The value of the nuclear power plant fleet in the German power market under the expansion of fluctuating renewables

Abstract

Flexibility of a conventional power plant fleet is becoming an increasingly valuable quality in several electricity markets due to growing solar and wind power supply. Nuclear power plants are not very flexible in terms of output, but their advantage is their low variable cost of generating electricity. Using a short-term techno-economic model which incorporates both the electricity and the balancing market, we examine quantitatively whether costs incurred by nuclear units' lower flexibility outweigh the low generation costs of nuclear power in the German power market, and investigate how this depends on the amount of fluctuating renewables. We show that, due to low negative prices stemming from inflexible baseload plants, balancing costs may increase rapidly with solar and wind power. Higher balancing and start-up costs arising from nuclear units in the fleet are still largely compensated by the nuclear units’ lower generation costs, and it is not cost-efficient to decommission nuclear units in the near future. The results suggest that it would be economically beneficial to harness the full flexibility potential of nuclear plants and curtail excess solar and wind power or include those in the negative balancing reserve.