- Joint Program Report
Summary: This study shows that the U.S. electricity sector can meet projected electricity demand while reducing CO2 emissions by 90% from 2005 levels. If nuclear generation costs remain at current levels as estimated by the U.S. Energy Information Administration, and renewable costs fall substantially, so that levelized cost of energy (LCOE) costs are well below natural gas generation costs, the authors project a considerable expansion, especially of wind, even without a CO2 price. Given the low LCOE, one might expect a complete phase-out of carbon fuel-based electricity without a carbon price. However, the study finds that it takes a substantial carbon price to achieve deep decarbonization. Moreover, modest advances in lowering the cost of nuclear by about 25 cents per kilowatt hour create a substantial role for nuclear, and reduce the needed carbon price by two-thirds. Continued focus on lowering the cost of baseload generation from low-carbon sources such as nuclear would make achieving deep reductions in carbon emissions much less costly.
Abstract: Continued improvements in wind turbine and solar PV technologies have reduced their costs to the point that they are nearly competitive with natural gas generation. This would seem to suggest there is little reason to look at other low carbon power sources such as nuclear, considering that the cost of building nuclear power plants, one of the main low carbon alternatives in the power sector, has remained high. However, simple costs metrics such as levelized cost of electricity are poor indicators of the full system cost and the competiveness of different technologies. We use then an hourly electricity dispatch and capacity investment model, EleMod, to investigate whether nuclear power has a potential role in decarbonizing the US power sector, assuming that the cost of wind and solar continue to decline such that they become the least expensive of any generation option in terms of levelized cost.
We find that solar and wind expand to about 40% of generation even in a scenario without any carbon policy. Under an electricity-sector policy to reduce CO2 emissions by 90%, we find that existing nuclear is almost phased out, and no advanced nuclear, at a cost of $0.076/kWh (2006$), is built while solar and wind expand to provide over 60% of power generation in 2050, with most of the rest coming from gas, hydro and some still operating existing nuclear plants. However, if the cost of advanced nuclear is reduced to $0.05/kWh (2006$), in the emissions reduction policy case wind and solar expand until they reach about 40% of generation, as they did in the no policy scenario, and then nuclear expands to meet the remaining low carbon power supply. Our simulations show that the availability of nuclear reduces the needed carbon price in the power sector to meet the 90% reduction target from near $120/ton (2006$) of CO2 to under $40/ton (2006$) by 2050. From these results, we can conclude that the additional system costs of wind and solar are minimal until they reach about 40% of power supply, but after that level these extra costs rise, making room for other power technologies such as nuclear, which can significantly reduce the carbon price needed to achieve deep decarbonization in the US.