The Politics and Economics of International Energy (Spring 2009- E657)

1. The Politics and Economics of International Energy (Spring 2009- E657) Lecture 10 About Nuclear Energy Prof. Giacomo Luciani

2. The issue • Obviously, the political impact of nuclear is not the same as renewables and energy efficiency, nationally and internationally • A revival of nuclear energy raises the immediate threat of nuclear proliferation and possible use of WMD by governments as well as non-governmental actors • Hence nuclear energy will be an increasingly hot topic in international relations – hotter than it already is now

3. Main points to be discussed: • Current trends in nuclear energy uptake • Technological developments and issues • Nuclear energy for oil and gas exporting countries? • Non proliferation issues

7. No US players left?

10. Facts on ELECTRICITY • Electricity is not a primary energy source but rather an energy carrier Practically all primary energy sources („clean“ or „dirty“) can be used for transformation into electricity • Suitable for practically all applications (industry, traffic, housholds, ...) and for all purposes (drives, motion, heat, signal transmission, ...) • Environmentally friendly and clean in use • Easy to transport large amounts of electricity over long distances with speed of light • No storage of large amounts of electricity possible, i.e. production necessary according to demand, in time and amount (equivalent to users). Therefore need of „backup“ power.

11. Typical Requirements for Different Power Plant Types Increasing minimum to Maximum load requirement shifts Regulation load Weighting of Product Requirements: Daily cycling of units Peak load: Simple-cycle GTPP, Hydro storage plants High Start-up Reliability Low start-up Evaluation Load Ramp Intermediate-load: Combined Cycle PP, Coal Plants Flexibility Part Load Efficiency Best Efficiency High availability Low Generation Costs Short Outage Period Base-load: Nuclear, Hydro Running Water, Coal Steam Plants Competition between gas and hard coal fired plants: High gas prices shift CCPP to lower load factors Renewables replace base load units be-cause of feed-in obligations, but need backup PP’s for wind shortfall Predictability (Weatherforecast) Increase in must run renewable Daytime Operational Flexibility: Increasing Challenges for Base Load Plants

12. Power Production Costs by Plant Types Production Costs (EURct/kWh) *) Average Annual Full Load Hours (h/a) Specific Investment (EUR/kW) Power Plant Type Variable Share / Total Costs Nuclear Power (1600 MW, 36%) 3.5- 1700 8000 0.8 Lignite (900 MW, 43%) 7000 1.5 1100 3.2+ Hard Coal (700 MW, 45%) 7000 1.9 850 3.4+ Combined Cycle (Gas) (450 MW, 58%) 7000 3.4 400 4.2+ IGCC Coal (700 MW, 47%) 1300 1.6 3.9+ 7000 Combined Cycle / CO2 –Sequestr./Liquific. (380 MW, 50%) 3.1 7000 580 4.3+ IGCC Coal / CO2 –Sequestr./Liquific. (630 MW, 43%) 1.8 7000 4.8+ 1750 *) Variable costs include fuel costs and O&M costs, while total costs include additionally capital costs Production costs averaged over plant operation time (Nuclear 45 years, Coal 35 years, CCPP 25 years, IGCC 30 years) Financing conditions: in general share of loans 70 %, interest on loan 6%, interest on equity 12%, discount rate 8%; for Nuclear EPR Finland interest on loan 4.5%, interest on equity 8%, discount rate 6%) Fuel prices: Hard coal: 2.00 EUR/GJ, Natural gas: 5.50 EUR/GJ, Nuclear fuel: 0.70 EUR/GJ (no price escalations)

13. Power Production Costs of Renewables by Plant Types Production Costs (EURct/kWh) *) Average Annual Full Load Hours (h/a) Specific Investment (EUR/kW) Power Plant Type Variable Share / Total Costs Hydro (Reservoir) (400 MW) 1800 5000 0.1 5.2 Hydro (Running Water) (30 MW) 5000 0.1 1800 7.0 Wind Power (Onshore) (1,5 MW) 1900 0.7 900 6.6 Wind power (Offshore) (3 MW) 3600 0.9 1500 6.0 Biomass (30 MW, 38%) 2700 8.0 4500 1.7 Geothermal (30 MW, 25%) 1.6 2200 6.9 5000 Photovoltaic (1 MW) 0.4 2400 40.0 6000 *) Variable costs include fuel costs and O&M costs, while total costs include additionally capital costs Production costs averaged over plant operation time (Hydro 45 years, Wind power 25 years, Biomass/Geothermal 30 years, Photovoltaic 25 years) Financing conditions: share of loans 70 %, interest on loan 6%, interest on equity 12%, discount rate 8%, Fuel prices: Biomass 1.30 EUR/GJ

14. Energy Landscape: Today & Tomorrow = 1 GW/a Today (2005 – 2007) 7 Tomorrow (2011 – 2015) Wind 6 Gas CC Hydro Costs of produced electricity [€ cent/kWh] 5 IGCC 4 Nuclear 3 Coal SPP 2 0% 20% 40% 60% 80% 100% Attractiveness Conventional Wisdom is Changing (security of energy supply, energy policy, environmental compliance, social acceptance)

15. Nuclear Reactor Generations Reactors with further enhanced safety and increased competitive-ness: Advanced water cooled reactors, e. g. EPR, SWR 1000, ABWR, AP1000 FutureAdditional Reactor concepts: e. g. HTR, FR CommercialPowerReactors PWR, BWR, CANDU,VVER/RBMK Fusion Generation IV Generation III, Generation III+ Generation II * Generation I Early Prototype Reactors * incl.. modernization, power increase and life time extension +Fusion? EPR / SWR1000 +New Types 1950 1970 1990 2010 2030 2050

16. Electricity generation costs, including emissions trading 60,0 54,2 Euro/MWh 50,1 50,0 44,3 44,3 10,0 19,6 Emissions tra-ding 20 €/t CO2 39,2 40,0 16,2 7,0 23,1 Fuel 30,0 27,3 23,7 17,9 22,8 2,7 13,1 23,4 20,0 40,1 Operation/Maintenance 14,9 7,2 8,2 6,5 7,4 10,0 Capital 3,5 13,8 13,0 10,2 7,6 5,3 0,0 Elspot Elspot Elspot Nuclear Coal Gas Peat Wood Wind 2000 2001 2002 Operating hours 2200h/a Finland Finland Finland Source: TVO operating hours 8000h/a Real interest rate 5,0% prices may 2003 R.Tarjanne&K.Luostarinen 15.05.2003 Reasons for fifth NPP in Finland

17. Natural Uranium & Thorium DISPOSAL Scheme of Nuclear Fuel Cycle 17

18. Nuclear Energy for Oil and Gas Exporting countries • Simplistic line: they have oil and gas, why would they need nuclear? • Domestic oil and gas consumption is increasing rapidly, subtracting from exports • Gas availability is limited: Iran cannot export, Qatar imposed moratorium, S.Arabia has not enough for all industrial projects

19. Paradoxical decisions • S. Arabia recently decided that all new power plants will be oil fired, in order to save gas for industry • But that oil is subtracted from exports – besides being underpriced • Abu Dhabi is considering coal or nuclear • The GCC as a group is considering nuclear

20. Other countries • Egypt and Algeria have also launched nuclear programs • The trend is pretty universal • Not just, and not primarily a response to Iran’s ambiguities

21. Iran: a long story • The nuclear program in Iran was initiated by the Shah • Attempts to deny Iran access to nuclear energy are unfounded in international law and good sense • Iran’s pursuit of enrichment is not “rational” except as provocation • Iran: • Is surrounded by nuclear powers (Russia, Pakistan, Israel, the US in the Gulf) • Suffered aggression and a very bloody war with Iraq • Has no external security guarantee