FONDAZIONE ENERGIA

COSTCOST--BENEFIT ANALYSIS BENEFIT ANALYSIS OF A NEW NUCLEAR PROGRAM IN ITALY OF A NEW NUCLEAR PROGRAM IN ITALY

THE IMPACT OF THE OIL PRICE THE IMPACT OF THE OIL PRICE Analisys with a MARKALAnalisys with a MARKAL--TIMES MultiTIMES Multi--Regional Model Regional Model

of the Italian Electrical Systemof the Italian Electrical System

Federico SantiItalian Association of Energy Economists, Energy Foundation

University of Rome Sapienza, M.Sc. Energy Engineering

Other Authors: Manuela Gusmerotti, Maurizio Gargiulo

32° IAEE International Conference “Energy, Economy, Environment: The Global View”

Grand Hyatt Hotel, San Francisco 21-24/06/2009

FONDAZIONE ENERGIA

SUMMARYSUMMARY

1. A MARKAL-TIMES Multi-Regional Model of the Italian Electrical System

2. The BASE Scenario

3. The Nuclear Scenario

FONDAZIONE ENERGIA

MARKAL is an Energy System Analysis Model Generator

It has been developed duering the last 30 years by the ETSAP project of the International Energy Agency (IEA-OCSE, www.iea.gov)

It is today used by more than 100 institutes in more than 50 Countries worldwide

Also, the 2 well known global energy scenarios are built using MARKAL models :

EIA - Energy Information Administration

U.S. Department of Energy, Washington DC

IEA - International Energy Agency

OECD, Paris

MARKAL modelSAGESystem for the Analysis of Global Energy market

MARKALmodelETPEnergy Technology Perspective

FONDAZIONE ENERGIA

Production Conversion Distribution Final Use Demand for Energy

Services

Light

Heat

Movement

…

The RES is made by the energy technologies (nodes) and the flows of the energy commodities(branches) able to satisfy the energy services demand of a community

input

Energy Flows

output

Bottom-up Approach

MARKAL Reference Energy System (RES)MARKAL Reference Energy System (RES)

FONDAZIONE ENERGIA

Demandfor

Energy Service Demand-side

Technology Stocks

Efficiency of final-use energy

technologies Final Energy

Consumption

Framework of indicators (GDP,

population, population age,

etc.)

Primary Energy

ConsumptionConversionTechnology

Stocks

Efficiency of conversion

energy technologies

Bottom-up approach: from the energy service demand(es. lighting required by the whole residential sector in Nanjing)

to the (virtual) re-construction of the whole energy system…

Input:- energy tecnologytecnology parameters- demandsdemands for energy services- balance, calibration and RES constraintsconstraints

Output: - energy flowsnergy flows and capacitycapacity of every energy technology- costscosts, investments, commodities (shadow) prices- emissionsemissions and others environmental parameters

MARKAL

FONDAZIONE ENERGIA

∑ ∑= =

−−−−• +++++++••+=R

r

NPER

t

NYRStNYRS dddtrANNCOSTdNPV1 1

121)1( ))1(...)1()1(1(),()1(

NPV Net Present Value of the Total Energy System Cost in the whole periodR number of the regions (for multi-regional models)NPER number of periods (es. 11, from the year 2000 to the 2050, 5-years step)NYRS number of years in each periodd social discount rateANNCOST (r, t) Total Annual Energy System Cost in the region r for the period t

The last factor of the objective function represent the “intraperiod” discount rate

MARKAL methodology is based on the minimization of the minimization of the Total Energy System Cost Total Energy System Cost over the whole period

from the reference year to the time-horiziìon

The mathematical problem consists in the minimization of a linear function(Linear Programming) subject to several linearized constraint equations and inequations.

Those equations represents the phisical and logical relationships between the several parameters involved. They must be satisfied in order to ensure a correct description

of the energy system

FONDAZIONE ENERGIA

A MultiA Multi--Regional MARKALRegional MARKAL--TIMES Model of the Italian Electrical System:TIMES Model of the Italian Electrical System:5 Institutes at Work from 2002 to 2005 5 Institutes at Work from 2002 to 2005

SCENARI Project - EDEN, OFFGEN, SCESEL Tasks

FONDAZIONE ENERGIA

AIEE Model Utilization in 2006, 2007, 2008, 2009AIEE Model Utilization in 2006, 2007, 2008, 2009

1.1. SCOSSE Project (Operational and Structural SCOSSE Project (Operational and Structural Scenarios of the Electrical System)Scenarios of the Electrical System)

3.3. Impact of the Impact of the Energy Efficiency Energy Efficiency Measures Measures over the Electricity Demandover the Electricity Demand

2.2. Impact of Impact of NAP 2008NAP 2008--2012 2012 over the electrcicty market priceover the electrcicty market priceAn analysis with a MARKALAn analysis with a MARKAL--TIMES modelTIMES model

4.4. LongLong--TermTerm Alternative Scenarios for the Alternative Scenarios for the Italian Electrical SystemItalian Electrical System

ASSOELETTRICAASSOELETTRICA

5.5. Max. Accettable Intermittent RES Quota in the Italian ElectricalMax. Accettable Intermittent RES Quota in the Italian ElectricalSystem System –– Electricity Storage Technology AssessmentElectricity Storage Technology Assessment

FONDAZIONE ENERGIA

Price and availability of primary energy sources

Energy Services Demand

Stocks

Technology Efficiency

Final Electricity Consumption

(TWh)

Indicators (population, GDP, etc.)

The Model Structure:The Model Structure:

4 Voltage Levels4 Voltage Levels

Technology databse

“bottom-up”

FONDAZIONE ENERGIA

Refrigerators

Freezer

Washing Machines

Dishe- Washing

Space Heating

Hot Water

Lighting

Services for Houses

Other Services

Residential Sector

Refrigerators

Office automation

Cooling

Space Heating

Hot Water

Lighting

Cooking

Other Services

End-

Use

Tec

hnol

ogie

s

Commercial Sector

Industrial Sector

Metal&Steel Mechanical Food Textiles Construction Chemical Others

End-Use Tecnologies

Buildings

End-Use Technologies

Urban transportation

Railway

High Speed Railway

Other transportation

Transportation:

End-Use

technologies Agricolture and Phishing

Dummy End-Use Technologies

Electricity Regional Consumption

Supply side

Space Cooling

Entertainment

Cooking

The DemandThe Demand--Side of the ModelSide of the Model

FONDAZIONE ENERGIA

Scenario BASEScenario BASEBASE = BASE = ““under the existing regulationunder the existing regulation””

NOTNOT ““business as usualbusiness as usual””,,

existing policies and measures are taken in accountexisting policies and measures are taken in account

and extended to 2030and extended to 2030(Green Certificates, White Certificates, CO2 Mitigation Policies(Green Certificates, White Certificates, CO2 Mitigation Policies, Standards, etc.), Standards, etc.)

FONDAZIONE ENERGIA

BASE Scenario Main Constraints:

2. Incentives for Renewables: Green Certificates (Finanziaria 2008), Feed-in-Tariff PV, Solar Thermal, small plants; GSE GC price = 180 euro/MWh – electrcity price (assuming the price is cleared by a new entrant natural gas fired CCGT power plant) incentives reduced with time (less GC per MWh assigned to each RES technology) no limits to the incentives for renewables (excess purchased by the GSE)

3. No new coal fired power plants except the two USC: Torrevaldaliga Nord (under construction) and Porto Tolle + existing plants upgrading to USC (no CCS till 2030) Old CIP6 plants gradually substituted by CCGT 80% size – Existing IGCC and cogeneration go on till 2030 with the same size’

4. CO2 till 2012 NAP, after 2012 NO free allowance, European auctions; allowances price rise to 64 €/t in 2030 (39 €/t in 2020), flexible mechanisms credit values rise to 32 €/t in 2030 (21 €/t in 2020); decreasing EUA availability, increasing FM credits

5. Decreasing net electricity imports, to 35 TWh/a in 2020 (stable after 2032); imported energy price = full cost new coal fired power plant USC type incl. CO2

6. The model is free to install all the new power plants today under development plus new natural gas CCGT power plants without any constraints (except in Sanrdinia till the new pipeline GALSI from Algeria will be ready)

FONDAZIONE ENERGIA

0

20

40

60

80

100

120

140

16020

00

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

2 Oil Price Scenarios (Brent DTD, $'07/b)

120 $/b

65 $/b

Studio FE sett. 2008Studio FE sett. 2008

Scenari UP dic. 2008Scenari UP dic. 2008

Wide range (sensitivity)

NO FORECAST, “WHAT-IF” approach

LONG-TERM (no sense in short-term)

FONDAZIONE ENERGIA

Copertura del fabbisogno di energia elettrica in Italia nello scenario BASE (TWh)

0

50

100

150

200

250300

350

400

450

500

2006

2010

2014

2018

2022

2026

2030

importazioninette rinnovabili

gas

oli combustibilie altricarbone

Total Electricity Supply by Source Total Electricity Supply by Source –– BASE ScenarioBASE Scenario(TWh) (TWh)

NetImports

Renewables

Coal

Natural Gas

HFO and others

Natural gas is the main actor

Oil products disappear

Coal slightly growing

RES important growing

Imports still at the maximum

NO nuclear

FONDAZIONE ENERGIA

Produzione netta di elettricità da fonti rinnovabili in Italiascenario BASE (TWh)

0

20

40

60

80

100

120

2006

2010

2014

2018

2022

2026

2030

Biomasse e Rifiuti

Eolica

Fotovoltaica

Solare termodin.

Geotermica

Idrica

Total Electricity Production from Renewable Energy SourcesTotal Electricity Production from Renewable Energy Sources(TWh) (TWh)

BiomassWind

Geothermal

Photovoltaic

Hydro

Sola rThermal

The double in 20 years: the BASE Scenario is ambitious

FONDAZIONE ENERGIA

0.00

50.00

100.00

150.00

200.00

250.00

300.00

350.00

400.00

2006 2010 2014 2018 2022 2026 20300.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

Carbone freeGas Oli combustibili e altriCarboneemissioni nette di CO2emissioni di CO2

Area di riduzione delle emissioni di CO2 per l'acquisto di permessi e crediti

Total Electricity Supply (right) , CO2 Emissions (left, blue)And “Free” CO2 Emissions (left, red)

BASE ScenarioBASE Scenario

Increasing CO2 Emissions

FONDAZIONE ENERGIA

Costi annui complessivi del sistema elettrico scenario Base

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

2006 2010 2014 2018 2022 2026 2030

Meu

ro

Acquisto CO2

IncentivirinnovabiliFuel

O&M

Investimenti

65 $/b in 2020:

Total Electricity System Annual Cost Total Electricity System Annual Cost –– BASE ScenarioBASE Scenario(million euros) (million euros)

CO2Subsidies to Renewables

Power PlantInvestments

FONDAZIONE ENERGIA

Costi annui complessivi del sistema elettrico scen Base

0

10000

20000

30000

40000

50000

60000

70000

2010 2014 2018 2022 2026 2030

Meu

ro

Acquisto CO2Incentivi rinnovabiliFuelO&MInvestimenti

120 $/b in 2020:

Total Electricity System Annual Cost Total Electricity System Annual Cost –– BASE ScenarioBASE Scenario(million euros) (million euros)

CO2Subs.to Renewables

Power PlantInvestments

FONDAZIONE ENERGIA

Incentivi alle fonti rinnovabili scenario BASE

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

2010 2014 2018 2022 2026 2030

M€

SolaretermodinamicoFotovoltaica

Eolica

Biomassa eBiogasGeotermica

Mini-idrica

65 $/b in 2020:

Total Annual Cost for RES Incentives Total Annual Cost for RES Incentives –– BASE ScenarioBASE Scenario(million euros) (million euros)

Biomass

Wind

Geothermal

Photovoltaic

Mini-Hydro

Sola rThermal

FONDAZIONE ENERGIA

Incentivi alle fonti rinnovabili scen BASE

0

500

1000

1500

2000

2500

2010 2014 2018 2022 2026 2030

M€

Solare termodinamicoFotovoltaicaEolicaBiomassa e BiogasGeotermicaMini-idrica

120 $/b in 2020:

Total Annual Cost for RES Incentives Total Annual Cost for RES Incentives –– BASE ScenarioBASE Scenario(million euros) (million euros)

BiomassWind

Geothermal

Photovoltaic

Mini-Hydro

Sola rThermal

FONDAZIONE ENERGIA

Costi di produzione medi unitariscenario BASE

0

10

20

30

40

50

60

70

80

90

100

2006 2010 2014 2018 2022 2026 2030

euro

/MW

h

Costi per CO2

Incentivi

Costi combustibile

O&M

Investimenti

con 65 $/b al 2020:

Average Electricity Production Cost Average Electricity Production Cost –– BASE ScenarioBASE Scenario(euros/MWh) (euros/MWh)

CO2

Subsidies to Renewables

Power PlantInvestments

Fuel

FONDAZIONE ENERGIA

Main Unsustainability Factors of te BAU ScenarioMain Unsustainability Factors of te BAU Scenario

Growing dependency from imported fossil fuels(coal and natural gas: the electrical system pushes-up the natural gas system over its limits, needs for new gas facilities)

Un-secure supply (natural gas from 3 producers @ geo-political risk)

Electricity production marginal cost strictly linked to the oil price,future growth of electricity market price

CO2 emissions over the targets (Kyoto/post-Kyoto constraints unsatisfied)

Renewable Energy Sources well below the EU target

Welfare lost due to the grid congestions

Electricity savings due to energy efficiency well below the economical potential (about 15% of total final electricity consumption in 2020)

High RES subsidies, expensive EU ETS

Conclusions from IAEE 2008 (Istanbul):Conclusions from IAEE 2008 (Istanbul):

FONDAZIONE ENERGIA

Actions to Address the System Towards the SustainabilityActions to Address the System Towards the Sustainability

1. To reinforce the mechanism to promote Energy Efficiency(White Certificates and standards) and to remove the barriers to the energy efficiency (information campaigns, loans, etc.)

2. To build new natural gas import (LNG terminals and pipelines) and storage facilities

3. To remove the barriers to the siting of the renewables power plants, mainly for the off-shore wind farms

4. To make a clear choice in order to reduce the oil and gas dependency for the base-load service: new nuclearnew nuclear (third generation), clean coal technologies with CCS (carbon capture and storage) or both?

5. To implement strong actions to promote the Distributed Generation

6. To make investments to empower the transportation and (particularly) distribution grids

Conclusions from IAEE 2008 (Istanbul):Conclusions from IAEE 2008 (Istanbul):

FONDAZIONE ENERGIA

Nuclear ScenarioNuclear Scenario

FONDAZIONE ENERGIA

MAIN FEATURES OF THE NUCLEAR SCENARIO:

1. From the 2020 the model is free to install till to 5 new nuclear power plants (EPR type)

2. The sites are the same already qualified for nuclear, in 4 Regions

3. It is a “what-if” option within respect to the BASE Scenario

MAIN RESULTS:

1. At > 60 $/b (Brent DTD) the model decides to install all the 5 EPRs

2. The electricity production from nuclear rise to 64 TWh in 2030

3. The CO2 emissions decrease by 21,6 Mt CO2 in 2030

FONDAZIONE ENERGIA

““BlackBlack--BoxBox”” Nuclear Technology Modelling: Main AssumptionsNuclear Technology Modelling: Main Assumptions

Reference technology: EPR (European Pressurized Reactor)Reference technology: EPR (European Pressurized Reactor)

2 EPR under construction in Europe (Olkiluoto and Flamanville)

Few data about investment costs (scale effect, technology learning, etc.)

No registered data about O&M costs/performance (but many similar reactors in the

world)

EPR Engineering very clear, affordable forecasts

Under uncertainty, approach strictly prudential against nuclearUnder uncertainty, approach strictly prudential against nuclear

(always upper values in the spread of the costs parameters)I.e.:

Investment costs and financial structure (debt/equity ratio)

Minimum construction time, Decommissioning

Fuel price and fuel on-site fuel cycle costs

Insurance, Personnel, Maintenance

etc. …

FONDAZIONE ENERGIA

Modelled EPR Nuclear Power Plant Main FeaturesModelled EPR Nuclear Power Plant Main Features

Site Italia

Year 2020

Minimum Size 1650 MWe

Average Energy Efficency 35%

Average Burn-up 60.000 MWd/t

Max Annual Utilization Factor 8.000 ore/anno

Technical Lifetime 40 yearsFrom the Engineering Design: 70.000 MWd/t, 37%, 60 years:

Prudential Assumptions

FONDAZIONE ENERGIA

Overnight cost and financial structure of the investmentOvernight cost and financial structure of the investment

‐

50 

100 

150 

200 

250 

300 

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

1994

 = 100

Carbon Steel Price Index: CRUspi Global  Index 

2000

2600 2600

2006 2008 2020

In 2020:2600 e/kW

1,2 $/euro: strong impact of

the steel and other materials

Learning effect

+30%

+67%

prudentially…

Financial Assumptions:Debt: 50% @ 7%/aEquity: 50% @ 12%/aLifetime: 40 anni

2 EPR under construction: France (Flamanville) and Finland (Olkiluoto)

Debt/Equity Prudential Report (i.e. Olkiluoto equity 20%)

Olkiluoto First Estimation: 3,3 Geur, 2000 e/kW Flamanville Recent Estimation: 4,0 Geur, 2500 e/kW

Constr. Cost included interests during construction: 2800 eur/kW

FONDAZIONE ENERGIA

Decommissioning Costs Decommissioning Costs

ASSUMPTION: obligation to create a fund for decommissioningWITH: lifetime 40 years, average annual production 8 TWh/GW

Cost Estimation for complete decommissioning:780 euro/kW780 euro/kW, i.e. 30% overnight costs

Cfr. decommissioning 4 Italian old nuclear pp: 2,65 mld euro / 92,5 TWh = 29 euro/MWh(IF fund @ 3%/a: 20 euro/MWh)

FONDAZIONE ENERGIA

Fuel Cycle CostFuel Cycle Cost

U3O8 PRICE: 300 $/kg300 $/kg, historic peak 2007 (but exchange rate1,4 $/euro)

AVERAGE BURN-UP: 60.000 MWd/t (instead of 70.000 as decleared)

EFFICIENCY: 35% (instead of 37% as decleared)

FUEL CONSUMPTION: 2 kg / TWh, with 8 kg fuel/kg U3O8, or 16 kgU3O8/TWh

FUEL PROCESSING: 500 euros/kg fuel

TOTAL FUEL COST: 2400 euro/kg fuel

FUEL MARGINAL COST: 5,1 euro/MWh

FUEL CYCLE MARGINAL COST*: 4,0 euro/MWh

Short Run Marginal Cost (fuel):Short Run Marginal Cost (fuel): 9,1 euro/MWh9,1 euro/MWh

* Temporary waste management, processing, storage

FONDAZIONE ENERGIA

Personnel, Maintenance, InsurancePersonnel, Maintenance, Insurance

PERSONNEL: PERSONNEL: 300 workers, 300 workers, 15 euro/kW/a15 euro/kW/a, 24 Meuro/year, 2 euro/MWh, 24 Meuro/year, 2 euro/MWh

MAINTENANCE:MAINTENANCE: 1,5% overnight cost, 1,5% overnight cost, 40 euro/kW/a40 euro/kW/a, 5 euro/MWh, 5 euro/MWh

INSURANCE*:INSURANCE*: 0,5% overnight cost, 0,5% overnight cost, 13 euro/kW/a13 euro/kW/a, 1,6 euro/MWh, 1,6 euro/MWh

* Es. Price-Anderson Nuclear Industries Indemnity Act (USA)The Italian Law should foresee a gradual insurance, proportional to the safety conditions, plus a “malus” in

case of accident, wheighted on the severity

NB: the other thermoelectric technologies in the model does not include the insurance costs:

PRUDENTIAL ASSUMPTION AGAINST NUCLEAR

FONDAZIONE ENERGIA

Other CostsOther Costs

NOT considered other costs related to the nuclear sector, i.e.:

security/radioprotection agency (es. APAT, ASL, army, etc.);

public research and high level professional education related to the nuclear industry (i.e.. ENEA, Universities, etc.);

O&M costs of the geologycal storage site for nuclear wastes

nuclear facilities different from the one’s hosted into the power plants(i.e. fuel re-processing, etc.)

royalties, authorization, etc.

public information campaign, consensus creation, etc.

… balanced by the other extremely prudential cost assumptions

FONDAZIONE ENERGIA

LongLong--Run Marginal Production Cost (LRMC) Run Marginal Production Cost (LRMC) of a New Nuclear EPR Power Plantof a New Nuclear EPR Power Plant

euro/MWh %

Fuel Cycle and Waste Management 9,8 14%

Maintenance 4,9 7%

Personnel 1,9 3%

Insurance and other costs 1,6 2%

Decommissioning Fund 4,2 6%

Short-Run Marginal Cost 22,4 33%

Investment 45,6 67%

Long-Run Marginal Cost 68,0 100%System Marginal Price / CCGT sets price = EPR Baseload

FONDAZIONE ENERGIA

LRMC Sensitivity Analysis v. 3 Main ParametersLRMC Sensitivity Analysis v. 3 Main Parameters  Variazione del Long-Run-Marginal-Cost di un impianto EPR al

variare del costo di investimento ("overnight")

0102030405060708090

2000 2200 2400 2600 2800 3000 3200 3400 3600Costo di investimento "overnight" [€/kW]

Long

-Run

-Mar

gina

l-Cos

t [€/

MW

h]

Nell 'intervallo considerato la variazione è lineare: per ogni 200 €/kg di costo di investimento il costo marginale

di lungo periodo sale di circa3,5 €/M Wh

Variazione del Long-Run-Marginal-Cost di un impianto EPR al variare della quota di equity (a tasso costante)

0102030405060708090

20 30 40 50 60 70 80 90Quota capitale proprio (equity) [%]

Long

-Run

-Mar

gina

l-Cos

t [€/

MW

h]

  Variazione del Long-Run-Marginal-Cost di un impianto EPR al variare del costo del combustibile (U3O8)

0

1020

3040

50

6070

80

100 150 200 250 300 350 400 450Quotazioni medie U3 O 8 [$/kg]

Long

-Run

-Mar

gina

l-Cos

t [€/

MW

h]

Nell 'intervallo considerato la variazione è lineare: per ogni 50$/kg in più di prezzo dell'U 3 O 8 , il costo marginale di lungo periodo sale di circa1 €/M Wh

Overnight Cost:2000 to 3500 eur/kW 58 to 82 eur/MWh

U3O8 Average Price:100 to 450 $/kg U3O8 65 to 71 eur/MWh

Debt/Equity Ratio:20% to 80% equity 58 to 82 eur/MWh

SPREAD:SPREAD: 5858÷÷82 eur/MWh82 eur/MWh

FONDAZIONE ENERGIA

Copertura del fabbisogno di energia elettrica in Italia nello scenario Nucleare (TWh)

0

50

100

150

200

250

300

350

400

450

500

2006

2010

2014

2018

2022

2026

2030

Nucleare

importazioninette rinnovabili

gas

oli combustibilie altricarbone

Total Electricity Supply by Source Total Electricity Supply by Source –– NUCLEAR ScenarioNUCLEAR Scenario(TWh) (TWh)

Net ImportsRenewables

Coal

Natural Gas

HFO and others

Nuclear

FONDAZIONE ENERGIA

Produzione differenziale termoelettrica Scenario NUCL vs Scenario BASE

-80

-60

-40

-20

0

20

40

60

80

2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030

CARBONE

GAS NATURALE

OLIOCOMBUSTIBILE

ALTRICOMBUSTIBILI

RIFIUTI

NUCLEAREThe nuclear program implies a reduction in the

natural gas imports of about 12 GScm/year12 GScm/year, the equivalent of a new LNG receiving terminal

Total Electricity Supply (TWh)Total Electricity Supply (TWh)BASE Scenario vs. NUCLEAR ScenarioBASE Scenario vs. NUCLEAR Scenario

Renewables

Natural Gas

HFO and others

Nuclear

Others

Coal

In the MARKAL-TIMES Model, the electricity production from nuclear “substitutes” the one

from natural gas (about 60 TWh in 2030)

FONDAZIONE ENERGIA

Differenziale dei costi annui dell'intero sistema di generazione: scen Nucleare vs scen BASE

-3000,0

-2000,0

-1000,0

0,0

1000,0

2000,0

3000,0

2010 2014 2018 2022 2026 2030

M€

Investimenti Fissi & variabili Rete Fuel Incentivi rinnovabili Acquisto CO2

Total Electricity System Cost Reduction of about 800 Meur/year in 2030

(before the 2026 nuclear represents an extra-cost, at 65$/b)

65 $/b in 2020

Annual Electricity System Costs (million euros)Annual Electricity System Costs (million euros)BASE Scenario vs. NUCLEAR ScenarioBASE Scenario vs. NUCLEAR Scenario

CO2Incentives RenewablesPower PlantInvestments O&M Grid

FONDAZIONE ENERGIA

Costi annui differenziali di sistema Scenario nucleare vs Scenario di Riferimento

-10000

-8000

-6000

-4000

-2000

0

2000

4000

2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030

Investimenti

Fissi &variabili

Fuel

Rete

IncentiviTotal Electricity System Cost Reduction of about 6500 Meur/year in 2030

120 $/b al 2020

Annual Electricity System Costs (million euros)Annual Electricity System Costs (million euros)BASE Scenario vs. NUCLEAR ScenarioBASE Scenario vs. NUCLEAR Scenario

Incentives forRenewables

Power PlantInvestments

O&M

Grid

FONDAZIONE ENERGIA

Emissioni di CO2 dal sistema termoelettrico in diversi scenari

0

20

40

60

80

100

120

140

160

2006

2008

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

Mt C

O2 BASE

EFFICIENZA20-20-20NUCLEARE

In the long-term the nuclear program allows a CO2 emission reduction of about

22 MtCO2/year (-15%)

CO2 Emissions from the Italian Thermoelectrical System CO2 Emissions from the Italian Thermoelectrical System in Several Scenarios (Mt CO2/year)in Several Scenarios (Mt CO2/year)

BASE

NUCLEAR

FONDAZIONE ENERGIA

ConclusionsConclusions

For several reasons (see IAEE 2008 Istanbul) the BAU Scenario is unsustainable, so is, unfortunately, the BASE Scenario (P&M already implemented/extended are not enough)

The options to reduce the un-sustainability factors represent a portfolio of P&M to promote Energy Efficiency, Renewables, Cogeneration, Nuclear

At an oil price over 65 $’07/b (Brent DTD), a new nuclear program of 5 power plants 1650 MW each one (tot 8250 MW), entering into operation between 2020 and 2030, representsa net benefit for the Italian electrical system:

the total electricity system cost decrease by 0.8 (@ 65 $/b) to 6.4 (@ 120 $/b) billion eur / year

the natural gas imports decrease by 12 billion std cubic meters / year(equal to the capacity of a new LNG receiving terminal)

the CO2 Emissions decrease by 22 million tonnes CO2 / year

Such conclusion is valid over 65 $/b, in doubt between 55 to 65 $/b and not valid under 55 $/b (in real terms), within the prudential assumptions here made against nuclear

The nuclear option is not alternative to Efficiency/Renewables (the complete MARKAL analysis demonstrates that the best result is obtained integrating all the P&M) and does not need any incentive, while it needs a wide political a social consensus to be developed

FONDAZIONE ENERGIA

THANK YOUTHANK YOU

FONDAZIONE ENERGIA

BACKBACK--UPUP

FONDAZIONE ENERGIA

Wide Range for Energy Sources Price AssumptionsWide Range for Energy Sources Price Assumptions

Brent DTD:

124 $’07/b al 2020

138 $’07/b al 2030

Coal CIF NWE:

242 $’07/t al 2020

314 $’07/t al 20300

200

400

600

800

1000

1200

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

eur'0

7/te

p

Quotazioni medie delle principali fonti energetiche primariein moneta costante (eur '07/tep)

G 0.2 CIF Med Genoa Lavera

Brent DTD

Gas naturale

LSFO CIF Med Genoa Lavera

Carbone CIF NWE

0

100

200

300

400

500

600

700

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

eur'0

7/te

p

Quotazioni medie delle principali fonti energetiche primariein moneta costante (eur '07/tep)

G 0.2 CIF Med Genoa Lavera

Brent DTD

Gas naturale

LSFO CIF Med Genoa Lavera

Carbone CIF NWE

Natural Gas:

22 $’07/GJ al 2020

25 $’07/GJ al 2030

Brent DTD:

65 $’07/b al 2020 / 2030

Coal CIF NWE:

98 $’07/t al 2020 / 2030Natural Gas:

10 $’07/GJ al 2020 / 2030

FONDAZIONE ENERGIA

Some Other Exogenous AssumptionsSome Other Exogenous Assumptions

GDP +1,3%/year till 2030 GDP structure slightly changes towards the commercial sector

Valore aggiunto ai prezzi base e relativa tendenza (Valori concatenati - Anno di riferimento 2000)

R2 = 0,9841

0,000

0,200

0,400

0,600

0,800

1,000

1,200

1,400

1,600

1971

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Mili

ardi

Inflaction +3%/year till 2030

Decreasing $/eur rate to 1,2 in 2030

FONDAZIONE ENERGIA

Confronto tecnico/economico/ambientale tra tecnologie termoelettConfronto tecnico/economico/ambientale tra tecnologie termoelettricheriche

Ubicazione Italia

Anno di riferimento 2020

Tasso medio di cambio 1,2 $/€

Prezzo petrolio (Brent DTD) 130 $/b

Prezzo medio CO2 (ETS) 42 €/t di CO2

CCGT gas USC carbone USC+CCS carbone EPR nucleare

Tempo di costruzione (anni) 2 4 4 6

Vita tecnica (anni) 25 35 35 40

Rendimento medio netto 60% 45% 36% 35%

Durata eq. utilizz.(ore/anno) 4500 7000 7000 8000

Investimento (€/kW) 550 950 1400 2600

Decommissioning (€/kW) - - - 780

O&M (€/kW/anno) 12 22 33 65

Fatt. emissione (t CO2 / MWh) 0,335 0,753 0,145 -

Quotazioni medie combustibili c€/mc 57 €/t 163 €/t 163 €/kg U3O8 250

Struttura dell'investimento 25% equity @ 12%/a, 75% debt 15 anni @ 7%/a 50% @ 12%/a, 50% @ 7%/a

FONDAZIONE ENERGIA

3,7  5,1  9,7  8,4 

89,6 

47,8 

61,4 

9,8 

14,1 

31,6 6,1 

‐

‐

‐

‐

4,2 

18,2 

18,5  28,3 

45,6 

0

20

40

60

80

100

120

140

CCGT gas USC carbone USC carbone + CCS

EPR nucleare

euro/M

Wh

Costo marginale di produzione per diverse tecnologie termoelettriche

Investimento 

Decommissioning 

Acquisto permessi di emissione 

Combustibile 

Esercizio e manutenzione 

108

163

52 42

Brent DTD      (euro/b)

Carbone CIF NWE   (euro/t)

Gas naturale        (cent euro/mc)

CO2 EUA ETS      (euro/t)

Anno 2020 Prezzi medi combustibili e permessi di emissione

58

35

Short-Run Marginal Cost

FONDAZIONE ENERGIA

3,7  5,1  9,7  8,4 

40,3 

23,5 

30,2 

9,8 

8,4 

18,8 3,6 

4,2 

18,2 18,5  28,3 

45,6 

0

20

40

60

80

100

120

140

CCGT gas USC carbone USC carbone + CCS

EPR nucleare

euro/M

Wh

Costo marginale di produzione per diverse tecnologie termoelettriche

Investimento 

Decommissioning 

Acquisto permessi di emissione 

Combustibile 

Esercizio e manutenzione 

IFIF: oil price 75 $/b (BRENT DTD)

Nuclear still competitive

Also under prudential assumptions

63

80

23 25

Brent DTD      (euro/b)

Carbone CIF NWE   (euro/t)

Gas naturale        (cent euro/mc)

CO2 EUA ETS      (euro/t)

Anno 2020Prezzi medi combustibili e permessi di emissione