University of Oulu

Juha Teirilä, The value of the nuclear power plant fleet in the German power market under the expansion of fluctuating renewables, Energy Policy, Volume 136, 2020, 111054, ISSN 0301-4215, https://doi.org/10.1016/j.enpol.2019.111054

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

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Author: Teirilä, Juha1
Organizations: 1Department of Economics, University of Oulu, Pentti Kaiteran katu 1, 90570, Oulu, Finland
Format: article
Version: accepted version
Access: embargoed
Persistent link: http://urn.fi/urn:nbn:fi-fe2020042119565
Language: English
Published: Elsevier, 2020
Publish Date: 2021-10-27
Description:

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.

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Series: Energy policy
ISSN: 0301-4215
ISSN-E: 1873-6777
ISSN-L: 0301-4215
Volume: 136
Article number: 111054
DOI: 10.1016/j.enpol.2019.111054
OADOI: https://oadoi.org/10.1016/j.enpol.2019.111054
Type of Publication: A1 Journal article – refereed
Field of Science: 511 Economics
512 Business and management
Subjects:
Funding: This study is funded by Tauno Tönning Foundation and the Strategic Research Council, Finland, Project No. 292854.
Copyright information: © 2019. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/.
  https://creativecommons.org/licenses/by-nc-nd/4.0/