System LCOE: What are the Costs of Variable Renewables?


From the Potsdam Institute for Climate Impact Research, a serious piece of work on renewable integration costs.


Levelized costs of electricity (LCOE) are a common metric for comparing power generating technologies. However, there is qualified criticism particularly towards evaluating variable renewables like wind and solar power based on LCOE because it ignores integration costs that occur at the system level. In this paper we propose a new measure System LCOE as the sum of generation and integration costs per unit of VRE. For this purpose we develop a conclusive definition of integration costs. Furthermore we decompose integration costs into different cost components and draw conclusions for integration options like transmission grids and energy storage. System LCOE are quantified from a power system model and a literature review. We find that at moderate wind shares (~20%) integration costs can be in the same range as generation costs of wind power and conventional plants. Integration costs further increase with growing wind shares. We conclude that integration costs can become an economic barrier to deploying VRE at high shares. This implies that an economic evaluation of VRE must not neglect integration costs. A pure LCOE comparison would significantly underestimate the costs of VRE at high shares. System LCOE give a framework of how to consistently account for integration costs and thus guide policy makers and system planers in designing a cost-efficient power system.

How Taxes Pervert our Energy Choices

In 2009 Nuclear engineer Joseph Somsel examined some of the US tax code provisions which favor building wind rather than nuclear power. This was originally published in American Thinker.

(…snip…) the current code allows what’s called accelerated depreciation so that they can recover the capital costs earlier in the asset’s life rather than later.  Like cash and lottery payouts, a tax deduction today is worth more than one 20 years from now so we can see how Congress views competing electrical generation sources by how quickly they allow the write-offs to occur.

For wind farms, the current code allows the write-offs over 3.5 years, a real boon for investors in wind mill projects. In fact, many such projects depend on this tax advantage to secure financing, especially since the right to take these deductions can be allocated with some freedom amongst the project’s investors and the developers.

Alas, for nuclear power plants, the tax picture is not so rosy.  They have to take their write-offs over 20.5 years, a significant disadvantage over a comparable investment in a wind project.  Taking a hypothetical $5 billion in generation investment in each technology, here’s a chart showing when those deductions could be taken and for how much:


From this chart, it is easy to see that the investors in a wind project get to write-off a LOT more money a LOT sooner than the investors in a nuclear plant.  This is greatly to the advantage of the wind developers.  At a 35% corporate tax rate, the difference in Year 2 alone is over $650 million in bottom line after-tax profits to the wind investors – that’s cash money that can cut dividend checks.  Maybe now you can see why T. Boone Pickens is pushing wind farms.

Let’s take the figures from Department of Energy’s Energy Information Agency for capital costs and productive experience (“capacity factor”) to see exactly what this means in terms of electrical production.  Let’s assume an equal “overnight” investment of $5 billion in wind mills and $5 billion in nuclear power plants.  That will buy you about 1.5 gigawatts of nuclear capacity and 2.6 gigawatts of wind farm capacity.  However, that’s only the equipment’s theoretical ability to make electricity and not how much electricity it likely will supply per year once in service.  For that we need to multiply our capacity by something called “capacity factor” which is what it really delivers.  Again, using EIA’s numbers on what really happens out in the real world in terms of expected production:


So that $5 billion will produce over TWICE the annual electrical output for American consumers if invested in nuclear power plants than if in wind farms.  One has to ask, do these provisions in the tax code really serve Americans’ interests or are they written with someone else in mind?  Yet, Congress wants 20% of our electricity to come from “renewables” like wind.  The California legislature, to prove its green bona fides, recently passed a law to make California electric consumers buy 33% of their electricity from renewables.  All I can say is, “Thanks guys!”


So, in comparing the tax treatment of wind against that of nuclear power, one could get the idea that Congress is rewarding the inefficient while hobbling the productive.  I’d call that perversion and poor public policy.

Burton Richter: America’s Nuclear Future

We cannot get a coherent accepted long-term plan. The French have a long-term plan. The Koreans, the Chinese, the Russians have it. We don’t have it. That’s not the fault of the labs, that’s the fault of the administrations.

Burton Richter is my #1 choice for energy policy advisor. In the recent Breakthrough interview you’ll read the true story of the state of Gen IV reactors and what passes today for “US policy”:

When it comes to nuclear energy, Dr. Burton Richter is Mr. Credible. Winner of the 1976 Nobel Prize for discovering a new sub-atomic particle, Richter has advised presidents and policymakers for almost 40 years. Richter has been a Breakthrough Senior Fellow since 2011, and is technical adviser to the forthcoming documentary, “Pandora’s Promise,” about pro-nuclear environmentalists.

Breakthrough interviewed Richter recently to get his opinion on next generation nuclear reactors, and why so many of them are being developed abroad and not by the Department of Energy in the United States. “The DOE is too screwed up to go into a partnership and do this in the US,” the blunt Richter told us, referring to the Bill Gates-backed nuclear design pursued in China by Terrapower.

Is DOE really to blame? In the end, Richter told us it was partisan polarization that was the problem. “George W. Bush actually had a good thing on next generation nuclear,” Richter said. “When the Obama people came in all the Gen IV activities were stopped. With a system that keeps changing its priorities every few years, the [National DOE] Labs are pretty demoralized. The French have a long-term plan. The Koreans, the Chinese, the Russians have it. We don’t have it. That’s not the fault of the labs, that’s the fault of the administrations.”

And that’s the fault, we might add, of irrational environmentalist and progressive fears of nuclear energy — something “Pandora’s Promise” hopes to change. Read the rest of our interview below.

What is the future of next generation nuclear reactors?


What about the reactor designed by Nathan Mhyrvold and backed by Bill Gates through Terrapower?

They had to change designs because the original design of a kind of slow-burning candle didn’t work. The new version is supposed to have a core that would be sealed for 50 years. But it’s not completely sealed because you have to shuffle the fuel rods. One advantage is that that at the end of 50 years, the waste is so impure that nobody would want anything to do with it for making a weapon.

Terrapower is being done in China because in the US there’s no way he could get it licensed. And the DOE is too screwed up to go into a partnership and do this in the US.

We always hear from people that DOE is screwed up. But what exactly does that mean? Can it be fixed?

Consider the fact that the DOE can, at one of its labs, go ahead with an experimental fission system that is not approved by the Nuclear Regulatory Commission (NRC). After all, the DOE is supposed to develop new technologies, while the NRC is supposed to deal with things in the civilian nuclear world.

In other words, the labs don’t need NRC approval to make a 5MW version of TerraPower’s reactor. They could just go do it. But it’s so agonizing to get [lab] approval for that kind of thing. So political. Ultra-greens would say too dangerous and NRC has to approve it, and NRC would say it will look into it and it would take a decade.

That’s the reason Nathan [Mhyrvold] and Bill Gates said, “Let’s build the first one in China.”

Is the problem with Congress or DOE?

Both. At DOE there are a lot of layers of bureaucracy and very little continuity. Everything changes with every new administration. The long-term goals change. The result is that the labs have become very conservative.

With a system that keeps changing its priorities every few years, the labs are pretty demoralized. We cannot get a coherent accepted long-term plan. The French have a long-term plan. The Koreans, the Chinese, the Russians have it. We don’t have it. That’s not the fault of the labs, that’s the fault of the administrations.

Is this a problem of ideological and partisan polarization?

George W. Bush actually had a good program on next generation nuclear. We were part of the Generation IV International Forum, working closely with Japan and France. We had a program that was headed toward certain kinds of advanced reactors, including liquid sodium, and a high temperature gas reactor. When the Obama people came in all the Gen IV activities were stopped. Yucca Mountain was shut down. And we’re off in totally new directions.

Partly, but there were even changes between the first George W. Bush term and the second. In first term, they were talking about reprocessing, and the second Gen IV designs. We have an on again off again program that changes too often. The next problem is the budget. The DOE nuclear budget is a complete mess. They are working off of a continuing resolution, and in that process you always take the lower budget line from either the Senate or House. This creates massive amounts of uncertainty in the programs.

Who can change that? Can Obama just tell the labs to build a next gen nuclear reactor?

No, it has to go to Congress to change. The whole structure has to change.

What’s your general impression of the integral fast reactor (IFR), the prototype of which ran at Argonne-West [which is now part of Idaho] National Lab, and is now being marketed by General Electric as the PRISM reactor?

The IFR is a sodium-cooled fast spectrum reactor with all the good and bad that come with it. The one sodium cooled reactor at Hanford ran for thirty years until we drilled a hole into it [after Congress ended funding for it in 1994]. France and Russia built versions as well.

What’s new to the IFR is the on-site reprocessing, and the feeding back of the actinides [radioactive elements like uranium and plutonium] back into the fuel, so that nothing ever leaves it. The new IFR trick is in the electrorefining [sometimes called pyroprocessing] to reprocess the waste into new fuel, making it a continuous fuel cycle. So think of the IFR as a liquid sodium fast spectrum breeder reactor with a trick as to how to do the separation of actinides in an effective fashion.

Electrorefining is the most interesting new element in the IFR, but it has been hard to figure out how to get it working well enough to be used commercially.

Who is working on improving electrorefining?

South Korea is very interested in electrorefining and would like to do a joint program with the US. The question is whether we’ll let them do it. The 123 agreement we have with them says that the US has to agree to any reprocessing. The Nuclear Energy Advisory Committee to the DOE has said that if you’re going to do this, then having a Korean partner would be a great idea.

Wouldn’t technologies like the IFR greatly reduce the amount of waste needed?

You need a geological repository anyway because you always have fission fragments, and that’s the really radioactive stuff. So if pyroprocessing worked perfectly the long lived components would be removed to be used as fuel, and after 500 years you wouldn’t have to worry about them any more because the radioactivity would be low.

So you’ll still need a repository, though probably not for 100,000s of years. But there’s a big if here. How efficiently can you separate these long-lived actinides from the fission fragments? If you allow only a few percent of the actinides in, then it will be for 100,000s of thousands years. It has to be really good. Right now, it’s not that good. The people working on it say they have good ideas but they haven’t fixed it yet.



Forecasts of LCOE for various energy options for 2015, 2025

Here are some essential resources for analyzing the real world costs and benefits of electrical generation options. 

This is the omnibus study. You will want to download this one for your reference library for sure: Electric Power Research Institute (EPRI ): Program on Technology Innovation: Integrated Generation Technology Options

The Integrated Generation Technology Options report provides an executive-level overview of near-term (5 – 10 years) as well as longer term (2025) electricity generation technology costs and performance. The purpose of this document is to provide a public domain reference for industry executives, policy makers, and other stakeholders. This report is based on 2010 EPRI research results and updates the Integrated Generation Technology Options report published in November 2009. [1] 

EPRI: Generation Technology Options in a Carbon- Constrained World. This slide deck references the above EPRI Report 1022782. Examines the sensitivity of LCOE to carbon prices and forecasts relative costs for 2015 and 2025. Here is the 2025 LCOE sensitivity to cost of CO2:

Click the thumbnail for original size image

How carbon pricing changes the relative competitiveness of low-carbon baseload generating technologies” an excellent meta study of LCOE generation options in Energy Volume 36, Issue 1, January 2011, Pages 305–313 by Martin Nicholson, Tom Biegler, Barry W. Brook. 

There is wide public debate about which electricity generating technologies will best be suited to reduce greenhouse gas emissions (GHG). Sometimes this debate ignores real-world practicalities and leads to over-optimistic conclusions. Here we define and apply a set of fit-for-service criteria to identify technologies capable of supplying baseload electricity and reducing GHGs by amounts and within the timescale set by the Intergovernmental Panel on Climate Change (IPCC). Only five current technologies meet these criteria: coal (both pulverised fuel and integrated gasification combined cycle) with carbon capture and storage (CCS); combined cycle gas turbine with CCS; Generation III nuclear fission; and solar thermal backed by heat storage and gas turbines. To compare costs and performance, we undertook a meta-review of authoritative peer-reviewed studies of levelised cost of electricity (LCOE) and life-cycle GHG emissions for these technologies. Future baseload electricity technology selection will be influenced by the total cost of technology substitution, including carbon pricing, which is synergistically related to both LCOE and emissions. Nuclear energy is the cheapest option and best able to meet the IPCC timetable for GHG abatement. Solar thermal is the most expensive, while CCS will require rapid major advances in technology to meet that timetable.


4.1. Lowest cost and lowest EI both critical in power generation

Electricity costs impact upon productivity growth, so generating costs need to be kept to a minimum (see Section 1.3). As can be seen from the data in Table 4, the more recent studies show increases in LCOE (excluding any carbon price) which exceed the rise in the CPI over the same period. This might suggest an escalation in future electricity prices over and above any increase from carbon pricing. Increasing costs will slow down the deployment of new low-carbon power plants and risk compromising our ability to achieve the 2050 emission reduction target (see Section 1).

Fig. 1. Levelised cost of electricity (LCOE) for baseload electricity generating technologies. Error bars represent 90% confidence intervals for the mean (bar height).


Fig. 2. Emission intensity for fit-for-service baseload electricity generating technologies. Error bars represent 90% confidence intervals for the mean (bar height).


Fig. 3. Impact of carbon pricing on levelised cost of electricity (LCOE) for FFS low-emission baseload technologies.

It is very important to recognize that LCOE costs are significantly understated for intermittent, non-dispatchable generation sources, such as wind or solar. It is a complex undertaking to properly analyze the cost of intermittency, and the free market, non-subsidized price of non-dispatchable power. Accurate costing must include the LCOE for the backup dispatchable power, and additional transmission infrastructure required to ship intermittent power from remote geographies to the locations of demand. 

One source I can recommend is the Joskow discussion paper. He recognizes the complexities, concluding his analysis with three cases or scenarios showing how widely the intermittent costs and profitability can vary. 

Comparing The Costs Of Intermittent And Dispatchable Electricity Generating Technologies by Paul L. Joskow Alfred P. Sloan Foundation and MIT [download PDF

Economic evaluations of alternative electric generating technologies typically rely on comparisons between their expected life-cycle production costs per unit of electricity supplied. The standard life-cycle cost metric utilized is the “levelized cost” per MWh supplied. This paper demonstrates that this metric is inappropriate for comparing intermittent generating technologies like wind and solar with dispatchable generating technologies like nuclear, gas combined cycle, and coal. Levelized cost comparisons are a misleading metric for comparing intermittent and dispatchable generating technologies because they fail to take into account differences in the production profiles of intermittent and dispatchable generating technologies and the associated large variations in the market value of the electricity they supply. Levelized cost comparisons overvalue intermittent generating technologies compared to dispatchable base load generating technologies. They also overvalue wind generating technologies compared to solar generating technologies. Integrating differences in production profiles, the associated variations in the market value of the electricity supplied, and life-cycle costs associated with different generating technologies is necessary to provide meaningful comparisons between them. This market-based framework also has implications for the appropriate design of procurement auctions created to implement renewable energy procurement mandates, the efficient structure of production tax credits for renewable energy, and the evaluation of the additional costs of integrating intermittent generation into electric power networks.


AFUDC: Allowance for Funds Used During Construction AGR: Advanced Gas-cooled Reactor
ALWR: Advanced Light Water ReactorARRA: American Reinvestment and Recovery Act BWR: Boiling Water Reactor
CC: Carbon Capture
CCS: Carbon Capture and Storage
CF: Capacity Factor
CFB: Circulating Fluidized Bed
CLFR: Compact Linear Fresnel Reflector
COE: Cost of Electricity
COL: Combined Operating License
COLA: Combined Operating License Application
CST: Concentrating Solar Thermal
CT: Combustion Turbine
CTCC: Combustion Turbine Combined Cycle
DC: Direct Current
DOE: Department of Energy
EPA: Environmental Protection Agency
EU: European Union
FBC: Fluidized Bed Combustion
FGD: Flue Gas Desulfurization
FOM: Fixed Operating and Maintenance Costs
GHG: Greenhouse Gas
GW: Gigawatts
HHV: Higher Heating Value
HRSG: Heat Recovery Steam Generator
HTF: Heat Transfer Fluid
IB MACT: Industrial Boiler Maximum Achievable Control Technology IGCC: Integrated Gasification Combined Cycle
IPP: Independent Power Producer
LCOE: Levelized Cost of Electricity
LFR: Linear Fresnel Reflector
LWR: Light Water Reactor
MACRS: Modified Accelerated Capital Recovery System MMBtu: one million British thermal units.
MW: Megawatts
NRC: Nuclear Regulatory Commission
NREL: National Renewable Energy Laboratory O&M: Operation and Maintenance
OEM: Original Equipment Manufacturer
PC: Pulverized Coal
PPA: Power Purchase Agreement
PRB: Powder River Basin (coal)
PV: Photovoltaic
PWR: Pressurized Water Reactor
RES: Renewable Energy Standard
RETG: Renewable Energy Technology Guide RPS: Renewable Portfolio Standards
SCR: Selective Catalytic Reduction SMR: Small Modular Reactor SCPC: Supercritical Pulverized Coal TAG: Technical Assessment Guide TCR: Total Capital Required
TPC: Total Plant Cost
USC PC: Ultra-Supercritical Pulverized Coal VOM: Variable Operating and Maintenance Costs <br

Energy Policy: Burton Richter

I would like to recommend my current favorite introduction to both climate change and energy policy.This is Stanford University nuclear physicist and Nobel laureate Burton Richter’s 2010 book: Beyond Smoke and Mirrors: Climate Change and Energy in the 21st Century. It is very accessible to the non-technical reader, and balanced in the presentation of energy policy options. Dr. Richter calls energy-policy winners and losers as he sees them, and has a real talent for making the complex understandable. E.g., for a sample of Richter’s no-nonsense style, he was interviewed by Mark Golden for Power Engineering. Excerpt:

If you got one wish on international policy on climate change, what would it be?

That we would abandon the stupid notion of legally binding agreements on emissions. What are the fines for not meeting your agreements? Who levies the fine? Where does the money go? There are no sanctions, so what does “legally binding” mean?

Also, 15 countries are responsible for more than 80 percent of the world’s emissions. Why are we trying to get a deal with 196 countries, most of which are spending all their time trying to figure out how to get the richer countries to pay them money? What we really need is to get these 15 countries, which includes some developed countries and some rapidly developing countries, to agree on a deal.


Your book takes a middle ground between the deniers of climate change and what you call “ultra-greens,” who insist on drastic action immediately but reject nuclear power and some other low-carbon solutions. Can you talk about that middle ground?

What I tried to say is: Here is what we know, and here is how we know it. Here’s what the uncertainties are. Here’s what I think we ought to be doing. But the reader should think about what we ought to be doing, too.

The future is hard to predict, because it hasn’t happened yet. For some, this is an excuse for inaction. “We don’t know enough. Since we don’t know enough, we shouldn’t do anything.” Whereas there are a lot of things we can do now that don’t cost much at all and that can have a relatively large impact.


Richter continues the pragmatic policy theme by showing why Calfornia should cancel its USD 2. billion subsidy “Million Solar Roofs” program. Instead for less than 20% of that cost, twice the CO2 emissions could be eliminated by converting the Four Corners power station to natural gas. I don’t like the lock-in effects of new investment in gas plants – but I think he is correct. In the light of what is politically feasible today, this is good policy.

Nuclear cost competitive with coal in China and the US Southeast

Harry is my goto source on electrical generation industry perspective. E.g., coal prices vary widely around the world depending especially on transportation costs (and grade obviously). Harry’s comment on BNC caught my attention. Our quest for new-build zero carbon electricity that is “cheaper than coal” is already happening in certain markets:

As a rule of thumb Nuclear is ‘cost competitive’(not considering externalized costs) in a ‘new build environment’ with coal at $4/MMbtu and Natural Gas at $6/MMBtu.

Those conditions exist in China and the US Southeast. That is where AP1000′s are being built. Those conditions also exist in the UK where the government position is ‘nuclear without subsidy’. They also exist in a good many other places in the world.

Australia and the US West have considerable quantities of coal that can be extracted and delivered a reasonable distance to market for well under $4/MMBtu. The discussion as to how to make cleaner technologies financially competitive with coal is therefore a much more difficult discussion.

Imagine how much lower the US cost will be once the “lawyer-protester” risk falls away, and the plants are mass-manufactured.

Mark Lynas: In defence of nuclear power

Mark discovers that the latest anti-nuclear attack is organized by the renewables industries.

Yesterday I wrote a post in defence of offshore wind. Today I feel compelled to write in defence of nuclear power. I do not see any contradiction here – both are major climate mitigation options that can play a substantial role in decarbonising the UK economy. Ironically, however, today’s attack on nuclear comes from environmentalists, many of whom have devoted years of their lives to raising awareness of the threat from climate change and seem unable to appreciate the harm they are currently doing.

At issue is a press release I received this morning via email entitled ‘Lawyers send complaint to the European Commission about subsidies for nuclear power’. I cannot find it online to add a link, but earlier material from the group responsible, an outfit called ‘Energy Fair’, may be found here. The release begins:

A formal complaint about subsidies for nuclear power has been sent to the European Commission. If it is upheld, it unlikely that any new nuclear power stations will be built in the UK or elsewhere in the EU. The complaint may be followed by legal action in the courts or actions by politicians to reduce or remove subsidies for nuclear power.

It further alleges that nuclear operators are not “properly insured”, and that

if nuclear operators were fully insured against the cost of nuclear disasters like those at Chernobyl and Fukushima, the price of nuclear electricity would rise by at least 14 Eurocents per kWh and perhaps as much as 2.36 Euros, depending on assumptions made. Even with the minimum increase, nuclear electricity would become quite uncompetitive.

At this point, you may be wondering – like I was – who Energy Fair actually is, and who might be behind this legal challenge. The press release states that

Lawyer Dr Dörte Fouquet, with a lawyer colleague, has prepared the formal complaint to the European Commission on behalf of Energy Fair and other environmental groups and environmentalists

and (with admirable openness) reveals that Dr Fouquet is actually Director of the European Renewable Energies Federation, whilst others of the supporters also have commercial interests in the renewables sector. These include Jeremy Leggett from the company SolarCentury, whilst the originator of the press release, a Dr Gerry Wolff, is involved in the Desertec solar initiative in North Africa.

In other words, what Energy Fair seems to represent is an effort from one heavily-subsidised industry to attack presumed subsidies in another – hardly very ‘fair’. It is disappointing that members of what I call the ‘Green orthodox church’ (those of a certain age who have never had an open mind on nuclear and never will, like Leggett, Jonathon Porritt and Tom Burke) have joined this effort despite the unacknowledged commercial conflict of interest. And it is particularly disappointing to see Friends of the Earth also on the list, and to see Mike Childs from FoE quoted at length in the press release.

All this is especially depressing given the reality of the figures, which is that nuclear provides the vast majority of the UK’s current low-carbon electricity – as much as 70% according to the Nuclear Industry Association, whilst avoiding the emission of 40 million tonnes of carbon dioxide per year. This is why I want to see more nuclear power in the UK and elsewhere, in order to avoid more carbon emissions, and I cannot understand the reasoning of those who claim to work for the good of the climate but put so much effort into opposing the primary existing source of low-carbon electricity.

As George Monbiot aptly puts it in an email to me today in response:

The efforts some people will make to destroy a low-carbon technology are remarkable. We are facing perhaps the greatest crisis humanity has ever encountered – runaway climate change – and instead of tackling the source of the problem (fossil fuels), environmentalists are attacking one of the solutions. People will look back on this era and wonder how such madness took hold.

Read the whole thing »

IEA: the world is locking itself into an unsustainable energy future

If we don’t change direction soon, we’ll end up where we’re heading

The World Energy Outlook 2011 is the most depressing of the International Energy Agency (IEA) outlooks that I have read. Check out the executive summary [PDF], and the associated slideshow deck. IEA has changed their policy to charge a significant access fee. The electronic version (1 user license) is €120 {happily PDFs of the pre-2010 books remain free}. You can access several useful extracts from the full report at the WEO home page, e.g., Developments In Energy Subsidies.

How to summarize? I think these two paragraphs capture the outlook — our chances of holding GHG concentrations to levels of 2°C are slipping through our inactive fingers:

Steps in the right direction, but the door to 2°C is closing

We cannot afford to delay further action to tackle climate change if the long-term target of limiting the global average temperature increase to 2°C, as analysed in the 450 Scenario, is to be achieved at reasonable cost. In the New Policies Scenario, the world is on a trajectory that results in a level of emissions consistent with a long-term average temperature increase of more than 3.5°C. Without these new policies, we are on an even more dangerous track, for a temperature increase of 6°C or more.

Four-fifths of the total energy-related CO2 emissions permissible by 2035 in the 450 Scenario are already “locked-in” by our existing capital stock (power plants, buildings, factories, etc.). If stringent new action is not forthcoming by 2017, the energy-related infrastructure then in place will generate all the CO2 emissions allowed in the 450 Scenario up to 2035, leaving no room for additional power plants, factories and other infrastructure unless they are zero-carbon, which would be extremely costly. Delaying action is a false economy: for every $1 of investment avoided in the power sector before 2020 an additional $4.3 would need to be spent after 2020 to compensate for the increased emissions.

I remain skeptical of the wisdom and indeed the technical feasibility of CCS. But IEA says, in effect, “we gotta”:

(…) In the New Policies Scenario, CCS plays a role only towards the end of the projection period. Nonetheless, CCS is a key abatement option in the 450 Scenario, accounting for almost one-fifth of the additional reductions in emissions that are required. If CCS is not widely deployed in the 2020s, an extraordinary burden would rest on other low-carbon technologies to deliver lower emissions in line with global climate objectives.

The IEA “New Policies Scenario” proposes that nuclear output increases by more than 70% by 2035 and increasing subsidies for non-hydro renewables, projected to increase “from 3% in 2009 to 15% in 2035, underpinned by annual subsidies to renewables that rise almost five-times to $180 billion.”

I do not know how realistic are the IEA projections of renewables costs — especially the costs of maintaining grid stability given an increasingly large proportion of unreliable, non-dispatchable power. One of the slides summarizes the New Policies for renewables as only 30% additional output for 60% of the investment. That is a staggering waste, compared to expanded nuclear generation — but I suspect we will find that figure understates the true cost of that much unreliable generation.

More commentary on WEO 2011:

Energy density: the key to our no-carbon future

Your lifetime energy supply, a golf ball-sized lump of thorium or uranium – Credit Kirk Sorenson

Your personal lifetime energy supply, the golf ball-sized lump of heavy metal at left represents about 780 grams of thorium or uranium. Barry Brook recently used this to illustrate the energy density and cleanliness of fast neutron fission power relative to coal. And compared to solar or wind power options, coal is extremely energy dense. But the energy density of thorium or uranium is about 2.6 million times that of coal.

Bill Gates has described the solar/wind options as “energy farming“, which neatly captures the extraordinarily diffuse nature of these energy sources. For land use-friendly and economical energy, dense is good, diffuse is bad.

A golf ball of uranium would provide more than enough energy for your entire lifetime, including electricity for homes, vehicles and mobile devices, synthetic fuels for vehicles (including tractors to produce your food and jet fuel for your flights). Your legacy? A soda can of fission product was, that would be less radioactive than natural uranium ore in 300 years.

Tom Blees used the above graphic to illustrate the tiny volume of waste generated by fast neutron fission power: Your lifetime energy supply = 1 golf ball, your waste = 1 soda can. For more please see the conference paper Advanced Nuclear Power Systems to Mitigate Climate Change, or IFR FaD 4 – a lifetime of energy in the palm of your hand.

Nuclear power – inadequate risk investment

Boosting taxpayer-funded energy R&D is easy to justify – e.g., for the USA, by 10x from about USD 3 to 30 billion/annum. Why? Because, energy research and development is a perfect illustration of an underinvested public good. The challenge is that the return to the innovator is often far less than the return to society – hence the normal market incentives do not work very well, especially if the payoff is very long term (typical for electrical generation).

Last year in the Washington Post  the former CEOs of Microsoft and Dupont argued for a big increase in energy R&D:

(…) Why can’t the private sector do this? What makes energy different from, say, electronics? Three things.

First, there are profound public interests in having more energy options. Our national security, economic health and environment are at issue. These are not primary motivations for private-sector investments, but they merit a public commitment.

Second, the nature of the energy business requires a public commitment. A new generation of television technology might cost $10 million to develop. Because those TVs can be built on existing assembly lines, that risk-reward calculus makes business sense. But a new electric power source can cost several billion dollars to develop and still carry the risk of failure. That investment does not compute for most companies.

Third, the turnover in our power system is very slow. Power plants last 50 years or more, and they are very cheap to run once built, meaning there is little market for new models.

It is understandable, then, why private-sector investments in clean energy technology are so small. Yet, while it may make sense for individual companies to make these choices, accepting the status quo would condemn our country to very bad options.

This is why we have joined other concerned business leaders (…) to create the American Energy Innovation Council (AEIC).


The AEIC members are Bill Gates, chairman and former chief executive of Microsoft; Norm Augustine, former chairman of Lockheed Martin; Ursula Burns, chairman and chief executive of Xerox; John Doerr, partner at Kleiner Perkins; Chad Holliday, chairman of Bank of America and former CEO of DuPont; Jeff Immelt, chief executive of GE; and Tim Solso, chairman and chief executive of Cummins.

With all those heavy hitters I don’t know why we have heard so little from AEIC since its founding H1 2010.