What is a good price for nuclear power?

There are two questions about such cost comparisons: what rival technology is the most sensible benchmark for nuclear power; and how quickly will the costs of less mature, rival technologies like offshore wind and CCS fall?

Regarding benchmarking, nuclear is baseload, dispatchable (but less flexible than gas and coal), low carbon and with low marginal costs.

The best comparisons may be hydropower (now fully exploited in Britain) and tidal power (untested and probably hugely expensive), both of which tick all those boxes.

Biomass and fossil fuels with CCS are zero carbon (although there is a question mark over biomass), dispatchable, baseload options but they have high marginal (fuel) costs.

Zero carbon and zero marginal cost wind and solar power are neither baseload nor dispatchable and require grid expansion or expensive battery technology to reduce their intermittency.

Given all of the above, the best benchmarks may be CCS and tidal power, both of which are untested, and large-scale offshore wind. Regarding potential cost reductions, offshore wind is a good example.

In its 2011 “Renewable energy roadmap” DECC targeted a reduction in offshore wind power costs by 2020 to 100 pounds per megawatt hour, still more expensive than a 90 pounds nuclear tariff.

Alternatively, the cost of a 90 pounds nuclear power purchase agreement can be compared with support rates for renewables, through an existing tradable certificate scheme.

The value of renewable obligation certificates (ROCs) is set by an administrative buy-out price plus the amount of redistributed penalty payments for non-compliance, which adds roughly an extra 5-10 percent, making for a total ROC value presently of about 42 pounds. Renewable power generators get a certain number of ROCs per MWh plus the wholesale power price.

For example, onshore wind gets 0.9 ROCs per megawatt hour, which works out at around 38 pounds, plus a year-ahead wholesale power price of about 56 pounds per MWh, adding up to 94 pounds.

Various technologies receive the following, in 2012 pounds per MWh: co-firing biomass with coal (77 pounds); onshore wind (94 pounds); hydropower (98 pounds); dedicated biomass burning (119 pounds); and offshore wind, large-scale solar and geothermal power all on 140 pounds.

So a nuclear tariff of 90 pounds so far appears competitive both according to a levelized cost and subsidy comparison with alternative technologies.

But there are enough other considerations to allow both supporters and detractors to claim the economic argument.

Given the scale of capital costs it has to recoup, EDF may insist on a power purchase contract of more than 30 years.

That is longer than the present ROC scheme contracts (20 years) or its replacement scheme from 2014 (15 years).
But nuclear power plants will last longer than wind farms and solar panels: EDF anticipates a lifespan of 60 years for its proposed giant 3.3 gigawatt Hinkley Point C power plant. And then there are the big, less tangible items: the benefit to the UK economy, and the waste disposal problem.

The discounted, estimated clean-up cost at the country’s main nuclear waste site is 37 billion pounds and rising, according to the National Audit Office.

That does not appear to include the cost of long-term storage in a geological disposal facility whose site and therefore costs are still unknown.

Meanwhile, EDF is eager to trumpet a 2 billion pounds investment in the regional economy over the lifetime of its proposed project, and 25,000 new jobs over the construction period.

That might be the clincher for the British government. For the rest, and in answer to the question in the headline above — 90 pounds per MWh is competitive, but the uncertainty over waste disposal is a big concern.