Nuclear energy and renewables : system effects in low-carbon electricity systems.

"NEA no. 7056."

Includes bibliographical references.

Executive summary -- Chapter 1. Introduction: system effects between nuclear energy and variable renewables -- 1.1. Why a study on the system effects of nuclear energy and variable renewables? -- 1.2. The nature of this study -- 1.3. Notions of system costs and their relation to externalities -- 1.4. The question of pecuniary externalities -- 1.5. A new role for nuclear energy -- Chapter 2. The effects of nuclear power at the level of the electricity system -- 2.1. Nuclear power plants as part of the electrical system -- 2.2. The siting issue -- 2.3. The importance of grid quality for nuclear power plants -- 2.4. Costs for a nuclear power plant . -- 2.5. Conclusion -- Chapter 3. The contribution of nuclear power to the minimisation of system effects in the short and long run -- 3.1. The flexibility potential of nuclear power plants in the short run -- 3.2. Long-term management of nuclear power plant fleets to minimise system costs -- 3.3. Conclusion -- Chapter 4. Determining and measuring the system costs of power generation -- 4.1. System costs in the electricity sector: the system cost matrix -- 4.2. Quantitative estimation of system costs for selected OECD countries -- 4.3. De-optimisation of the generation mix and pecuniary externalities -- Appendix 4.A. OECD system cost model -- Appendix 4.B. Supplementary tables and data -- Appendix 4.C. Calculation of the optimal generation mix using annual LOAD duration curve and residual duration curves Appendix 4.D Changes in the optimal generation mix -- a hidden system cost -- Chapter 5. Regulatory frameworks for the internalisation of system effects and the adequate remuneration of flexibility services -- 5.1. Introduction -- 5.2. Dispatchable back-up capacity, interconnections, storage and demand response: four options for the provision of flexibility services -- 5.3. Markets for managing variability and the provision of dispatchable capacity -- 5.4. Improving renewable support policies to reduce system effects -- 5.5. Conclusion -- Chapter 6. Future visions -- 6.1. The role of smart electricity grids in facilitating the interaction between intermittent renewables and nuclear power in integrated electricity systems -- 6.2. The economic potential of small modular reactors in integrated electricity systems -- Chapter 7. Modelling the system-wide interaction of nuclear power and renewables: a case study of Germany -- 7.1. Objective and background of this analysis -- 7.2. Methodology and presentation of the model -- 7.3. The case study -- 7.4. Summary -- Appendix 7.A. Structure and working of the E2M2S and the JMM used in the modelling -- Appendix 7.B. The impacts of the annual volatility of wind and solar generation -- Chapter 8. Lessons learnt and policy recommendations -- 8.1. System effects: the need for policy action -- 8.2. On this study -- 8.3. Lessons learnt -- 8.4. Policy recommendations -- ANNEXES -- Members of the Working Party on Nuclear Energy Economics (WPNE) -- Acronyms.

This report addresses the increasingly important interactions of variable renewables and dispatchable energy technologies, such as nuclear power, in terms of their effects on electricity systems. These effects add costs to the production of electricity, which are not usually transparent. The report recommends that decision-makers should take into account such system costs and internalise them according to a "generator pays" principle, which is currently not the case. Analysing data from six OECD/NEA countries, the study finds that including the system costs of variable renewables at the level of the electricity grid increases the total costs of electricity supply by up to one-third, depending on technology, country and penetration levels. In addition, it concludes that, unless the current market subsidies for renewables are altered, dispatchable technologies will increasingly not be replaced as they reach their end of life and consequently security of supply will suffer. This implies that significant changes in management and cost allocation will be needed to generate the flexibility required for an economically viable coexistence of nuclear energy and renewables in increasingly decarbonised electricity systems.