Longer lead times – significantly lower prices

dThe green side of the federal government opposes not only a real extension of the life of nuclear power plants because of the radiation risks, but also because continued operation will not really alleviate the energy crisis. According to Minister of Economic Affairs Robert Habeck (Greens), the reactors do not make a significant contribution to security of supply, nor do they significantly depress electricity prices. In fact, the most expensive of the plants needed only to meet the demand for electricity set the rate for all the others. These are currently the expensive gas-fired power stations. Even nuclear power wouldn’t change much in terms of their price dominance, Habeck and others argue.

But there are more and more scientific findings that contradict this assessment. In mid-September, the Ifo Institute found out that the use of the last three nuclear power stations would reduce the electricity price by 4 percent in 2023. After all, the poles could generate 4 percent of Germany’s electricity. The Ifo is skeptical about the “operational reserve” that Habeck has made possible until the spring for only the two southern German nuclear power plants: the systems are incapable of compensating for fluctuations in demand and renewable energy, “the cost structure requires continuous operation” . The quintessence of the researchers is: “It may make sense to keep the nuclear option open for the coming year after a crisis-related, short-term extension.”

Different scenarios

A new study by economists from Friedrich-Alexander University in Erlangen-Nuremberg points in the same direction. The paper considers different scenarios depending on German and international conditions regarding demand, supply, price or weather conditions. Namely in the short term until 2024 and in the medium term until 2027, whereby an emission price of 80 and 100 euros per tonne of CO2 is used for the reference years.

In the optimistic scenario, the model assumes a one-tenth decrease in electricity demand, a European wholesale gas price of EUR 120 per megawatt hour (MWh), a production by French nuclear power plants of 370 terawatt hours (TWh), an ambitious expansion of renewable energy in neighboring countries and a “weather year” like in 2020. The pessimistic perspective assumes unchanged demand and prices of 180 euros, as well as 330 TWh, a delayed expansion of green electricity and 10 percent less favorable weather than in 2020.

The study makes clear that the largest capacity expansion of renewable energy can be expected. Depending on the pace, German expansion alone will reach a minimum of 38 gigawatts (GW) in 2024 and a maximum of 139 gigawatts (GW) in 2027. But traditional forms of production can also contribute if allowed. For example, if the coal plants from the third and fourth decommissioning tenders remain online, the expansion will be 2.7 GW. If the nuclear plants continue to operate – all three – they are expected to generate 4.1 GW.

Very high price effects

Even if the increase in the supply from nuclear fission is limited, the price effects are particularly significant in the short term. Even in a pessimistic scenario, nuclear energy will cut the electricity price by 8.5 percent in 2024 to 223 euros per megawatt hour from the otherwise expected level. In the optimistic case, it is minus 12.1 percent to 106 euros. The contribution to the price reduction of the coal-fired power stations that continue to run and the ambitious expansion of renewable energy is much lower, at a maximum of 5 percent. If you add up all the performance increases, the average electricity price in 2024 is at most 102 euros and in the worst case 208 euros. Without these steps it would be 120 and 244 euros.

In the optimistic scenario, continuing nuclear energy with new fuel rods would displace the emission-intensive lignite and thus have the greatest reduction effect on greenhouse gas emissions. On a pessimistic assumption, the emissions effect would be smaller, but still significant, because the combustion of natural gas, coal and oil would decrease.

For 2027, the scientists around Veronika Grimm expect an electricity price between 87 and 137 euros per MWh without additional capacity expansion. With more renewables, the price could fall the most, optimistically by 13 percent and pessimistically by 4 percent. But even then, nuclear power could still deliver a price reduction of 2 to 10 percent. In the optimistic scenario, nuclear energy would still lead the way in reducing emissions, but if conditions were negative, the contribution of green energy to climate protection would be greater.

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