Shoring up investment in addition to the price of carbon will significantly impact the costs for generating electricity this year, according to a report released by the International Energy Agency (IEA) and the OECD Nuclear Energy Agency (NEA). “Projected Costs of Generating Electricity: 2010 Edition” is composed of the latest data on the costs of electricity generation for a wide variety of fuels and technologies.
“In a period when many countries are looking to invest in electricity capacity while working to reduce carbon emissions, it provides an indispensable basis for any discussion about electricity generation choices,” said NEA Director-General Luis Echávarri.
Using a common standardized measure of cost and assuming a carbon price of $30 per ton of CO2, the study provides results for two real interest rates of 5% and 10%. When financing costs are low (5% case), nuclear energy followed by coal with carbon capture are the most competitive solutions. With higher financing costs (10% case), coal-fired generation followed by coal with carbon capture and gas-fired combined cycle turbines are the cheapest sources of electricity. Apart from interest rates, generation costs of renewables are heavily dependent on local resources and fast technological improvement.
IEA Executive Director Nobuo Tanaka stressed that “to bolster competitiveness of low-carbon technologies such as nuclear, renewable, and carbon capture and storage, we need strong government action to lower the cost of financing and a significant CO2 price signal to be internalized in power markets.”
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