive the required changes in the electricity system to achieve the government’s target.

Conclusion

Based on the results presented in Figure 14 and the table showing CO2 emissions intensity and total system cost for various proportions of wind and nuclear, the cheapest way to decarbonize the British electricity system is with all or mostly nuclear power. As is usually the case with such analyses the uncertainties are large and the report states:

Using DECC’s cost estimates the differences in economic value to the system between the key options examined (nuclear, gas-CCS and onshore wind) are much smaller than the margin of error estimating those costs. Therefore it’s difficult to claim any one of these is the optimal solution to progress grid decarbonisation.

Comment from ERP

Andy Boston, Head of the ERP Analysis Team, provided the following comment on this post.

Peter Lang has faithfully reproduced a number of our results but the context needs clarifying and the emphasis and confidence placed in the results are different. The analysis undertaken by ERP was based on a particular forecast of costs used by DECC. The point of the work was not to determine the cheapest option for decarbonising the UK but to look at what affects the value of technologies to the system, therefore no other cost scenarios were presented. In the report we state that

The system cost results are of course very sensitive to the inputs on fuel costs and technology capex, and so the absolute costs presented here are only applicable to this particular scenario based on the PB 2013 inputs as described in the section on input data. However the messages about how the relative value of technologies change with different grid mixes are generally applicable.

The most important conclusion is that to decarbonise the system it is essential to have a significant amount of generating capacity which is both low carbon and firm. In the UK there are only three technologies able to offer this, nuclear, biomass and fossil-CCS. Weather dependent renewables like wind and PV are not able to provide firm output unless coupled with an infeasibly large volume of storage so are not competing for this role. Other systems may have additional options such as solar thermal, hydro, or geothermal, or may have access to large volumes of storage, so it is difficult to translate these results directly to them without careful consideration of these.

We do not say that wind, marine and CCS are expensive and ineffective. According to the input data we used it is true that marine is expensive, but wind can provide significant volumes of low carbon generation before its value to the system declines, and CCS is an important option for providing flexibility as well as firm capacity and energy.

Overall we caution against emphasising the relative costs of the low carbon options. This is summed up by one of the key observations in the report:

Using DECC’s cost estimates the differences in economic value to the system between the key options examined (nuclear, gas-CCS and onshore wind) are much smaller than the margin of error estimating those costs. Therefore it’s difficult to claim any one of these is the optimal solution to progress grid decarbonisation.

I welcome debate, including about the policy implications of the issues raised in the ERP report, the total system costs with various proportions of generator technologies and the uncertainties in the estimates.

PL Response to ERP

Andy Boston, Head of the ERP Analysis Team, made several points in his comment (included at the end of the post). I accept the results in the ERP report but not persuaded by some of the interpretations stated in the points in the comment. I’ll respond to one of the points here and to the others on the thread.

We do not say that wind, marine and CCS are expensive and ineffective. According to the input data we used it is true that marine is expensive, but wind can provide significant volumes of low carbon generation before its value to the system declines, and CCS is an important option for providing flexibility as well as firm capacity and energy.

The text of the ERP report doesn’t say “wind, marine and CCS are expensive and ineffective” but Figure 14 shows these technologies achieve less decarbonisation than nuclear and at a higher increase in total system cost (£B/year) for any given emissions reduction. Given that little extra hydro is viable in GB, nuclear is the only technology that could achieve the targets on its own. Therefore, it seem Figure 14 supports my Key Point #6. To illustrate, the emissions and total system cost with 30 GW of each technology (i.e. the end of each line on Figure 14) are listed below (ordered by increasing annual CO2 emissions).

This shows nuclear would be most effective generator technology at decarbonising. Onshore and offshore wind would achieve 10 times less CO2 emissions reduction for around 10%-20% less total system cost.

CCS is not yet demonstrated at scale so the statement “CCS is an important option for providing flexibility as well as firm capacity and energy” is not supported by evidence at this stage.

I reiterate the ERP analysis is a highly credible analysis and a valuable contribution to the policy debate; anyone interested in policy on decarbonising electricity systems is encouraged to read it.

Biosketch: Peter Lang is a retired geologist and engineer with 40 years’ experience on a wide range of energy projects throughout the world, including managing energy R&D and providing policy advice to government. His experience includes: hydro, geothermal, nuclear, coal, oil, and gas and a wide range of energy end-use management projects.

JC note: As with all guest posts, please keep your comments relevant and civil.