News in Depth: Dave Toke’s Cost Comparison of Nuclear and Wind

On May 15, Dave Toke, a Reader in Energy Politics at the University of Aberdeen, shared his analysis of the cost between nuclear power and both onshore and offshore wind power. Toke concluded that nuclear is, on the whole, more expsensive than both wind sources.

In this week’s News in Depth, we take a look at Toke’s analysis and discuss whether his conclusions and assumptions can apply in different context.

Comparing Nuclear with Wind Cost: Understanding the Numbers

Toke compares energy costs by using two main sources. First, he cites the UK Government’s 2013 contract with the operators of the Hinkley C nuclear power station in Somerset, England. The Government agreed to pay the price of £92.50 per/MWh over 35 years with a £10 billion loan guaranteed by the Treasury. Adjusted for inflation, the price is now closer to £94 per/MWh.

Toke then contrasts that example with the Government’s February announcement of new onshore and offshore windfarm contracts at £80 per/MWh and £120 per/MHh respectively over a shorter 15 year term (with no loan guarantee by Treasury). He notes that that these installations are yet to be built and thus he has to assume that these prices will remain stable for years.

So how does Toke arrive at his headline cost comparison figures of £83 per/MWh for nuclear, £78 per/MWh for offshore wind, and £73 per/MWh for onshore wind? For the full breakdown, please take a moment to read Toke’s full post. However, for context, know that Toke is taking a longer term view, building in the cost of refurbishment of both nuclear facilities and wind turbines.

He assumes a lifespan of 45 years for nuclear – lower than what he calls the wrongfully “accepted average” – and a lifespan of 45 years for wind (with a refurbishment after 25 years). He argues that the refurbishment of the wind turbines is much less expensive than the initial construction costs, as the foundations and electrical infrastructure can remain in place. As a result, both offshore and onshore wind are, in his analysis, much cheaper than nuclear. Toke concludes:

Hence we can see that both onshore wind and offshore wind are cheaper over 45 years even before we take the considerable advantage given to nuclear power by the loan guarantee on offer and also that the prospect of cost reductions is much stronger in the case of wind power than nuclear power.

Cost Comparison

Image Source: Dave Toke’s Green Energy Blog

The Take-Away’s and Potential Criticisms of Toke’s Analysis

So what are the potential takeaways and criticisms of Toke’s comparison? It must be said that his comparison is of course site specific, but there is little use in criticizing or dismissing his numbers simply because of their limited scope. Rather, we have to think about both the wider repercussions of his conclusions and about what his analysis elides: what assumptions are at play and what figures are not addressed?

It’s clear that one missing element is any discussion of the nature of the power sources themselves. Namely, nuclear, on the whole, provides a steady source of energy production during operation. Wind and solar are susceptible to the elements. I am not claiming that Toke is ignoring such a basic idea, he is looking at the averages here and at the government contract values, but it is nevertheless useful to bear in mind the fundamental difference in how the energy is produced if we are too think about cost in a broader sense.

Toke also makes assumptions about the refurbishment costs and construction methods employed in the offshore wind installations. Notably, he hedges when discussing the scope of refurbishment,

if they are refurbished (say after 20 years) the costs may NOT include the foundations, towers and electrical connections since they will already exist.

While assumptions like these may be informed and necessary for the short analysis of a blog post, they potentially undermine the profundity of the final conclusion regarding the cost benefits of solar vs. nuclear. The costs may indeed be lower, but such conclusions will take time to be tested in the years to come.

PWU and OCI promote nuclear over wind power

The Power Workers’ Union (PWU) and the Organization of Canadian Nuclear Industries (OCI) issues a press release promoting investment in nuclear power generation instead of further investment in wind power.

The press release was based on a report from Strategy Policy Economics Inc.  It posits two scenarios.  The first scenario sees an expansion of Ontario’s wind farms and natural gas power stations to compensate for the intermittency of wind power.  The second scenario would scale back the growth of wind power in favour of refurbishing existing nuclear plants and building new ones.  According to the report, investing in nuclear power represents a $60 billion net incremental increase to Ontario, when compared to retaining wind power.  They also predict a 108 million tonne reduction in greehouse gasses in the nuclear scenario.

The report and the press release that followed come just as the Government of Ontario reviews its Long Term Energy Plan (LTEP), created in 2010.

Sources:

PRESS RELEASE: New study concludes that nuclear generation is the best investment for Ontario’s energy future, Power Worker’s Union, http://pwu.ca/

Brouillette, Marc, Ontario Electricity Options Report, Strategy Policy Economics Inc., http://strapolec.ca/