Economics of nuclear and renewables

Abstract

This paper provides an assessment of the economic challenges faced by both nuclear power and “new” renewable electricity technologies. The assessment reflects the need to incorporate new renewables into power grids and issues faced in dispatching power and their effect on traditional electricity technologies as well as the need for transmission extension and/or grid reinforcement.Wider introduction of smart grids and the likely demise of nuclear in some OECD countries are bound to enhance the future prospects for new renewables. However, their immediate future expansion will depend on continued subsidies, which are becoming difficult to sustain in present economic circumstances. Development of large energy storage facilities and carbon pricing could significantly enhance future renewable energy prospects. Correspondingly, expanding renewable energy, in spite of their popularity with some governments and sections of the public, is likely to face challenges which will slow their present rapid progress.Nuclear is now shied away from in many industrialized countries and having mixed prospects in developing economies. In many instances, it suffers from high initial costs, long lead times and often excessive construction delays. Nuclear power also faces challenging risks – investment as well as regulatory. In contrast to renewables, its share of global energy consumption is declining.