Grid Costs:

Leveling the Playing Field

I was pleased to see a new study from the OECD Nuclear Energy Agency (NEA) comparing grid costs of different technologies.  I was pleased both because the issue is an important one, and because I used to work at the NEA, and I'm glad to see them tackling this subject.

The report, Nuclear Energy and Renewables: System Effects in Low-carbon Electricity Systems, addresses the way variable renewables and so-called dispatchable energy technologies (specifically coal, gas and nuclear) interact in terms of their effects on electricity systems.  The premise of the study is that all power generation technologies cause system effects.  In particular, since they are connected to the same grid and deliver power to the same market, they exert impacts on each other. For example, dispatchable technologies need to be brought in or cut out to balance variable input from renewables.

We have long known that, but this study quantifies the effect.  The study examines the case for six technologies: nuclear, coal, gas, onshore wind, offshore wind, and solar.  It finds that the dispatchable technologies have system costs of less than $3 per MWh, while the system costs for renewables can reach up to $40 per MWh for onshore wind, $45 per MWh for offshore wind and $80 per MWh for solar. Currently, these costs are usually not acknowledged.  Rather, they are are absorbed by consumers through high network charges and by the producers of dispatchable energy through reduced margins and lower load factors.

The report recommends that system costs be made transparent in order to ensure that they are fully considered in future electricity planning.  The value of dispatchable low-carbon technologies in complementing the introduction of variable renewables needs to be recognized, and measures are needed to ensure that nuclear power and any other low-carbon dispatchable technology remains economically viable.  (No other such technologies are included in the study, but presumably, hydropower would be another such source.)  The study also recommends the development of load-following capabilities and other options to improve the flexibility of low-carbon dispatchable technologies in the future.

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