cost-related issues affecting nuclear power deployment ... meetings/09-30... · cost-related issues...

Cost-Related Issues Affecting Nuclear Power Deployment within the Brazilian

Energy Planning Process

Marcelo WendelEnergy Research Analyst

Idaho Falls, United States of America

October 2019

Introduction

• About EPE

• Governmental agency in charge of energy planning

• Supports the Ministry of Mining and Energy in its decision-making process

• The Brazilian nuclear power programme

• Number of projects to date: 3

• Early decades: 1940-1970

• Construction of Angra I: 1972/1985

• Construction of Angra II: 1981/2001

• Construction of Angra III: 1984/...Brazil has an installed capacity of ~164 GW

(1.2% nuclear)

Objectives of this presentation

• To present a framework for understanding power sector planning within the Brazilian context

• To use this framework for analysing:

1. different methodological approaches

2. different assumptions on the nuclear program

3. and how these translate into opportunities and challenges for nuclear power

PART I: The frameworkOne of the goals here is to a give a sense of what is done and what

is not done within the Brazilian power sector planning process.

Power sector planning in Brazil

Medium and long-term planning

• PDE: Ten-year Energy Expansion Plan

• PDE 2027: published

• PDE 2029: still under development

• PNE: Long-term National Energy Plan

• PNE 2030: published in 2006

• PNE 2050: still under development

* Isolated grids not covered in these plans

Modelling

• Brazil does not use the more commonly used software packages (e.g. MESSAGE)

• The power sector has historically relied on its own software packages

• PDE (10 years)

• Coupled process involving different software packages

• Capacity expansion on a MWh basis – MDI

• System operation – Newave

• Capacity assessment

• PNE (longer term)

• Just one software package: Planel

PDE

(ten-year plan)

• PDE focuses on system supply adequacy

• This is NOT where most of the discussion around nuclear power takes place

• Angra III being considered as an input to the model (to be commissioned in 2026)

• No other newly built power plants (due to the time frame)

PDE 2027 – Power generation mix

PNE

(long-term plan)

• PNE provides a sense of risks and opportunities in the long term

• PNE focuses on a more strategic analysis than the 10-year plan

• Which technologies?

• What time schedule?

• In which region of the country?

• Would we have supply chain issues?

• This is where most of the discussion around nuclear power takes place


Methodological aspects

• Cost optimization model

• LCOE approach

• Minimization of cost for both capacity expansion and system operation

• Given set of generation technologies


Optimization model

• Costs considered

• Overnight costs

• Financing costs

• O&M costs

• Fuel costs

• Costs not considered

• Some grid-level system costs

• External costs (unless previously included as part of the project)


Costs not considered

• Cost of transmission inside each zone

• Flexibility and load following

(may be relevant for advanced nuclear)

• CO2 emissions

• Pollution and health effects

(e.g. particulate matter)


Other methodological aspects

• Predefined set of assumptions

• For nuclear power specifically:

• Assumptions based on a similar nuclear power programme

(conventional large-scale light-water reactors)

• Assumptions based on international data

(limited experience with nuclear power plant construction in Brazil)

• No sensitivity

• No risk analysis

Cost-related assumptions

Investment cost 5000 US$/kW

O&M cost 110 US$/kW/year

Fuel cost 9 US$/MWh

Lifetime 60 years

Construction time 7 years

Efficiency 33%

Installed capacity 1000 MW

Average capacity fator 85%

Decommissioning cost 200-500 US$/kW

Published data from PNE 2050

PART II: The analysesNow that we have a framework, what kind of analysis can we make?

If we look back in history?

Angra III Power Plant timeline

• The Angra III project has raised serious concerns

• The project has been on hold since 2015

• Construction began in 1984

constructionbegan 1984

constructionhalted 1986

constructionresumed 2010

constructionhalted 2015




Fuel cost 9 US$/MWh

Lifetime 60 years


Efficiency 33%





Should we take this

into account?

New assumption?


Limited experience with

nuclear power plant

construction in Brazil

Greater uncertainty for

the cost estimates

needed as input




Fuel cost 9 US$/MWh

Lifetime 60 years


Efficiency 33%





Should we take this

into account?

Risk analysis?


• We would probably find out that nuclear power would be much less competitive

• This can be critical in the case of Brazil

(cost of capital has been historically high)

New assumption? Risk analysis?


• And nuclear power has faced some challenges even internationally

• Mostly capital-intensive projects

• Frequent delays and cost overruns

• General trend of rising costs

• Fragmented supply chains

• Financing difficulties

If we instead looked into the future?

What about SMR and advanced nuclear reactors?

• Very promising opportunities

• Shorter construction time periods

• Better financing

• More integrated and optimized supply chains

• Better suited to load following

• This can be an even more interesting opportunity for Brazil

(cost of capital has been historically high)


What about SMR and advanced nuclear reactors?

• But there are some challenges (new risks)

• Poor track record

(costs and construction time)

• Supply chain issues

• Licensing issues


How would we model that?

Predefined set of

assumptions

Assumptions based on

conventional large-scale

light-water reactors

Different assumptions

Greater uncertainty for

many of the variables


• There is also an ongoing discussion in Brazil about a potential power sector reform

• Power Sector Modernization Working Group

(established by Ministerial Order No. 187/2019)

• Redesign of the capacity mechanism

• The grid may experience capacity constraints in the near future

• Explicit incentive for capacity availability (on a MW basis)

• Opportunity for also discussing

• Environmental aspects (e.g. CO2 emissions certificates)

• Operational flexibility


However…

1. Do the optimization models take into account CO2 emissions?

Partially (sensitivity analysis)

2. Do the optimization models reflect the real capacity and flexibility needs of the system?

Flexibility: No

Capacity: Yes, but the models can be further improved to better reflect that


More accurate information on system capacity needs could be achieved by means of:

• A finer time discretization

• Better coupling between the software packages

(in the case of PDE)


If the optimization model does not favour nuclear power, could we conclude

that new nuclear power plants will not be deployed?


No




First

• The plans serve as a reference for policy-makers and market players

(not mandatory)




Second

• Even if the optimization models do not take into account some of the

benefits of nuclear power, it does not mean that they will be ignored by

policy-makers




• EPE focuses mainly on economical and reliable supply of power

• There are other concerns regarding the nuclear sector in Brazil, such as:

• Other civilian applications of nuclear technology (e.g. for medical purposes)

• Industrial policy

• Science and technology policy

• Human resources


• Due to the positive externalities of a nuclear power programme, the benefits for society go beyond the power sector and so the discussion should involve many other stakeholders

• Nuclear Power Program Committee

• Federal Decree No. 9828/2019

• Composed of several state ministries

So what is the point of planning?

• The incremental cost for the power sector (if this is the case) can be outweighed against the benefits for other sectors of society

• This is particularly important for low- and middle-income countries

• This can also provide a reference for thinking about the sharing of costs between electricity consumers and taxpayers

• This is a more transparent way of developing policies for the nuclear sector

• Nevertheless the challenge remains

• At the end of the day, the evidence from these studies will only make sense if the optimization models use high-quality input data, including cost assumptions

PART III: Conclusion

Conclusion

• Policy-makers should rely on high-quality and evidence-based planning studies

• In Brazil, the long-term studies carried out by EPE have a time frame of about 30 years

• There are great opportunities within this time frame, but we are taking a more conservative approach: to consider just one (proven) technology

• Those in charge of policy-making are usually not nuclear specialists

Conclusion

• The Brazilian experience suggests that if we want to better explore the real opportunities that exist around the world for nuclear power (including not only high-income countries) and do it in an informed way, we should aim towards:

I. a more multidisciplinary and inclusive approach (involving many stakeholders)

II. cooperation among policy-makers, regulators and the nuclear community

III. international cooperation among policy-makers regarding SMR and advanced nuclear technologies

Avenida Rio Branco, 1 - 11o andar

20090-003 - Centro - Rio de Janeiro

www.epe.gov.br

/epe.brasil @epe_brasilepe_brasil /EPEBrasil

Thank you very much

cost-related issues affecting nuclear power deployment ... meetings/09-30... · cost-related issues...

Documents