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Nuclear and Renewables: Decarbonization in a Collaborative Model

terça-feira, janeiro 07, 2020


Resultado de imagem para ENERGIA
Comparing the costs of different power generation technologies has become one of the main arguments used by proponents of specific sources and those seeking to find the best approach to plan the expansion of electrical systems. However, this approach, taken alone for public energy policy making, is far from simple and can lead to unwanted and unexpected results.
How much does it cost? It seems like a simple question. However, when it comes to competing power generation technologies, it is an extremely challenging question. Generation costs include many variables: capital, fuel, location, waste disposal, environmental impact, interconnection, reliability, intermittency, and other external and systemic costs. No two technologies are alike.
System costs are often divided into the following four broadly defined categories of profile costs (also referred to as utilization costs or backup costs), balancing costs, grid costs and connection costs[1]:
•   Profile costs refer to the increase in the generation cost of the overall electricity system in response to the variability of VRE output.
•   Balancing costs refer to the increasing requirements for ensuring the system stability due to the uncertainty in the power generation (unforeseen plant outages or forecasting errors of generation).
•   Grid costs reflect the increase in the costs for transmission and distribution due to the distributed nature and locational constraint of VRE generation plants.
•   Connection costs consist of the costs of connecting a power plant to the nearest connecting point of the transmission grid.
The external costs are based upon the sum of three components: climate change damage costs associated with emissions of greenhouse gases (CO2 and others); damage costs (such as impacts on health, crops etc.) associated with other air pollutants (NOx, SO2, NMVOCs, PM10, NH3); and other non-environmental social costs for non-fossil electricity-generating technologies. Environmental and social externalities are highly site specific and so results will vary widely even within a given country according to the geographic location.
For decades, analysts have come up with an approach that attempts to integrate some of the key cost variables of generation technologies. It is called the Levelized Cost of Electricity (LCOE), meeting internal costs, including Capex and Opex, until a new plant is connected to the grid[2]. LCOE analysis[3], provided evidence on three key points:
•   Despite recent high-cost projects in Western countries, most new nuclear plants have a Levelized Cost of Electricity (LCOE) comparable to any other generation source, including most Variable Renewable Energy (VRE). LCOE meets all costs, including Capex and Opex, until a new plant is connected to the grid; and
•   LCOE for VRE did not take into account the system costs that consumers would be required to pay, such as network upgrades to accommodate a distant generation from consumer centers, low VRE predictability balancing and frequency control and backup and/or storage of electricity to compensate for this variability.
•   LCOE analysis does not include environmental and social externalities such as waste disposal, greenhouse and air pollution, material resources and land use; excluding marginal externalities, LCOE contradicts a central point for the consideration of clean energy technologies, which is the very impact of these externalities.
Using LCOE to compare generation costs has become widespread practice. However, the approach based on comparisons of LCOE associated with different generation technologies, or any other measure of total life cycle production costs per MWh provided, does not take in account different system costs, effectively treating all generated MWh, regardless of source, as a homogeneous product, i.e. a commodity, governed by a single price.
The criticism is technical and the fundamental objection is that cost does not measure value. Power generation occurs at different times and in different places, having different values at each moment and in each place. It would be like saying that a car costs a lot more than a bicycle, so we should all buy bicycles. Nevertheless, this disregards that car and bicycle are providing services of different natures.
Analysing NEA Study on the costs of decarbonization[1], COSTES[4] gave us some powerful insights:
•   Setting a price for carbon as an external cost seems obvious: $ 35 per ton of emitted CO2 is considered sufficient to eradicate it from all scenarios. This is not so far from the $ 20 already considered by some countries. The sooner this is achieved, the better, since everyone agrees that there is an urgent need to decarbonize the energy system.
•   Ideally, policies should be developed to ensure that system costs are well analyzed and allocated to the source that generates them. The concept of “Equivalent Firm Power[5] was proposed, according to which any VRE source should guarantee its production with some storage for which it would be responsible. In any system, this would be very difficult to implement.
•   The adequacy of most existing electricity markets may be questioned. The order of merit could be justified in the past, when all sources had comparable LCOE and were fully exposed to the market. Electricity markets today produce situations where prices are zero and there are no longer economic signals consistent with an increasing share of VRE.
•   In a market where any form of electricity generation is dealt with on its own merits, without any subsidies or priority rights, there will be a need for very clear new regulations. With a high share of VRE, existing markets will be very volatile and will pose high risks to any long-term investment and financing. How can policies be designed to attract investment in this situation?
•   There is clear evidence that in addition to hydroelectric power with large reservoirs, nuclear is the only low-carbon dispatchable technology, and it is essential, along with variable renewable energy, to obtain a decarbonized electrical system. The cost-benefit ratio for the consumer leads to a balanced system where the value of nuclear energy and the VREs themselves is not destroyed by excessive participation by the latter. Rather than developing public policies that set targets for VRE participation, which will require network capacity, flexibility and infrastructure, it would not be preferable to set carbon generation targets first and then identify which electrical system would provide the best cost-benefit?
When considering the facts about the types of technology; their costs, including external and system costs; public acceptance; and by assessing the potential for higher electricity prices, policy makers could create the market conditions and rules to find an appropriate path.
Nevertheless, there are other important subjects for decision makers take in account:
•   in order to accommodate a high share of VRE, the system must develop not only transmission and distribution networks but also incorporate new technologies that do not yet exist to accommodate the fluctuations that VRE generation entails.; these costs may be taken into account, but what about the risks associated with these future technologies? And the reliability of such a system and its resilience?
•   material resources use to generate electricity is an issue scarcely analyzed; it is a matter of energy and power density[6]; in essence, VRE has, in most areas, a limited load factor: to achieve the same generation in GWh, VRE needs around three times more capacity than any dispatchable source and would require a lot of storage capacity with a limited load factor; low energy density VRE implies more building materials (cement, concrete, steel, for example) and more land use for a given lifecycle energy generation; which police provides the most efficient way to use the resources the planet can offer?
•   Another issue to consider is the acceptability of a given scenario; while existing nuclear power generation is generally well accepted, new nuclear power can be a challenge; what about a comparatively large VRE deployment and its impact? What about the acceptability and feasibility of distribution/connection requirements?
A cost-effective low carbon system would probably consist of a sizeable share of VRE, an at least equally sizeable share of dispatchable zero carbon technologies, such as nuclear energy and hydroelectricity with large reservoirs. A complementary amount of gas-fired capacity would provide additional flexibility, alongside storage, demand side management and the expansion of interconnections. The Brazilian system seems to go in that direction, already having some of these attributes.
The Brazilian electric system is unique for its extremely high contribution of renewable sources, thanks to intense use of a huge hydropower potential, started since the beginning of the twentieth century. As of 2018, renewable energy accounted for 85% of the installed capacity. Hydropower account for 64% and “new renewables” (small hydro, wind solar and biomass) for 22%. Thermopower provides remaining 14% (including 2% nuclear)[7]. This system, however, lives a called “hydrothermal transition” since the very beginning of XXI century.
Hydrothermal transition is what happens when the expansion of an electricity system with predominant hydropower source requires an increasing thermopower contribution, either by hydro potential depletion or loss of auto-regulation capacity due to stored water volume reduction in reservoirs, or both simultaneously, what is effectively happening in Brazil.
The hydrothermal transition begins to take place in Brazil in 2000, when the growth rate of the thermopower becomes much higher than the growth rate of the hydro. This is a consequence from the growth rate of the volume of water in the reservoirs become much lesser than the growth rate of hydropower installed until the late 80. The Brazil realized this painfully in 2001 facing a supply crisis due to reduced reservoir levels with limited thermopower availability. Since then, thermopower has been successfully increased, facing without crisis reservoir levels lower than 2001 crisis. From 2000 to 2018, thermopower installed capacity more than doubled, from 6% to 14%. By other side, reservoir storage capacity increased only 5%, indicating that the effects of hydrothermal transition will accelerate over the next years.
Similar situation happened before in Canada. In early 60´s, hydropower contribution to Canadian electric system was in a level equivalent to those of Brazil in 2000. This contribution decreased in the 70´s and 80´s, stabilizing in the 90´s around 50-60%. At the same time, the share of coal and nuclear in Canada rose, with the remainder filled by gas and oil, and a small but growing share of new renewable sources.
Hydrothermal transition requires a long-term strategy for diversification of primary sources of electricity generation. The role of new renewables in a Brazilian hydrothermal transition nowadays is much more important than was in Canadian transition, decades ago. The installed capacity of these new sources increased spectacularly from almost 0% in 2000 to 22% in 2018. New renewables have unique competitive advantages in Brazil for two complementarities: wind-hydro (high wind in dry season) and wind-solar (high wind in high insolation places). This allows low-cost storage of intermittent energy in hydro reservoirs, saving water and increasing the capacity of hydroelectric make regulation of demand.
This strategy of diversification of sources can also be observed in many other countries and is most marked in those where national energy resources are very scarce, such as Japan and Korea. More recently, countries have gone through a rapid economic growth process, such as India and China, are also seeking greater diversification. The Canadian and Brazilian cases rises particular interest due to starting point: a large hydropower contribution. The other countries´ transition starting point is an electric system with very large fossil fuel contributions.
Nuclear power will play a key role in diversification strategies to energy transitions reaching decarbonized systems. Although it reliably produces large quantities of low-carbon, dispatchable energy, it faces issues of public acceptance in many countries. However, nuclear power remains an economically viable option to meet severe carbon constraints, despite the economic challenges for some new reactor projects.
The cost advantage of nuclear power is not in its plant-level costs, although they are quite competitive. It does lie in its general benefits to the electrical system. VRE’s plant-level costs have fallen dramatically, but its overall system costs are not accounted for as production is aggregated over a limited number of hours. All of these factors must come into play in the decisions of each country. 
Electricity markets are evolving and nuclear energy is following this evolution to meet future requirements: Small Modular Reactors (SMR) development is a promising response. Nuclear energy is well placed to take on these challenges in a collaborative mode, working together with all other forms of low carbon generation, in particular VRE, to achieve the ambitious decarbonization targets most countries have set for themselves.
Nuclear power is a reliable partner of VRE through a collaborative model. A technical complementarity could be achieved through the development of a larger flexibility in reactor operating, in order to palliate VRE variable power production. A systemic complementarity could be achieved through innovative technologies in fields like cogeneration, heat and hydrogen production, demand management or interconnection of ultra large power grids. Last, but not the least, a strategic complementarity for building the future decarbonized energy mix.
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References:
[1] ORGANIZATION FOR ECONOMIC COOPERATION AND DEVELOPMENT NUCLEAR ENERGY AGENCY, The Costs of DecarbonizationSystem Costs with High Shares of Nuclear and Renewables, available at http://www.oecd-nea.org/ndd/pubs/2019/7299-system-costs.pdf. (2019).
[2] GUIMARAES, L., The Levelized Cost of Electricity and its Impact on Energy Transition, CEIRI NEWS, available in Portuguese at https://ceiri.news/o-custo-nivelado-da-eletricidade-e-seu-impacto-na-transicao-energetica/. (2019)
[3] INTERNATIONAL ENERGY AGENCY AND NUCLEAR ENERGY AGENCY, Projected Costs of Generating Electricity, available at https://www.oecd-nea.org/ndd/pubs/2015/7057-proj-costs-electricity-2015.pdf. (2015)
[4] COSTES, P., ViewpointStudying the cost of decarbonization, World Nuclear News, January 30, available at http://world-nuclear-news.org/Articles/Viewpoint-Studying-the-cost-of-decarbonisation. (2019)
[5] HELM, D., Cost of Energy Review, BRITISH INSTITUTE OF ENERGY ECONOMICS, available at http://www.biee.org/wpcms/wp-content/uploads/Cost_of_Energy_Review.pdf. (2017)
[6] SMIL, V., Power DensityA Key to Understanding Energy Sources and Uses, MIT Press (2016)
[7] EMPRESA DE PESQUISA ENERGÉTICA, Decennial Energy Expansion Plan 2027, available in Portuguese at http://www.epe.gov.br/pt/publicacoes-dados-abertos/publicacoes/plano-decenal-de-expansao-de-energia-2027. (2018)


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