Rue d’Arlon 15, -1050 Brussels, Belgium
T +32 2 743 41 00 F 32 2 743 41 09
E brussels@boell.eu W www.boell.eu

strategies? To what extent is the unit size co-responsible for structural overcapacities and thus a lack of incentives for efficiency?
How do government grants/ subsidies stimulate long-term decision-making? Will large renewable power plants reproduce
the same system effects as large coal/nuclear plants? The present
report presents the basic situation and raises questions thaturgently need to be addressed. It is obvious that nuclear power
did not lead to broad-scale and just access to energy services
in the countries that opted for nuclear energy. But is a nuclear
strategy actually counterproductive for the development of a cleanenergy service future based on efficiency+renewables? There isstrong evidence that this is the case.

Systems for Change: Nuclear Power vs. Energy Efficiency+Renewables?

Nuclear power as a “bridging technology”? On windy and lowconsumption days the energy demand in Germany is alreadycovered to a large extent by the wind energy supply. As theoutput of existing nuclear power stations (as well as the big coalfired power stations) is not reduced at short notice for economic
reasons, the surplus energy has to be exported to other countries
at a loss. There is method in this madness. Many systemic issues
have not been thoroughly investigated yet when it comes to compatibility or incompatibility of the centralized nuclear approachversus the decentralized efficiency+renewables strategy. What
are the consequences for grid development or how do choices
on grid characteristics influence power generation investment

Systems for Change:
Nuclear Power vs. Energy
Efficiency+Renewables?
By Antony Froggatt with Mycle Schneider

publication series on ecology

Systems for Change:
Nuclear Power vs.
Energy Efficiency+Renewables?
by Antony Froggatt with Mycle Schneider

Paper prepared for the Heinrich Böll Foundation
March 2010, updated in August 2010

“We know the country that harnesses the power of clean,renewable energy will lead the 21st century”.
President Barack Obama, State of the Union Address,
February 2010

Hypothesis
Continued investment in nuclear power, in particular new nuclear power plant projects, constitutes
a significant barrier for the necessary shift toward a sustainable and intelligent energy-services
economy based on energy efficiency and renewable energy sources.

With the support of theHeinrich-Böll-Stiftung
Published by the Heinrich-Böll-Stiftung, European Union, Brussels
Printed in Belgium, September 2010
© The authors, the Heinrich-Böll-Stiftung, European Union, Brussels
All rights reserved
Coordination and final editing: Annett Waltersdorf
Print production: Micheline Gutman
Cover picture: © thinkstockphotos.com/ Colllection Hemera
Some rights reserved for the pictures of pages 10, 21 and 46. They are attached to the following Creative
Commons license: http://creativecommons.org/licenses/by-sa/2.0/
D/2010/11.850/6
This publication can be ordered at:
Heinrich-Böll-Stiftung, European Union, Brussels
15 Rue d’Arlon
B-1050 Brussels
Belgium
T (+32) 2 743 41 00
F (+32) 2 743 41 09
E brussels@boell.eu
W www.boell.eu

Contents Preface: Nuclear Energy – a Dead End 

5Introduction

7

Overview and Trends	Energy demand and the impact of a carbon- and resource-constrained world	Transforming the energy-supply options	Historic and projected development of renewables
Historic and envisaged development of nuclear power	Comparison of nuclear to renewables Systemic Issues	The French centralized system	
The German approach: Nuclear phase-out and renewables expansion 
Spanish renewables hitting the current ceiling?	A new approach 	

10
10
11
12
18
19

The Timing of Investment Imperative of rapid climate change action	
Lead times for scaling up new technologies, experiences and expectations 
Nuclear power	
Renewables 	

28
28
29
29
32

Opportunity Costs	
Research and development	
Investment costs	
Infrastructure and grids	Market mechanisms	

35
36
38
41
43

Conclusions 

46

Figures and Tables
Figure 1: Growth in Global Energy Demand			
Figure 2: New Financial Investment in Clean Energy by Sector: 2004-2009 (US$bn)	
Figure 3: Global Growth of Renewable Energy in the Power Sector	
Figure 4: Global Electricity and Hydropower Production (TWh)	
Figure 5: Accumulative Global Wind Power Capacity (MW)
Figure 6: Installed Capacity of Wind Power Plants in 2008 (MW)	
Figure 7: World Installed Concentrating Solar Thermal Power Capacity 1980-2007 (MW)	
Figure 8: World Annual Solar Cell Production 1998-2009 (MW)	
Figure 9: World Nuclear Reactors and Capacity 1954-2010 (GW)	
Figure 10: 	Net Additions to Global Electricity Grid from New Renewables and Nuclear 1990-2010 (in GW)
Figure 11: Electricity Production from Non-Fossil Fuel Sources	Figure 12: Greenhouse Gas Emissions Due to Final Consumption in France	Figure 13: Negative Electricity Prices on the German Power Exchange	

21
21
23
25
25

12
13
13
15
16
16
17
17
19
20
20
23
25

4

Systems for Change:Nuclear Power vs. Energy Efficiency+Renewables?

Figure 14: Investment Cost Evolution (“Learning Curve”) of US Nuclear Power Plants	Figure 15: Investment Cost Evolution (“Learning Curve”) of French Nuclear Power Plants	Figure 16: Technology Learning Curves Figure 17: Changing Investment in Low-Carbon Energy Sectors	
Figure 18: National Research and Development Budgets in OECD Countries (US$mil)	
Figure 19: 	Technological Breakdown of OECD Energy Research and Development Budgets (1974-2008)
Figure 20: Estimated Carbon Abatement Costs in the UK in 2020 (£/tC)	
Figure 21: Exelon 2010 Carbon Abatement Cost Estimates (in US$/t of CO2)	

31
31
33
36
37
38

Table 1:
Table 2:30
33

Construction Time of Nuclear Power Plants Worldwide	Electricity Fuel Source Cost Projections in 2020

40
41

Preface

5

Preface: Nuclear Energy – a Dead End
Anyone following the statements expressedfrom time to time about the renaissance of nuclear energy could get the impression that the
number of new nuclear plants was increasing at
an immense and steady rate. In fact, more recent
statistics show 60 plants in the process of being
built, the majority in China and others in Russia,
India, South Korea and Japan. The USA is only
shown as having one actual building project.
However, this list (the VGB Power Tech) includes
numerous ancient projects that were never completed and are therefore de facto building ruins.
Moreover, there are at the present time proposals for about 160 new nuclear power plants
up to the year 2020, 53 of these in China alone
and 35 in the USA, followed by South Korea andRussia. In Europe, the UK heads the list witheight proposed new projects, followed by Italy,
Switzerland, Finland, Rumania and Lithuania.
France, that would like to bless the world withnew nuclear power stations, is itself only planning one new plant. Most European states are notentertaining any concrete nuclear plans.
As a matter of fact the number of nuclear power plants in the world is continually decreasing.
At the present time there are still 436 reactors inoperation. In the next 15 to 20 years more ageing
plants will go offline than new ones coming into
operation. By no means will all declarations ofintent be implemented. The more energy markets
are opened up to free competition, the smaller
the chances are for nuclear energy.
The costs for new plants are also exploding. For example, the building cost of the new
nuclear power plant in Finland’s Olkiluoto has
already increased from 3 to around 5.4 billion
Euros although not even the shell of the building
is standing yet. In addition, there are the unsolved
problems of waste disposal and the high susceptibility of the technology to failure. Today, no
privately run energy conglomerate risks building
a new nuclear power station without government
subsidies and guarantees. It is noticeable thatnew nuclear power stations are built particularly
where the government and the energy industry
form an unholy alliance.
Up to now, nuclear power plants have been
funded by massive public subsidies. For Germany
the calculations roughly add up to over 100 billion Euros and this preferential treatment is stillgoing on today. As a result the billions set aside
for the disposal of nuclear waste and the dismantling of nuclear power plants represent a tax-freemanoeuvre for the companies. In addition theliability of the operators is limited to 2.5 billion
Euros – a tiny proportion of the costs that would
result from a medium-sized nuclear accident. All
things considered nuclear energy proves to bejust as expensive as it is risky.
In addition to the routine arguments about
nuclear energy, there are some new ones. Firstly,
the danger of nuclear proliferation is growing in
proportion to the number of new nuclear power
stations all over the world. There is no insurmountable division between the civil and military use ofthis technology in spite of the efforts on the partof the International Atomic Energy Agency (IAEA)
to regulate this. The most recent example is Iran.
At the end of the day anyone who does not want
to be regulated cannot be forced to do so. With
the expansion of nuclear energy there is a growing necessity to build reprocessing plants and fast
breeders in order to produce nuclear fuel. Both giverise to the circulation of plutonium leading in turnto the creation of huge amounts of fissile material
capable of making bombs – a horror scenario!
Secondly, an extension of the life span of existing nuclear energy stations, and even more so
the building of new plants, would act as a massive
brake on the development of renewable energies.
The claim that nuclear energy and renewableenergies complement each other is a myth since
not only do they compete for a meagre amountof investment capital and power-lines but at thesame time nuclear plants limit the growth potential particularly of wind energy owing to their

6

Systems for Change:Nuclear Power vs. Energy Efficiency+Renewables?

inflexible continuous operation. On windy andlow-consumption days the energy demand inGermany is already covered to a large extent by
the wind energy supply. As the output of existing nuclear power stations (as well as the big
coal-fired power stations) is not reduced at short
notice for economic reasons, the surplus energy
has to be exported to other countries at a loss.
There is method in this madness.

guarantee energy supply. The exact opposite is true.
Those who want to promote the development of
renewable energy with the aim of producing 100%of the power demand should oppose the buildingof new nuclear plants as well as the life span extension of older ones. Despite the claims about nuclear
energy it is not a suitable interim strategy leading
towards the age of solar energy.

Whatever way you look at it, nuclear energy has
neither the potential to make a decisive contribution to climate change nor is it necessary in order toBerlin, January 2010
Ralf Fücks(Chairman of the Heinrich-Böll-Stiftung)Introduction 

7Introduction
US President Obama’s speech of 16 February2010 on energy in Maryland1 sets the tone. The
possible future, he says, is “a future in which
renewable electricity is fueling plug-in hybrid carsand energy-efficient homes and businesses” and“in which we’re exporting home-grown energy
technology instead of importing foreign oil.” And
in order to get there, he says, more is needed:
We'll need to make continued investments
in advanced biofuels and clean coal technologies, even as we build greater capacity
in renewables like wind and solar. And we'regoing to have to build a new generation ofsafe, clean nuclear power plants in America.
Efficiency, renewables and nuclear power.
French President Sarkozy agrees with his US
counterpart and on 9 June 2009 he stated: “Wewill take a turn on renewable energies that is as
significant as the one General de Gaulle took on
nuclear in the 1960s. It is not one or the other. It
is one and the other”.2 Sarkozy announced thatfor each euro spent on nuclear, a euro will bespent on renewable energy. He also clarified thepolitical agenda on the issue. The investment parity is meant to “preserve a consensus on nuclear
and get those that are opposed to nuclear totolerate it”.3 What has been known for 65 years
as the French Atomic Energy Commission has
been renamed Atomic and Alternative Energy
Commission (Commissariat à l’Energie Atomiqueet aux Energies Alternatives).
Nuclear power as a “bridging technology”?
Germany’s conservative coalition government
has announced that it plans to extend the operation of its remaining 17 nuclear power plants
1beyond the deadlines that are defined in the stillvalid nuclear phase-out legislation. According
to the coalition agreement between the two
government parties, “the lion share” of the additional utility profits from plant life extension
shall be taxed by the government and reinvested
in renewable energies and energy efficiency inparticular. The explicit prohibition of nuclear
new built shall remain untouched. Chancellor
Angela Merkel’s government and her own party
are split when it comes to the implementationof the agreement. Environment Minister Norbert
Röttgen stated that the challenge is to shift “quasi
entirely to renewable energies” and he stresses
that he does not know “anybody in the coalition that says: Nuclear is our technology of the
future”.4 Röttgen wants the nuclear phase-out
to be accomplished by 2030 – about eight years
later than the timeframe under the current legislation, when reactors reach about 40 years inage and renewables are supposed to cover 40%of the electricity, up from 16% today. The German
minister points out that “a lot of nuclear electricity and a lot of eco-electricity don’t fit together as
economic concepts”.5
Fit or don’t fit together? Germany is likely themost interesting case when it comes to the analysis of potential complementary or contradictory
aspects of nuclear and efficiency+renewablesbased energy systems. The German Federation of
Municipal Enterprises (VKU) – a powerful association of 1,350 companies that covers over half ofthe country’s end-users in the electricity and heatsectors – is concerned about the consequences ofthe planned delayed phase-out of nuclear power.
VKU’s executive director, Hans-Joachim Reck,
declared in a press statement:6

Remarks by the president on Energy in Lanham, Maryland (16 February 2010),
http://www.whitehouse.gov/the-press-office/remarks-president-energy-lanham-maryland
2 Le Monde (9 June 2010); in fact, it was not de Gaulle that launched the first large nuclear power plant program but
Prime Minister Messmer in 1974.
3 Ibid. One should add that the “consensus” on nuclear power was never a public opinion consensus but rather anagreement by the major political parties.
4	Frankfurter Rundschau (19 February 2010),
http://www.fr-online.de/in_und_ausland/wirtschaft/debatte_energie_der_zukunft/?em_cnt=2331965&
5 Ibid.
6	VKU, press release 2/10 (19 January 2010).

8

Systems for Change:Nuclear Power vs. Energy Efficiency+Renewables?

The negative implications for competition
and for the conversion of the energy system toward decentralization and renewableenergies are entirely blanked out. […] It iscounterproductive to discourage investmentsof municipal utilities into efficient and futureoriented energy generation.
Municipal power plant investments inGermany in the order of €6.5 billion would now
have to be reassessed, and even the economic
viability of already implemented projects would
be threatened, VKU added.
Many systemic issues have not been thoroughly
investigated yet when it comes to compatibility or
incompatibility of the centralized nuclear approachversus the decentralized efficiency+renewables
strategy. What are the consequences for grid development or how do choices on grid characteristics
influence power-generation investment strategies?
To what extent is the unit size co-responsible forstructural overcapacities and thus a lack of incentives for efficiency? How do government grants/
subsidies stimulate long-term decision-making?
Will large renewable power plants reproduce thesame system effects as large coal/nuclear plants?
The present report presents the basic situation and raises questions that urgently need tobe addressed. Successful energy policy will haveto address the energy service needs of people ina much more efficient way than has been done in
the past, as increased competition for ultimately
finite fossil fuel leads to higher energy prices forall. For too long, energy policies have aimed at“supply security” of oil, gas and kilowatt-hours,
rather than general access to affordable, reliable
and sustainable services like cooked food, heat7
8

and cold; light; communication; mobility; andmotor torque.
The outcome is well known. Even in industrialized countries with established nuclear power
programs like the United States, France and theUnited Kingdom, fuel poverty has become asevere problem and is rising rapidly. The acronym EWD has been created: It stands for Excess
Winter Deaths. A European project7 has shownthat the number of people that die during thewinter because they cannot afford to heat theirhomes appropriately has become statisticallyhighly significant. EWDs vary from 10% in Paris to
30% in Glasgow. In the United Kingdom, it is estimated that 15,000 people die in winter in addition
to the normal mortality rate due to consequencesof fuel poverty. In nuclear France, close to eight
million households, about 28% of the total,
spend over 10% of the budget on energy (including transport). Since 2005 about three million
French families have been eligible for the Tariff
for Primary Necessities, another recent invention
that provides a subsidized lower tariff for lowincome families.
It is obvious that nuclear power did not leadto broad-scale and just access to energy services
in the countries that opted for nuclear energy.
But is a nuclear strategy actually counterproductive for the development of a clean-energy service
future based on efficiency+renewables? There isstrong evidence that this is the case. As Time magazine commented on President Obama’s nuclear
loan-guarantee decision: “Eventually, extravagant government largesse might create a nuclear
rebirth of sorts – but it might end up strangling
better solutions in their cribs or prevent themfrom ever being born”.8

European fuel Poverty and Energy Efficiency, see http://www.precarite-energetique.org/
Time magazine (18 February 2010).

Introduction 

Nuclear vs. Renewable
Amory Lovins:9 “But nuclear power is about
the least effective method: It does save carbon,
but about 2 to 20 times less per dollar and 20 to
40 times less per year than buying its winningcompetitors”.
Bill Keepin and Gregory Kats:10 Improving
electrical efficiency is nearly seven times morecost-effective than nuclear power for abating
CO2 emissions, in the United States.
Environment California:11 “Per dollar spentover the lifetime of the technology, energy
efficiency and biomass co-firing are five times
more effective at preventing carbon dioxide
pollution and combined heat and power isgreater than three times more effective” than
nuclear power.

99Warwick Business School:12 The undermining of other technologies means that nuclear
power is not complementary to other lowcarbon technologies. This refutes the argumentthat all low-carbon technologies should, andare able to, be harnessed together so that they
can harmoniously work together to reducing
carbon dioxide emissions. On the contrary, thegovernment has to make a choice between anuclear future and one dominated by renewable generation and the more efficient use ofenergy.
Duke University:13 “Solar photovoltaics
have joined the ranks of lower-cost alternatives
to new nuclear plants,” John O. Blackburn, professor of economics.

Amory B. Lovins, “Proliferation, Oil, And Climate: Solving For Pattern”; Lovins’ expanded version of essay“Proliferation, Climate, And Oil: Solving For Pattern,” Foreign Policy (17 January 2010).
10 B. Keepin and G. Kats, "Greenhouse Warning. Comparative Analysis of Nuclear and Efficient Abatement Strategies,"
Energy Policy 15:6 (December 1988): pp. S38 S61.
11 Travis Madsen, Tony Dutzik, Bernadette Del Chiario, and Rob Sargent, Environment California: Generating Failure:
How Building Nuclear Power Plants Would Set America Back in the Race Against Global Warming (November 2009).
12 Catherine Mitchell and Bridget Woodman, New Nuclear Power: Implications for a Sustainable Energy System(Warwick Business School: March 2006).
13 Nuclear Energy Loses Cost Advantage, Diana S. Powers, New York Times, July 26, 2010.

Systems for Change:Nuclear Power vs. Energy Efficiency+Renewables?

Andrea Zeppilli

10

Overview and Trends
Energy demand and the impact ofa carbon- and resource-constrained world
The last few years have seen unprecedentedchanges in the energy sector. The markets – inparticular for oil but with a knock-on effect tothe other energy sources – have been extremely
volatile. By mid 2008, the price of oil was close
to $150 per barrel – an eightfold increase from a
decade earlier. However, within a few months,
the high prices had accelerated global economic
problems, resulting in a price collapse to around$30 per barrel. In all energy sectors, the global
recession has depressed energy consumption
and, remarkably, 2009 was the first year since theend of World War Two that global electricity consumption has fallen.
However, globally, traditional energy “forecasts” anticipate rapid increases in energy
demand, driven primarily by the need to fuelthe growing economies in Asia, and particularly China, and to a lesser extent India. The
International Energy Agency (IEA) assumes in

14 IEA, World Energy Outlook 2009, p. 44.

its Reference Scenario of the 2009 World Energy
Assessment that global energy demand will
increase by 40% by 2030. Within this scenario,
Chinese energy consumption effectively doubles
between 2007 and 2030, while in the European
Union demand increases by only 1%, and in the
United States by less than 5%. The Reference
Scenario adopted by the IEA is not a sustainable
one, but is an extension of current national policies. There is no doubt that development along
this pathway would lead to unparalleled andcatastrophic changes in the atmosphere, with the
IEA suggesting that the “the CO2 concentration
implied by the Reference Scenario would resultin the global average rising by up to 6 degrees
Celsius”.14
The climate impact is not the only – or evennecessarily the most pressing – problem associated with the Reference Scenario. The question of
the midterm availability of suitable resources andthe associated impact on the physical availability
and prices for consumers is pressing, especially for
liquid fuels. In recent years, the IEA has decreased

Overview and Trends

the 2030 estimates for oil demand in its Reference
Scenario. In the 2004 World Energy Outlook, global oil demand was expected to grow at an annual
rate of 1.6% per year, reaching 121 million barrels
per day (mb/day) in 2030, compared to current
annual growth-rate scenarios of 1% per year,
leading to 105 mb/day in 2030. The IEA has inparticular altered its assumptions for consumption of oil in OECD countries with a 17-mb/day
difference between the 2004 and 2009 scenarios.
The lower oil demand still, however, leads to serious questions of resource availability due to a
combination of overall increase in demand (ascurrent demand is 76 mb/day). An assessment by
the UK Energy Research Centre in 2009 estimatedthat the average rate of decline from fields that are
past their peak of production is at least 6.5%/year
globally, while the corresponding rate of decline
from all currently-producing fields is at least 4%/
year. To maintain the current levels of output, 3mb/day of new capacity would be required eachyear, or the equivalent of the production of Saudi
Arabia every three years.15
Therefore, from a security of supply and climate security system perspective, the current
energy system and the policies that shape it arehighly unsustainable. Regardless of the type ofenergy system envisaged, new investment will be
required to meet predicted increases in demand
for the exploitation of new energy sources andto replace existing infrastructure and facilities.
The IEA estimated that the investment cost for
its Reference Scenario will be in the order of $26
trillion between 2008 and 2030, or an annual
requirement of $1.1 trillion – 1.4% of global
GDP per year. Over half of this cost would be forthe power sector. Importantly, the IEA has also
undertaken a scenario in which emissions fromthe energy sector are reduced so as to fall within
the 2 degree target. The investment costs associated with this “450 Scenario” are significantly
higher than for the Reference case and would
require an additional $10.5 trillion. However,the IEA also calculates that the 450 Scenario will

11

result in a reduced energy cost of around $8.6 trillion by 2030 and a total savings over the lifetime ofthe structures of $17 trillion.
It is clear that a new direction is needed tocreate a sustainable and secure energy sector
and that the current policies and market trends
in place around the world must radically and rapidly change. In the long term, a low-carbon andenvironmentally secure energy sector is possible
and will be cheaper than attempting to continue
business as usual. However, just switching from ahighly polluting to a less-polluting energy source
will not result in a sustainable energy sector.
Instead, there also needs to be systemic changethat places far greater emphasis not only on theefficiency of the system as it relates to energy use,
but also on its production, transformation andtransmission, which are often overlooked.

Transforming the energy-supply options
Global energy consumption has increased as aresult of the increase in population and per capita
energy use. The figure 1 shows the extent to which
global energy consumption has increased overthe last two centuries, with a doubling between
1800 and 1900, and an eightfold increase in thelast 100 years. As noted by the IEA and others, thistrend is expected to continue as less-developed
countries seek to increase the standard of livingof their populations and enable them to haveeven basic energy services. Currently, around aquarter of the world’s population lack access toelectricity-based services and there is a fivefold
per capita difference between energy consumption in OECD and developing countries. The
figure also shows the extent to which commercial
fossil fuels – those from coal, gas and oil – havecontributed to this gap. While the global annual
population growth rate has slowed in recent years
to 1.3%, the UN’s medium fertility scenario envisages that the population will not peak until after
2200, when it will have reached 10 billion, up
from today’s 6 billion level.16

16 UN, Six Billion (2004), http://www.un.org/esa/population/publications/sixbillion/sixbilpart1.pdf
15 UKERC, Global Oil Depletion, An Assessment of the Evidence for a Near-term Peak in Global Oil Production(August 2009).

12

Systems for Change:Nuclear Power vs. Energy Efficiency+Renewables?

Figure 1: Growth in Global Energy Demand
PJ

Billionnon-commercial

coal

oil

gas

hydro

nuclearpopulation
Source: Arnulf Grübler, 200817

Historic and projected developmentof renewables
Renewable energy was for centuries the mainenergy source for the human race, initially throughthe burning of biomass – particularly wood – butthen through the exploitation of water and wind
power. However, over the last centuries the reliance on renewable energy has declined as theability to harness energy from fossil fuels developed. The use of fossil fuels, in particular in theform of coal, oil and then gas, has enabled energy
to be released on an unparalleled scaled. Thisis because they are relatively energy-dense andtherefore, despite the energy consumed in theirprocessing and transportation, the consumer canobtain large quantities of usable energy.

However, in the last few years this trend has
started to reverse in certain regions and sectors.
Most notable has been the EU power sector. In
Europe €13 billion of wind investment was madein 2009, which led to wind power installations
accounting for 39% of new installations – the second consecutive year in which more wind power
was installed than any other generating technology. Furthermore, renewable power installations
in general accounted for 61% of new installationsin 2009. The EU power sector continues its moveaway from coal, fuel oil and nuclear, with eachtechnology continuing to decommission morethan it installs.18
Figure 2 shows how a similar trend is developing within the global power sector. In 2009 newinvestment in sustainable energy was $162 billion(7% down from the record 2008 figure of $173 billion, as a result of the global economic crisis).

17 Arnulf Grubler, “Energy transitions,” in Encyclopaedia of Earth, ed. Cutler J. Cleveland (Washington,
DC: Environmental Information Coalition, National Council for Science and the Environment, 2008).
18 EWEA, More Wind Power Capacity Installed Last Year in the EU Than Any Other Power Technology, European Wind
Energy Association (February 2010).

Overview and Trends

13

Figure 2: New Financial Investment in Clean Energy by Sector: 2004 2009 (US$bn)
Growth: 56%

52%

44%

10%

-7%

173

162

157

109
72
46

2004

2005

2006

2007

Third party investment

2008

2009

SDC, corp RD&D, gov R&D

Source: UNEP et al., Global Trends in Sustainable Energy Investment, 201019

consequence, as can be seen in Figure 3, 36% of
the total increase in the installed capacity of thepower sector was renewable (excluding largehydro), however, its total contribution to the global electricity consumption , is still relatively low
at only 5%.

However, this was still the second highest
annual investment total ever (and four times
that seen in 2004) and spending on new capacity(including large hydro as well as other renewable) was for the second year running bigger than
the investment in new fossil fuel capacity. As a

Figure 3: Global Growth of Renewable Energy in the Power Sector (excluding Large Hydro)
40%
36%

35%

31%

30%

29%

25%

25%

20%
15%
10%
5%
0%

16%
10%

2004

5%
4.5%
3.4%

2005

6%
4.9%
3.5%
2006

 enewable powerR
generation increase
as a % of global
power generation
increase
 enewable powerR
as a % of global
power capacity

10%

4%4.0%
3.3%

 enewable powerR
capacity addition
as a % of global
power capacity
addition

5.5%

6.2%

3.8%

4.3%

2007

2008

7.0%
5.0%

 enewable powerR
as a % of global
power generation2009

Source: UNEP et al., Global Trends in Sustainable Energy Investment, 201019 SDC = small distributed capacity: New investment volumes adjusts for re-invested equity. Total values include
estimates for undisclosed deals (source New Energy Finance).

14

Systems for Change:Nuclear Power vs. Energy Efficiency+Renewables?

Hydropower
The development and widespread use of electricity has resulted in considerable use of hydropower, which in 2009 produced around 3,200
terawatt hours (TWh) of electricity per year (anequivalent of 740 million tons of oil equivalent– mtoe). As a contribution to the global energy
mix, this equates to around 15% of electricity. The
installed capacity of hydropower is 923 gigawatts(GW) and is by far the largest of the renewablesources. However, there are significant differences in the environmental impacts and acceptability of hydropower. This particularly relates tothe size of hydropower facilities.
Despite having many of the most accessible
and economical large hydro sites in operation,
particularly in North America and Europe, there
has not been a significant increase in the use ofhydropower. In fact since 2000 the global output ofhydropower has increased by only 20%, which is
below the rate of increase in electricity consumption as a whole. Consequently, hydropower’s
contribution to global electricity consumption
has declined from 17% in 2000 to little over 15%
in 2009, according to the BP Statistical Review ofWorld Energy. Under the IEA’s Reference Scenario,
the electricity production from hydropower is
expected to increase by around 50%, although
its relative contribution will fall to nearly 14%.

Even in the 450 Scenario, it is expected to provide
only around 19% of electricity by 2030.
Scenarios by other organizations also indicate that there will be no significant increasein output from the hydro sector. Greenpeace’s
Energy Revolution scenario assumes even lessinstalled capacity from hydropower than the IEA’s
Reference Scenario.20 However, assessments doshow that the potential from hydropower is potentially much larger. The World Energy Assessment
estimates that the economic potential is approximately 8,100 TWh, the technical potential some
14,000 TWh and the gross theoretical potential
around 40,000 TWh.21 Reaching many of theselevels would potentially bring large and, to many,
unacceptable environmental and social consequences, and therefore will not be undertaken.
However, some expansion could be achieved
through smaller run of the river power plants orincreased efficiency of existing facilities.
Figure 4 shows the relative importance ofhydropower in the global electricity supply mix
over time. Importantly, despite its relatively good
economic performance, the expansion of hydrogenerated electricity has not kept pace with thesector as a whole and its relative contribution
continues to fall.

20 Greenpeace, Energy Revolution, Global Energy Scenario (DLR, Institute of Technical Thermodynamics, Department of
Systems Analysis and Technology Assessment, European Renewable Energy Council, and Greenpeace International, 2008).
21 WEA, “Chapter 4: Energy Resources,” in: World Energy Assessment: Energy and the Challenge of Sustainability(United Nations Development Programme, 2004).

Overview and Trends

15

Figure 4: Global Electricity and Hydropower Production (TWh)25000.020000.015000.0
Hydro electricity
10000.0

Total electricity

5000.0

08

06

20

04

20

02

20

20

00

98

20

96

19

94

19

92

19

19

19

90

0.0

Source: BP, 201022

Wind power
As noted, the commercial use of wind has
increased rapidly in a number of countries inrecent years. The Figures 5 and 6 show both theincrease in installed capacity over the last decade and also the breakdown of installed capacity
across the globe. Over the past decade, the annual
global growth rate has reached 30%. This trend is
expected to increase, in particular with measures
to improve energy security and climate security
relying on wind power. The Global Wind Energy
Council envisages that there will be an increasein wind energy from the 2008 level of 261 TWh to
680 TWh in 2012, which in total would contributeto 42% of the Annex 1 commitments under the

first commitment period of the Kyoto Protocol.
Furthermore, the GWEC estimates that undera more ambitious scenario, wind power could
provide between 21 and 34% of the required
emission reductions for developed countries, as
outlined by the IPCC when calling for a 25 to 40%
reduction. This would require around 1,000 GW
of installed capacity by 2020, which would represent a slowing down of the current global growthrate.23 However, other scenarios give, in somecases, much lower levels of installed capacity
for wind power in 2020: the IEA suggests around
650 GW in their 450 Scenarios and Greenpeacearound 900 GW.

22 BP, Statistical Review of World Energy (June 2009).
23 GWEC, Wind Power is Crucial for Combating Climate Change (Global Wind Energy Council, December 2009).

16

Systems for Change:Nuclear Power vs. Energy Efficiency+Renewables?

Figure 5: Accumulative Global Wind Power Capacity (MW)
180000160000140000120000100000
80000
60000
40000
20000
09

08

20

07

20

06

20

05

20

04

20

03

20

02

20

20

01

20

00

20

99

19

98

97

19

19

19

96

0

Source: Global Wind Energy Council, 201024

Figure 6: Installed Capacity of Wind Power Plants in 2008 (MW)

21391

3535
3465
4051
4492

35158

4850
25777

10926
25104

19149

USA
Germany
Spain
China
India
Italy
FranceUK
Denmark
PortugalRest of the World

Source: Global Wind Energy Council, 2010

Solar power
There are two basic types of solar technologies for electricity production: concentrated
solar power, which concentrates solar heat tocreate steam and to drive turbines and thencreate energy in a more conventional way; andsolar photovoltaic (PV), which converts the
sun’s energy directly into electrical current. Solarenergy is also used, on a far wider scale, to heatwater and buildings – solar thermal. The development of these technologies has followed quitedistinctive pathways. The larger, more centralized
concentrated solar power so far has experienced
more of a “boom and bust” pathway (Figure 7),
while Figure 8 shows the more steady development of solar PV.

24 GWEC, “Global Installed Wind Power Capacity: 2008/9” (Global Wind Energy Council, February 2010),
http://www.gwec.net/fileadmin/documents/PressReleases/PR_2010/Annex%20stats%20PR%202009.pdf

Overview and Trends

17

Figure 7: World Installed Concentrating Solar Thermal Power Capacity 1980 2007 (MW)
500
450
400
350
300
250
200
150
100
50
0
1980

1985

1990

1995

2000

2005

2010

Source: Earth Policy Institute, 2009

Figure 8: World Annual Solar Cell Production 1998-2009 (MW)
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000

19

96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09

0

Source: Earth Policy Institute, 2010 and www.renewableenergyworld.com (for 2009)

The last few years have seen a breakthroughin the economics and deployment of solar PV.
Technology breakthroughs and the introduction of larger production facilities have resulted
in considerably cheaper PV modules, with PV’s
installed costs falling from $7 per peak watt in2008 to around $5 in 2009 and as low as $3 per wattinstalled for some utility scale projects.25 This fallin prices is leading to wider deployment, which

in turn is leading to lower prices, a virtuous circle. Until recently, Germany has been the major
driver of this growth in deployment, in 2009, it
installed 3800 MW of new capacity and by the endof the year operated a cumulated capacity of justunder 10,000 MW of PV. For the first six months of2010 alone, the Federal Network Agency expects
an increase of more than 3,000 MW.26

25 Clean Energy Trends 2010, by Ron Pernick and Clint Wilder, Clean Edge.
26 Federal Network Agency, Press Release, 27 July 2010.

18

Systems for Change:Nuclear Power vs. Energy Efficiency+Renewables?

As of 19 July 2010, it has become possible tomonitor real-time generation of solar power on
the German national grid, which in the following weeks could be seen to regularly exceed 5,000
MW injection around midday (see Actual Solar
Power Generation at http://www.transparency.eex.
com/en/)However, other countries, notably, China,
Italy, Japan, Spain and the US are expected torequire 60% of the growth in installed capacity
in 2010. The falling production prices are leading to new claims that solar PV now has similar
grid costs to nuclear power. A report prepared byJohn Blackburn, a professor of economics at Duke
University, suggests that a “historic crossover,”will occur whereby the costs of solar photovoltaic
systems have declined to the point where they
are lower than the rising projected costs of new
nuclear plants.27 Furthermore, one of the leading solar PV companies in the UK, a country not
known for its sun exposure, has stated that they
believe that by 2013 electricity from domestic PV
will have a similar production price (grid parity)
to that consumers are paying for their electricity.28 While others suggest that parity in Europe
may not be achieved until 2020, even this later
date would be at best occur at the same time as
the start up of a new nuclear reactor that wereordered today.

Historic and envisaged developmentof nuclear power
The first nuclear reactor was connected to a
power grid in 1954 in what was then the Soviet
Union. The rise in the numbers of operating units
was uninterrupted for 35 years until the end of
the 1980s. By 1989 there were a total of 424 reactors operating in the world. A historic peak wasreached in 2002 with 444 units, five more than
the 439 operating reactors as of August 2010. The
International Atomic Energy Agency (IAEA) lists
61 reactors as under construction (as of August2010), 13 of which have been listed for over 20
years and many have encountered significant
delays.29 In fact, for the first time since the beginning of the commercial use of nuclear energy,
no new unit was connected to the grid in 2008.
Since the grid connection in August 2007 of the
Romanian Cernavoda-2 unit (after 24 years ofconstruction), only five new reactors (one eachin China, Japan and Russia and two in India)
have started up, while five units were taken off
the grid in 2008 and 2009. Total installed capacity has slightly decreased, in spite of widespread“uprating”.30
In 2009 the 370 GW of nuclear capacity generated about 2,600 TWh – a 1.3% decline, the third
in a row – that is about 13% of commercial electricity or 5.5% of commercial primary energy, or
between 2% and 3% of all energy in the world – allon a downward trend.31
In spite of the real-term decline in the role ofnuclear energy, projections for a massive development by the IAEA and the OECD’s International
Energy Agency have been increasingly optimistic.
The IAEA anticipates 473 GW of nuclear capacity
in its “low” scenario and, with admirable precision, 747.5 GW in its “high” scenario by 2030.
The IEA’s World Energy Outlook 2009 has added
another 10% to its projected installed nuclear
capacity to reach 475 GW by 2030 in its Reference
Scenario. In its 450 Scenario (climate stabilization
scenario) the IEA envisages, similar to the IAEA
“high” scenario, to more than double the current
nuclear capacity and power generation by 2030.
The IEA states:

27 Nuclear Energy Loses Cost Advantage, Diana S. Powers, New York Times, 26 July, 2010.
28 Jeremy Leggett, “I accept George Monbiot's £100 solar PV bet”, The Guardian, 9 March 2010.
29 For a detailed analysis, see Mycle Schneider, Steve Thomas, Antony Froggatt, and Doug Koplow, The World Nuclear
Industry Status Report 2009, commissioned by the German Environment Ministry (Paris: August 2009), available in
English and German at http://www.bmu.de/english/nuclear_safety/downloads/doc/44832.php
30 Capacity increase at existing facilities by technical means (steam generator replacement, turbine refurbishment, etc.).
31 We use the term “commercial” here in order to clarify that the energy statistics do not generally take into accountnon-grid connected power or non-commercial biomass for example that contribute a substantial share of the energy
supply in many parts of the world.

Overview and Trends

19

A nuclear renaissance is possible but cannot occur overnight. Nuclear projects facesignificant hurdles, including extended construction periods and related risks, long
licensing processes and manpower shortages,
plus long-standing issues related to waste disposal, proliferation and local opposition. The
financing of new nuclear power plants, especially in liberalised markets, has always beendifficult and the financial crisis seems almost
certain to have made it even more so. The huge
capital requirements, combined with risks ofcost overruns and regulatory uncertainties,
make investors and lenders very cautious,
even when demand growth is robust.32
Neither the IAEA nor the IEA demonstrate howthese “significant hurdles” could be overcome inorder to justify these significant expansion projections. In fact, in a recent report, the Basel-based
think tank Prognos33 suggests that the numberof operating reactors is likely to decrease by 29%
by 2030 if compared with the spring 2009 level.
Prognos estimates that only 35% of the projects
announced by the World Nuclear Association for2030 will materialize – not enough to compensate
for aging reactors being taken off the grid.

Comparison of nuclear to renewables
Figures 10 and 11 show the net additions to
the grid from new renewables (not including
large hydropower) and nuclear and the contributions of all so-called low-carbon energy sources
to the global electricity mix. Although at firstglance these figures may appear contradictory,
they are two sides of the same narrative. Figure
10 details the net additions to the grid over the
global grid over the last two decades. The size ofthe individual stations, coupled with the closureof reactors, is why the nuclear trend-line lacks
an overall direction, but it could be summarized
to an average net annual additional capacity ofaround 2 GW per year in the beginning of theperiod, compared to a global installed capacity ofsome 370 GW. However, this trend has stagnatedor decreased since 2005. Over the same period,
wind power has increased its capacity by over 10
GW on average per year, with capacity additions
steadily increasing to reach over 37 GW in 2009.

Figure 9: World Nuclear Reactors and Capacity 1954-2010 (GW)
Nuclear Reactors & Net Operating Capacity in the World
in GWe, from 1954 to 1st August 2010

©Mycle Schneider Consulting - Sources: IAEA-PRIS, MSC, 2010
32 IEA, World Energy Outlook 2009, p. 160.
33 Matthias Deutsch et al., Renaissance der Kernenergie, commissioned by the Federal Radiation Protection Office(BFS), Prognos, Berlin/Basel, September 2009.

20

Systems for Change:Nuclear Power vs. Energy Efficiency+Renewables?

Figure 10: Net Additions to Global Electricity Grid from New Renewables and Nuclear
1990-2010 (in GW)
60
50
40
Wind

30

Photovoltaics
20

Nuclear

10
0
1995

1990

2000

2005

2010

-10
Source: Amory Lovins, 201034

It is important to also look at the actual electricity generated by the different non-fossil fuelsources, as is mapped out in Figure 11. This showsthe extent to which, despite the recent growth in
new renewables, their contribution, compared tonuclear power and large hydro, is small. However,as this situation will change, as seen in Figure 17.
The IEA assume that in their 450 Scenario that by
2030, the use of hydropower will be double thecurrent level of nuclear power, while wind power
would produce an equivalent amount as would
other renewable sources.35

Figure 11: Electricity Production from Non-Fossil Fuel Sources
3.500,00
3.000,00
2.500,00
Renevables-NonHydro

2.000,00

Hydro

1.500,00

Nuclear1.000,00
500,00Source: Earth Policy Institute, 200934 Amory Lovins, Personal communication to the authors (2010).
35 IEA, World Energy Outlook 2009, table 9.2, p. 324.

2006

2004

2002

2000

1998

1996

1994

1992

1990

1988

1986

1984

1982

1980

0,00

21

Dave Fayram

Systemic Issues

Systemic Issues“If someone declares publicly that nuclear
power would be needed in the baseload because offluctuating energy from wind or sun in the grid, he
has either not understood how an electricity grid ora nuclear power plant operates, or he consciously
lies to the public. Nuclear energy and renewableenergies cannot be combined”.
Siegmar Gabrielthen Federal Environment
Minister of Germany36
The policy decision to develop nuclear power
and/or energy efficiency+renewables is far fromlimited to the choice of technological options.
The decisions are often triggered, or at least heavily influenced, by pre-existing political systems,
decision-making processes, market structure andheavy infrastructure. On the other hand, basic
system decisions, like centralized or decentralized
power generation, have a significant impact on
the flexibility and competitiveness of the energy
technologies and systems. For example, while
there is no doubt that combined heat and power(CHP) is a much more efficient way to provide
heat- and electricity-based energy services thanseparate generation, it is difficult for CHP to compete with existing centralized and often oversized
power plants or existing natural gas networks.
In many developing countries, very manyof those infrastructural decisions have yet to be
made. Consequently, it is of utmost importanceto assess the implications of these basic systemchoices. Industrial countries illustrate the outcome of past strategic choices. Unfortunately,while there are numerous successful local andregional cases, there is no “good” example for a
successful national energy policy that provides
affordable, sustainable energy services. All countries have implemented policies that have serious
drawbacks, and major “repair jobs” are necessary
in order to address the defaults.

The French centralized system
France, for example, governed by a very
centralized political system, quite naturally has
always been looking for centralized answers toenergy-supply challenges. Nuclear power was a
logical choice of top-down decision-making and

36 Deutscher Bundestag, 16. Wahlperiode, 211. Sitzung (Berlin: 19 March 2009).

22

Systems for Change:Nuclear Power vs. Energy Efficiency+Renewables?

the result of the total absence of a willingness
by the central state to share political power onenergy issues with regional or even local governments. Like a steamroller, the state-sponsorednuclear logic wiped out small and medium-sizedindustries trying to develop new and renewableenergy sources. In a similar way, efficiency efforts
have been often suffocated. By the mid 1980s, it
had become clear that the state utility EDF had
massively overbuilt (in the order of 16 nuclear
power plants). Instead of adjusting the equipment planning, the state dismantled most of theEnergy Efficiency Agency and EDF went for two
strategic choices: long-term electricity exportagreements and widespread promotion of electric space and water heating. This strategy has
led to the single most significant barrier for thedevelopment of energy efficiency+renewables
in France. Hundreds of thousands of buildings
have been built without chimneys, thus withouta low-cost opportunity to switch to a less wasteful and polluting heat sources than electricity.
In recent years the tendency has even increased
and around 75% of all new French homes areequipped with electric space heating. There arecases where new urban heating networks pass byelectricity-heated buildings without any chanceof hooking them up because of what is felt as disproportionate investment costs.
The other side-effect of the massive thermal
use of electricity – almost half of the residential
power consumption in France – is the spectacu-

lar increase of the winter peak load that exceeds
now three times the lowest load-day in summer.
The result is a considerable increase in fossil fueluse for power generation (an increase of about
25% since 1990), the restart of up to 40-year-old
oil-fired power plants and the rapidly increasing
import of electricity, in particular coal-fired powerfrom Germany. In fact, in January 2010 France wasa net importer of electricity – after October 2009
the second net import month in 27 years.
The energy efficiency+renewables efforts inFrance have remained severely underdeveloped.
Logically, per capita electricity consumption issignificantly higher than the EU average or in acountry like Italy, which abandoned nuclear power
after the Chernobyl disaster. In 2008 Spain added
more wind power capacity (4,600 MW) thanFrance had installed in total by 2007 (4,060 MW).
The idea that the French nuclear system has
led to a low carbon content of its economy iswrong. As new figures published by the Frenchgovernment37 illustrate, taking into account the
net carbon content of imported goods (minus
the carbon content of exported items), per capita
greenhouse gas emissions (2005) increase from
8.7 t to 12 t of CO2equivalent and thus almost
reach the level of coal-based Germany.38 France
has a large trade deficit while Germany has been
the world’s leading export nation until China took
over in 2009.

37 Ministère de l’Ecologie, “L'empreinte carbone de la demande finale intérieure de la France”, August 2010.
38 For year 2001, the Norwegian Carbon Footprint Calculator indicates 13.1 t of CO2eq for the six greenhouse gases forFrance and 15.1 t of CO2eq for Germany, see http://carbonfootprintofnations.com

23

Systemic Issues

Figure 12: Greenhouse Gas Emissions Due to Final Consumption in France (in t of CO2eq.)39

National
Territory

Final
Domestic
DemandDirect Household Emissions (transport and heating)
Emissions of National Production for Domestic Demand
Emissions Contained in Imported Goods
Emissions Contained in Exported Goods
Source: Ministry of Ecology, August 2010

The German approach: Nuclear phase-out
and renewables expansion
The German case illustrates an entirely different strategy. While nuclear power has provided
up to 30% of the electricity, the country has
always heavily depended on coal and lignite. In
2000 the government signed an agreement with
the nuclear utilities and in 2002 legislated for thephase-out of nuclear power. In parallel, in 2000
feed-in tariff legislation was passed. It introduced
guaranteed prices for renewable electricity producers and market stimulation programs havebeen introduced to foster the penetration ofrenewable energies in the heat market. The
combination of a clear planning horizon for thephase-out of nuclear power and strong stimulation for the development of renewable energies
created a phenomenally dynamic environment.
Regional energy agencies under Länder (state)authority were instrumental in engineering theimplementation. The total energy provided byrenewable energies has tripled since the end of
the 1990s, hundreds of thousands of jobs havebeen created and renewable energy technologies
have become a top export branch.
However, not everything has gone well. While
the generation of renewable electricity, mainly
wind, increased by about 70 TWh – or a factorof five between 1990 and 2007 – total electricity
consumption increased by over 12%, or almost
68 TWh, during the same period. As a result, theCO2 emissions of the German power-generation
sector was identical in 2007 and 1990. That is aparticularly shocking result as the unificationof East and West Germany led to a “natural”
decrease of the carbon content and power consumption in the east due to the simple shutdownof outdated power plants40 and industries.

39 Note that this calculation only takes into account CO2, CH4 and N2O.
40 The oldest coal-fired power plant in East Berlin operating in 1989 dated from 1919.

24

Systems for Change:Nuclear Power vs. Energy Efficiency+Renewables?

Energy analysts and environmental organizations have been pointing out this problem
for some time, but neither the previous Grand
Coalition nor the new conservative government
have been able to implement even the minimum
efficiency requirements under EU legislation.
At the same time, the potential extension of
the operation of German nuclear power plants
threatens the restructuring of the energy systemin the country. A comprehensive analysis by
Joachim Nitsch, commissioned by the German
Environment Ministry, concluded in 2008:41
In case of the lifetime extension of nuclear
energy, the current planning for the construction of new fossil fuel plants would have to be
entirely revised in order not to threaten the 30%
target for renewable energy for 2020. The CHP
target could not be reached. The necessary
structural change of the power supply towards
significantly increased electricity efficiency,
a significantly higher share of CHP and a highexpansion dynamic for renewable energy
would be fundamentally put into question.
Thus the energy system would be hardly in aposition to fulfil the climate protection target ofan 80% CO2 emission reduction until 2050.
The significant expansion of renewable energies in the power sector does not necessitate
additional, large baseload capacities that operate
all year round with high load factors, but rather
flexible, middle-load plants that can adapt tovarious types of intermittent power plants.42 “Thelifetime extension of nuclear power plants would

leave electricity quantities in the market that
otherwise would be successively replaced by combined heat and power”, stresses the Wuppertal
Institute.43 At the same time, continued operationof nuclear plants would also hinder the extensionof urban heating systems.
Direct competition between renewable electricity and nuclear and other “baseload” power
leads more and more to absurd market situations.
In Germany the injection of renewable electricity
has a legal priority over nuclear and fossil power.
But in October 2008 wind energy generation was
so high that some of the non-renewable electricity had to be “sold” for “negative” prices on the
power market because nuclear and coal fired
power plant output could not be reduced quickly
enough. This situation appeared in spite of thefact that 8 GW of nuclear capacity was off-line
for maintenance.44 Since then, negative electricity prices, which are legal in Germany only since
September 2008, have become an increasingly
frequent phenomenon on the German power market. In the six months between September 2009
and February 2010, power prices dropped into
the red on 29 days (see Figure 13). Negative prices
reached stunning levels: on 4 October 2009 a
power producer had to pay up to €1,500/MWh(15 cents/kWh) to get rid of its electricity.
In fact, the German nuclear phase-out strategy
is perfectly complementary to the introduction ofa highly flexible system based on the intelligent
combination of distributed energy sources.

41 Joachim Nitsch, “Leitstudie 2008 - Weiterentwicklung der Ausbaustrategie Erneuerbare Energien vor dem
Hintergrund der aktuellen Klimaschutzziele Deutschlands und Europas”, commissioned by the Federal Ministry for
the Environment, Nature Conservation and Nuclear Safety (October 2008).
42 Note that in fact all power plants are more or less intermittent, including nuclear plants that are not only down forseveral weeks per year for refueling but also many of which that have experienced extensive repair or upgrading
outages exceeding one year.
43 Manfred Fischedick et al., “Hindernis Atomkraft – Die Auswirkungen einer Laufzeitverlängerung der Atomkraftwerke
auf erneuerbare Energien”, commissioned by the Federal Ministry for the Environment, Nature Conservation and
Nuclear Safety (Wuppertal Institut, April 2009).
44 Ibid.

25

Systemic Issues

Figure 13: Negative Electricity Prices on the German Power ExchangeDays with negative prices between September 2009 and March 2010 (in €/MWh)
Note: 100€/MWh=10 Cents/kWh
Lowest Daily Price

1200
800

200

11

100

100

5

10

4

8

250

11

200

21

8

11

10

50

11

11

230

11

199

21

27

26

800

1499

8

0

18

400

50

€ €/MWh (Negative Values)

1600

01. 04. 15. 03. 04. 25. 15. 19. 22. 23. 24. 25. 26. 29. 30. 06. 20. 22. 24. 25. 26. 27. 29. 19. 31. 02. 27. 28. 01.
Sep Sep Sep Oct Oct Oct Nov Nov Nov Nov Nov Nov Nov Nov Nov Dec Dec Dec Dec Dec Dec Dec Dec Jan Jan Feb Feb Feb Mar

Sources: H. Alt, “Warum negative Strompreise an der Strombörse?”, FH-Aachen, March 2010

Spanish renewables hitting
the current ceiling?
In Spain, in the early morning of 24 February
2010, the transmission system operator Red
Eléctrica (REE) ordered 800 MW of wind power tostop generating electricity for several hours. Thiswas because at 1:30 am, wind power was delivering
11,961 MW (44.5% of the 26,674 MW demanded
at that time). However, after an intervention
from REE, the wind power output was loweredto 10,852 MW. Wind generation remained below
the amount it could have delivered until 6:30 am,
when demand started to increase. However, during the period of decreased wind output, nuclear
generation remained unchanged.

A new approach
One of the most significant system issues isthe effect of the insistence on centralized power
plants – whether extended operation or new
built – on innovation. This is not only relevant
for technological aspects of power and heat generation but in particular for innovative linkages ofdecentralized energy use and load managementin virtual power plants. As the Galvin Electricity
Initiative, founded in 2005 by former Motorola
Chairman Robert Galvin, points out:

Aging, unreliable, inefficient, insecure andincompatible with the needs of a digital economy,
the U.S. electric system is in dire need of modernization. With technology that pre-dates the 1950s,
the system includes decades-old equipment on
the verge of failure. While these parts can andwill be replaced, the situation presents the nation
with an unprecedented opportunity – a chance toalso reinvent and change America’s electric gridin ways that are profoundly beneficial to consumers, the environment and the economy. (…)The
industry, however, has failed to spawn significant
innovation in more than 50 years, largely due to aregulatory structure not attuned to the needs ofthe 21st century.45
This verdict could be applied to the European
grid as well as to many other industrialised countries in the world.
Virtual Power Plants (VPP) – the clustering and central management of decentralized(distributed) generation units like small-scale
renewables and CHP – are one of the most promising concepts of the electricity future. A further
expansion of this approach is the inclusion ofdecentralized storage capacities, like car batteries or renewable energy-system backup storage.
This is literally the opposite of the nuclear power

45 The Galvin Initiative, “Transforming the Grid: An Executive Summary”,
see http://galvinpower.org/about-galvin/transforming-grid26

Systems for Change:Nuclear Power vs. Energy Efficiency+Renewables?

vision. Power consumers use a power switch thattriggers the generation and use of energy according to optimized grid conditions (demand/supply
balance/price). Power consumers turn into producers and the term prosumers was born. The
bulk of investment into new generation capacity in a country like Germany is now done byhouseholds and not by utilities anymore. In
order to allow for this development, the grids will
have to be adapted significantly. The European
Regulators Group for Electricity and Gas stated ina public consultation paper:46
Future electricity networks will be required
to connect generators of many different
technologies and sizes, at all voltage levels,
some of them highly controllable and otherswith their output strongly dependent on the
instantaneous physical availability of theirrenewable primary energy resource (e.g.,wind generation). […] Significantly more system monitoring and intelligent control willneed to be introduced to securely meet thedemand for energy with the optimum level ofgeneration and network capacity. This will beachieved by the evolution of electricity networks – in short smart grids.
The key difference to traditional power transport and distribution systems is the adaptation ofa sophisticated communications network to theelectricity network. A significant challenge will be
the integration of these communication systems
at medium- and low-voltage levels and the organization of their synergies with smart metering on
the consumer side. In order to make this work,
not only do new electronic systems have to be
deployed but also regulation has to be adapted.
And the faster one wishes for the introduction ofsmarter grids, the more regulators are requested“to find ways of encouraging an adequate leveland scope of more radical innovations whileproviding an appropriate degree of protection ofcustomer interests and economically-effective
development of the network”.47
Non-nuclear Italy was a precursor in smart
metering. Already in 2006 the regulators announced
the mandatory installation of smart meters for all
consumers by the end of 2011. However, Sweden
implemented the technology faster and reached100% coverage by July 2009. Now the country is
helping neighbouring Denmark, Finland andNorway to speed up installation.48 Nuclear France
will only start a test phase in 2010 with 300,000
smart meters in two regions. In the meantime theEuropean Smart Metering Industry Group (ESMIG)
has grown from five founding members in 2008 to amembership of 32 in July 2010, federating the largest electronics and telecom companies in Europe.
Most industrialized countries have now demonstration projects underway and some developing
countries are preparing for introduction. In March2010 the US Agency for International Development
published “A Smart Grid Vision for India’s Power
Sector”.
The household appliances industry is making
fast progress. Whirlpool was the first company toannounce that all of their household applianceswith an electronic component will be smart grid
capable by 2015.
Various models of developing distributed
power with a share of renewable energies are
already being implemented. Virtual Power Plant
and micro-grid projects that significantly reducetransmission and distribution losses are being built
up in several countries.49 In May 2010 the Galvin
Electricity Initiative launched the Microgrid Hub:

46 ERGEG, “Position Paper on Smart Grids – An ERGEG Public Consultation Paper” (Brussels: 10 December 2009).
47 Ibid.
48 Technology Action Plan – Smart Grids, report by Italy and South Korea to the Major Economies Forum on Energy
and Climate (December 2009).
49 See for example Dardesheim in Germany and the “Power Matching City” Hoogkerk in the Netherlands. In the US, theCalifornia Energy Commission (CEC) recently approved the proposal of the University of California in San Diego for
the Renewable Energy Secure Communities (RESCO) grant to develop and demonstrate integration of on-site renewableenergy production using geothermal, heat pump technology and treated wastewater, solar voltaic, wind energy combinedwith on-site storage alternatives, lighting and air conditioning building retrofits and electric vehicle charging stations.

27

Systemic Issues“Smart microgrids are an ideal way to integrate
renewable resources on the community level andallow for customer participation in the electricity
enterprise. They form the building blocks of the
Perfect Power System”.50 The Perfect Power System,
developed by the Initiative, is the “innovative business and technology blueprint for the ultimate
smart grid”. The University of Illinois’ Institute ofTechnology has recently entered the implementation phase for a real size demonstration project on
the university campus.
The July 2010 Washington Clean Energy
Ministerial has launched the “International
Smart Grid Action Network (ISGAN) to accelerate the development and deployment of smart
electricity grids around the world”. However, theterm “smart grid” is being used in many ways. The
key question will be whether some of its components (smart metering in particular) are being
implemented as convenient complement to theold macro top-down system or whether they
are developed in order to make use of their fullpotential. This would necessarily mean to shift
towards a micro-grid based power system. Where
possible, these micro-grids would most likely beconnected to clusters in order to increase complementarities and system stability.

Much like France, the United Kingdom envisages smart grids as an upgrading of the current
network rather than a tool for a profound shift
toward an efficiency+renewables economy. On
the contrary, the UK Department of Energy andClimate Change is even counting on a continuous
increase in consumption.
By 2050 we will need to produce more electricity than we do today but must do so largely
without emitting greenhouse gases. We willneed to generate electricity from low-carbon
sources such as renewables, nuclear and fossil fuel plants fitted with carbon capture andstorage.51
While significant knowledge gaps remain,
there is overwhelming evidence that some ofthe systemic effects of a nuclear-power-based
electricity infrastructure include barriers to thedevelopment of an efficiency+renewables-basedenergy service society and, in some cases – especially as the level of renewable energy increases– the fact that both approaches exclude eachother.

50 http://galvinpower.org/microgrids
51 http://www.decc.gov.uk/en/content/cms/what_we_do/uk_supply/network/smart_grid/smart_grid.aspx

© thinkstockphotos.com/ Colllection Hemera

28

Systems for Change:Nuclear Power vs. Energy Efficiency+Renewables?

The Timing of Investment
Imperative of rapid climate change action
There is a growing, and now near universal,
consensus that human-induced greenhouse gas
emissions, particularly carbon dioxide (CO2)from the energy sector, are altering the global
climate. The Fourth Assessment Report from theIntergovernmental Panel on Climate Change
stated that “warming of the climate system isunequivocal” and that there was a more than 90%
probability that this was a result of human activities since the start of the industrial revolution.
During the 20th century, global temperatures
increased by 0.6 degrees Celsius. Continuingalong the current trajectories of energy and land
use will increase the concentrations of greenhouse gases in the atmosphere to such a pointthat by the end of this century, temperatures
might increase by an additional 6 degrees. This
would have catastrophic consequences for thehuman race and the earth’s ecosystems.
To avoid the most dangerous consequencesof climate change, the international community
has set a “2 degree target,” whereby emissions

would be reduced to try and ensure that the global average temperature does not increase by
more than 2 degrees Celsius above pre-industrial levels. This target has been endorsed by alarge number of international bodies and fora,
including the European Union, the International
Panel on Climate Change and most recently the
Copenhagen Accord, which states: “We agree
that deep cuts in global emissions are required
according to science, and as documented by the
IPCC Fourth Assessment Report with a view to
reduce global emissions so as to hold the increasein global temperature below 2 degrees Celsius,
and take action to meet this objective consistent
with science and on the basis of equity.”52
In order to meet this target, there must be a
dramatic cut in greenhouse gas emissions of morethan 80% by 2050. In many ways more important
than the long-term target are those for the shortterm. Rapidly changing technology or behaviour
will demonstrate the viability of reducing emissions and avoid locking in investment in highenergy-consuming/high emissions pathways.
However, delays in reducing emissions lead to

52 Copenhagen Accord, drawn up at the UN Framework Convention on Climate Change, 15th Session(Copenhagen: 7-18 December 2009).

29

The Timing of Investment

much larger requirements for cuts at much higher
cost in the future.

Lead times for scaling up
new technologies, experiencesand expectations
Nuclear power
Given the need for rapid emission reductions,the time needed to introduce new technologies
on a mass scale is an important and highly underestimated factor. There are two major phases forthe commissioning of new energy-generating
facilities: the pre-development phase and construction.
The pre-development phase can include awide variety of consultations and potentiallyinvolves obtaining the necessary construction
and operating licenses, local and national consent, as well as raising the financing package. In
some cases, the deployment of a new technology
may be sped up as generic safety assessments
are made, or alternatively, the pre-development
phase may take longer due to local site conditions or new issues coming to light. The IEA has
estimated a pre-development phase of approximately eight years for nuclear power.53 However,this includes the time it takes to gain political
approval and it assumes an existing industrial
infrastructure, workforce and regulatory regimes.
In the case of the United Kingdom, then Prime
Ministry Tony Blair announced that nuclear
power was “back with vengeance” in May 2006,
but it was some years before the pre-development
phase for nuclear power even began.

Nuclear power has a history of delays in construction, and analysis undertaken by the World
Energy Council54 has shown the global trend inincreased construction times for nuclear reactors.
The significant increase in construction times
from the late 1980s until 2000 was in part due tochanges in political and public views of nuclear
energy following the Chernobyl accident, withsubsequent alterations in the regulatory requirements. As we have shown in the World Nuclear
Industry Status Report 2009,55 calculating a global
average construction time – it would be aroundnine years for the 16 most recent grid connections – does not make much sense because of thedifferences between countries. The construction
period for four reactors started up in Romania,
Russia and Ukraine lasted between 18 and 24
years. In contrast, it took hardly more than five
years on average to complete the 12 units thatwere connected to the grid in China, India, Japanand South Korea.
Increases in construction times can be seen invarious countries across the world. In Germany,in the period from 1965 to 1976, construction took
76 months, increasing to 110 months in the period
from 1983 to 1989. In Japan average construction
time in the period from 1965 to 2004 was in therange of 44 to 51 months. Finally in Russia, theaverage construction time from 1965 to 1976 was
57 months, then from 1977 to 1993 it was between
72 and 89 months, but the four plants that havebeen completed since then have taken around
180 months (15 years),56 due to increased opposition following the Chernobyl accident, economic
constraints and the political changes after 1992.

53 IEA, Nuclear Power in the OECD (International Energy Agency, 2001).
54 World Energy Council, Alexandro Clerici, and ABB Italy, “European Regional Study Group – The Future Role of
Nuclear Energy in Europe” (13 June 2006); and, for post-2000 figures, calculation based on PRIS database,
http://www.iaea.org/programmes/a2/index.html
55 Mycle Schneider et al., The World Nuclear Industry Status Report 2009.
56 World Energy Council et al., “European Regional Study Group” (2006).

30

Systems for Change:Nuclear Power vs. Energy Efficiency+Renewables?

Table 1: Construction Time of Nuclear Power Plants Worldwide
Period of reference

Number of reactors

Average construction time (months)

1965-1970

48

60

1971-1976

112

66

1977-1982

109

80

1983-1988

151

98

1995-2000

28

116

2001-2005

18

82

2005-2009

677

Sources: Clerici, 2006; IAEA57

The first of the latest design of reactors, theso-called Generation III+ reactors, is under construction in Finland.58 At the time of the orderingof Olkiluoto-3 in December 2003, the contract
called for the plant to be on-line by 1 May 2009.
However, the latest completion date is now at least
three and a half years late and close to 100% overbudget (current estimates suggest that by completion, the total will reach €5.7 billion or more,compared to an original estimate of €3 billion).
The second Generation III+ reactor, also an EPR as
in Finland, is under construction in France. After
three years of construction, Flamanville-3 is now
officially at least two years behind planning and€2 billion over budget. As a consequence of thebuilding problems, the credit agency Standard &Poor’s downrated nuclear builder AREVA.59
Given the complexities and costs associatedwith construction, reactors tend to be built inseries rather than parallel, i.e., constructors will
wait until one reactor is completed until starting
the next. Consequently, it will take a number of
additional years for a new fleet of reactors to be
fully operational.
The construction of large numbers of reactors
around the world would bring experience, which

would, under normal technological deployment
conditions, lead to accelerated diffusion rates
and lower costs. To date, accelerated deployment rates have not occurred with nuclear power,in part due to the complexity of the technology,
the associated supply chains and the variety ofthe technologies deployed. One of the cost andfinancing papers prepared for the Stern Review(the UK government’s review of the economic
impact of climate change) stated that:
The costs of energy production and use fromall technologies have fallen systematicallywith innovation and scale economies in manufacture and use, apart from nuclear power
since the 1970s.60
This can be illustrated by the two largest
nuclear programs in the world: the United States(Figure 14) and French ones (Figure 15). Bothshow large increases in construction costs, despite
considerable construction experience. In the caseof the United States, over the 25-year period thecost per installed kW increased approximately
fivefold, while in France more than a threefold cost was accrued. The data for the UnitedStates also shows, in pink, the projected costs fornuclear power plant, which includes assessments

57 Ibid. The 2005-2009 range does not include the completion of the Cernavoda 2 unit in Romania, which took
279 months due to an extended break in construction.
58	For more information, see paper by Steve Thomas, “The Economics of Nuclear Power”, (2010), www.boell.de
59 From A to BBB+
60 Dennis Andersen, “Cost and Finance of Abating Carbon Emissions in the Energy Sector,” supporting paper for
the Stern Review (Imperial College London: October 2006), p. 18.

31

The Timing of Investment

from independent and Wall Street analysts of over
$10 000 per installed KW. What is also remarkablein France was that this was recorded for one com-pany, as only the state-owned company was in aposition to build and operate reactors.

Figure 14: Investment Cost Evolution (“Learning Curve”) of US Nuclear Power Plants
11000
10000

Overnight Costs (2008$/KW)

9000
8000
7000
6000
5000
4000
3000

“GREAT BANDWAGON MARKET”“NUCLEAR RENNAISANCE”

2000
1000

09

07

20

05

20

03

20

01

20

99

20

97

19

19

95

93

19

91

19

89

19

87

19

85

19

83

19

81

19

79

19

77

19

75

19

73

19

19

19

71

0

Year of Operation/Projection
Operating Plants

Projected Plants

Source: Cooper, 200961

Figure 15: Investment Cost Evolution (“Learning Curve”) of French Nuclear Power Plants
16
141000 FF(98) / kW

12
10
8
6
4
2
0
1970

1975

1980

1985

1990

1995

2000

Source: Arnulf Grübler, 200962

61 Mark Cooper, The Economics of Nuclear Reactors: Renaissance Or Relapse? Mark Cooper is Senior Fellow for
Economic Analysis Institute for Energy and The Environment (Vermont Law School, June 2009).
62 Arnulf Grübler, An Assessment of the Costs of the French Nuclear PWR Program 1970–2000 (6 October 2009).

32

Systems for Change:Nuclear Power vs. Energy Efficiency+Renewables?

Various reasons have been put forward forthe relatively low or negative learning rate relating to the manufacture of nuclear power plants,
including the relatively small, post-1970s reactor
ordering rate; the interface between the complexity of the nuclear power plant and the regulatory
and political processes; and the variety of designs
deployed.63 While some of these factors may beovercome in the future, the UK government’s
Performance and Innovation Unit also highlighted a number of areas in which future nuclear
power plants may not exhibit comparable learning rates to other technologies, including:nuclear power is a relatively mature technology and, therefore, a dramatic “technologicalstretch” is less likely than in other technologies;
the relatively long lead times for construction and commissioning mean that improvements
derived by feeding back information from operating and design experiences on the first units arenecessarily slow;
the scope for economies of scale is narrower in the nuclear case than for renewables,
due to the latter’s smaller initial scale and wider
potential application (in types and numbers).
Furthermore, the industrial issue has radically changed since nuclear construction peakedaround 1980. Many of the leading organizationsin the nuclear industry in 1980 have moved away
completely from the nuclear business, having
amalgamated with others in the nuclear field or
redirected their business approach to activities
related to decommissioning and waste management, where there has been an increase in activity
in the last few years. This has resulted in a smallergroup of companies in fewer countries with thecapability of managing the construction of a complete nuclear power plant.64
The nuclear manufacturing industry is clearly ina state of profound reorganization and upgrading.
Investments in heavy-equipment manufacturing
capacity are very capital extensive. Manufacturers
will not go ahead with investments worth hundredsof millions of dollars if they do not have firm orders
for several years ahead.

Renewables
As Figure 16 shows, the lack of a positive
learning effect and the negative impact on theeconomics in the nuclear sector have not provento be applicable to renewable energy technologies.
The further diffusion of wind power, solar electricity and ethanol has in all cases led to a significant
reduction in installation or production costs.

63 Performance and Innovation Unit (PIU), “Energy Review Working Paper, The Economics of Nuclear Power”(PIU, 2002).
64 IAEA, International Status and Prospects of Nuclear Power (2008).

33

The Timing of Investment

Figure 16: Technology Learning Curves

100000

1

10

1000

100

10000

100000

US$/KW (PV, Wind)

1980
1981

10000

1985
PV

1000

100

1981

1

1985
Ethanol

1990

1990
1985

Wind

1000000
1000

2002
2000

100

2000
1990
1995

10
2000

1000
10000
100000
10
100
Cumulative installed capacity in MW (PV, Wind)

1
1000000

price paid to ethanol producers (US$/m3)

Cumulative ethanol volume (1000m3)

Source: IPCC Fourth Assessment Report, Report 3, Mitigation of Climate Change

In 2002 the UK Government’s Performance andInnovation Unit estimated what the production
costs for various supply options in 2020 might be.
This can be seen in Table 2, where nuclear power

costs are significantly higher than onshore windand offshore wind costs and are in a similar range
to energy crops and wave power.

Table 2: Electricity Fuel Source Cost Projections in 2020
Technology

Cost in 2020 – p/kWh

Confidence in Estimate

Cost Trends to 2050

Conventional Fuels
Coal (IGCC)

3.0-3.5

Moderate

DecreaseGas (CCGT)

2.0-2.3

High

Limited decrease

CCS

3.0-4.5

Moderate

Uncertain

Large CHP (gas)

Under 2High

Limited decrease

Micro CHP (gas)2.5-3.5

Moderate

Sustained decrease

Nuclear3.0-4.0

Moderate

Decrease

Renewables
Onshore wind

1.5-2.5

High

Limited decrease

Offshore wind2.0-3.0

Moderate

Decrease

Energy crops

2.5-4.0

Moderate

Decrease

Wave

3-6

Low

Uncertain

10-16

High

Sustained decrease

Solar PV
Source: PIU, 2002

65

65 PIU, “The Energy Review: Performance and Innovation Unit,” The Cabinet Office (February 2002), p. 199.

34

Systems for Change:Nuclear Power vs. Energy Efficiency+Renewables?

Recent years have seen an increase in opposition to wind power in some counties, which has
led to the cancellation and delays of projects. In
the United Kingdom in 2009, only 25% of proposed onshore wind power sites were given thelocal approval necessary – a fall from 63% in 2007.
The government’s Renewable Energy Strategy,
published in July 2009, set a target of 14 GW of
installed capacity for onshore wind by 2020.
Onshore in the United Kingdom, as of mid 2010
there are 3.2 GW installed, 0.8 GW being built and3.4 GW under construction – which makes 7.4 GW
total, or just over halfway to the target. However,there are another 7.4 GW in planning – enough toreach the target in time if approved.66 Even larger
offshore projects can be done quickly, relative tonuclear power plants. In January 2010, the UK
government announced plans for 32 GW, to complement the 8 GW currently under development.
These are expected to be in operation by 2020.

It is important to note the differences in theconstruction of a wind farm compared to conventional power stations. The European Wind Energy
Association likens the construction of a wind farmto the purchase of a fleet of trucks, as they notedthat the turbines will be purchased at a fixed cost
agreed in advance and that a delivery schedule
will be established. The electrical infrastructure
can also be specified well in advance. There may
be some variable costs associated with the civil
works, but this cost variation will be very small
compared to the cost of the project as a whole.67
The construction time for onshore wind turbines
is relatively quick, with smaller farms being completed in a few months, most within a year. The
wind industry has turned the speed advantage of
implementation into a major marketing tool.68

66 BWEA, Wind Farm Planning Approvals by Local Councils Slump to Record New Low of 25%,
British Wind Energy Association (20 October 2009).
67 EWEA, Wind Energy, The Facts: Volume 1, Technology, European Wind Energy Association (2003).
68	Vestas (2009): “You can get a Vestas wind power plant up and running in a year – much faster than conventionalenergy plants – and this means a quick return on investment”
http://www.vestas.com/en/modern-energy/understanding-modern-energy/fast.aspx

35© iStockphoto.com

Opportunity Costs

Opportunity Costs
Assessments by the International Energy
Agency and others show two important andsomewhat conflicting trends. Firstly, that there
will need to be unprecedented levels of investment in the energy sector over the next decade.
This is as a result of a number of trends:

investment in the energy sector is both likely andis being encouraged. However, despite the statedeconomic recovery, capital will be limited, in particular for public sector investment. Furthermore,
there will be considerable competition for investment funds between sectors.

growing demand from developing countries, particularly in the urban environment ;the need to retire large numbers of electricity-generating plants in OECD countries as theyreach the end of their operating lives and, in somecases, due to the introduction of environmental
protection legislation;
depletion of existing energy reserves and theopening up of new energy reserves and sources.

Assuming that there is an acceleration of
investment in the energy sector, then decisions onwhat types of investment are to be made now will
determine the type of energy sector that will operate for a generation. The figure below shows thescale of investment needed in the energy-related
sector, according to the IEA, based on different
scenarios. The IEA Reference Scenario assumes a
total level of investment of $25.6 trillion by 2030;
whereas under conditions that keep greenhousegas emissions from raising global temperatures
above 2 degree Celsius, the total investment would
be increased by an additional $10.5 trillion. Mostof this investment will be needed to improve enduse efficiency, such as in buildings or vehicles,
but there is also an increased cost associated with
fuel-switching and electricity generated by nonfossil fuels or carbon capture and storage (CCS).
However, this additional investment would leadto a lower demand for fossil fuels, reduce the level

Secondly, however, there has been a reduction in investment in the energy sector over thelast couple of years due to: less availability andhigher cost of capital, lower energy demand as
a result of the global recession and lower energy
prices leading to higher levels of financial uncertainty. With many analysts now predicting theend of the global recession, the conditions thatslowed or halted investment may be fully or
partially removed. As a consequence, increased36

Systems for Change:Nuclear Power vs. Energy Efficiency+Renewables?

of new investment required to extract and transport fossil fuels by around $2.1 trillion and reduce
the amount spent on fuel. The IEA predicts that

fuels savings until 2030 would be in the order of$8.6 trillion, and over the lifetime of the investment around $17 trillion.

Figure 17: Changing Investment in Low-Carbon Energy Sectors

Reference Scenario

450 Scenario

Source: IEA, World Energy Assessment, 2009This example shows the degree to which policy targets should influence investment. Failure torecognize this will either lead to policy failure or
stranded investments.
The same logic applies to investment choices
for the power sector. Clearly, a much greater
penetration of end-use energy efficiency will
potentially reduce the need for further fossil fuelexploration and exploitation as well as transmission investment. However, the most direct impact
will be between different electricity sources, as
clearly an increase in investment in one reduces
the need for another.
Under virtually all global scenarios that resultin an energy sector with considerably lower
emissions, nuclear’s contribution compared
to renewable energy (aside from conservationand efficiency) is relatively small. However, it isargued that nuclear power should neverthelessbe included within a wider portfolio of “low-car-bon energy options,” in particular along with CCS
from coal or gas-fired power plants.
Changing the energy sector to one whichis genuinely low-carbon and sustainable will
require transformative change not only in thesources of energy, but also in the way that energy
is distributed and used. To enable this transition,changes in priorities and investments must be
made across the entire technology deployment
chain, from research and development throughto widespread technological diffusion. The section below will look at each deployment stage andcompare nuclear power and renewable energy.

Research and development
There are few areas in which there are suchdirect comparisons and competition between
nuclear power and renewable energy as in the fieldof government research and development. Despite
continued calls for increased R&D to address

37

Opportunity Costs

energy and climate security, in many countries thelevel of government research expenditure is nearly
half of what it was in the 1980s. This has affected
all energy sources and is an indication of both thedesire for smaller government in general and thegreater role of the private sector in the energy fieldover the last decades.

Figure 18: National Research and Development Budgets in OECD Countries (US$mil)

Source: IEA, 201069

This decline in budgets will decrease opportunities and limit the influence of governments
in developing new energy technologies. Figure
19 shows the dominance of nuclear power withinthese R&D budgets, as it commands nearly twothirds of total expenditures over the past coupleof decades. This is a truly remarkable statistic
and is a result of particular factors. Firstly, thenuclear sector includes fission- and fusion funding, of which fusion currently receives the largest
share of R&D, as priority has been given to thedevelopment of the International Thermonuclear
Experimental Reactor (ITER) fusion project.
Secondly, funding of nuclear power research –and in particular the financing of demonstrationor pilot facilities – is expensive and requires adisproportionate level of funding, especially considering the lack of provided short-term energy
service. The technical complexity and innovative nature of these demonstration facilities incur
cost overruns, and delays have and continue tooccur. In the case of the ITER project in 2006, it
was expected to cost around €5 billion (US$7.4
billion) to construct and another €5 billion tooperate over a 20-year period. But following an
extensive design review, the construction costs
are now expected to at least double.70 Such cost
overruns are likely to impact upon the availabilityof governments to fund other energy projects inthe coming decades.

69 IEA, Research and Development Budget data-base (2010), http://www.iea.org/stats/rd.asp
70 “Fusion Dreams Delayed International Partners are Likely to Scale Back the First Version of the ITER Reactor,”
Nature (27 May 2009): pp. 488-489.

38

Systems for Change:Nuclear Power vs. Energy Efficiency+Renewables?

Figure 19: Technological Breakdown of OECD
Energy Research and Development Budgets(1974-2008)

Efficiency
Fossil Fuels
Renewables
Nuclear

Source: IEA, 201071

Investment costs
In competitive markets there are a number offactors that will affect the decisions on the typesof energy sources to be deployed. However, ofparticular importance is the cost of the energy
produced, the price at which it can be sold andthe financial cost and risks of its development anddeployment.
Nuclear power is at a financial disadvantage
when compared to most energy sources, as it haslarge upfront costs, long construction times and– given the technological complexity – difficulty
in meeting anticipated budgets. The history of
nuclear power is littered with examples of where
the cost expectations of nuclear construction
have not been met, as can be seen in the following
box. Such cost overruns are important, not only
because they significantly affect the cost of theparticular project, but because this will affect thecost of capital for further nuclear projects and/or
for the utility in general. As the IEA notes, “construction costs uncertainty is a major risk factor
for investors”.72

Nuclear Cost Overruns
The construction costs of nuclear plants completed during the 1980s and early 1990s in the
United States and in most of Europe were very
high – and much higher than predicted today
by the few utilities now building nuclear plants
and by the nuclear industry generally.73
MIT 2003[T]he evidence shows that, historically, costestimates from the industry have been subject
to massive underestimates – inaccuracy of anastonishing kind consistently over a 40, 50 year
period.74
Jonathan Porritt
Chair of the UK government’s Sustainable
Development Commission
2005
I do not have any reason to believe ČEZ [theCzech utility constructing the Temelin nuclear
power plant]. I have been lied to nine times. I
do not know why I should believe them in the10th case.75
Vaclac Havel
then President of the Czech Republic
1999
Figure 14, taken from a report by the Vermont
Law School, shows the extent of both theincreased costs of reactor construction in the
United States in the 1970s and 80s and the rapidlychanging expectation of nuclear costs over the last
few years. It is important to note that these cost
increases were not as a result of actual experiencein the United States, as no reactors are currently
under construction, but presumably as a result of
more in-depth economic analysis and the impact
of experiences in other parts of the world.

71 IEA, Research and Development Budget data-base (2010).
72 IEA, World Energy Outlook 2009, p. 268.
73 Massachusetts Institute of Technology, The Future of Nuclear Power (MIT, 2003).
74 Cited in House of Commons Trade and Industry Committee “New Nuclear? Examining the Issues,” Fourth Report ofSession 2005-2006, Vol. I.
75 Office of the President, Press Department press release (12 May 1999).

39

Opportunity Costs

Often these higher construction costs are notincorporated into the economic analysis that isused to assess the costs of energy production.
For example, in its latest economic analysis,
the IEA states that the overnight construction
costs for nuclear are in the range of $3,200 to$4,500 per kW.76 This is well below the summaryof analysis undertaken by academics from the
Vermont Law School and others.77 On this basis,the IEA assumes that production costs for electricity will be in the range of $55 to $80 per MWh.
Higher construction costs have a significant
impact on the overall cost of nuclear electricity.
The University of Vermont study quotes threesources for the impact of higher construction coston electricity prices:
the MIT model suggests that for every$1,000 of increased overnight costs, the busbar
costs78 go up by $US 1.8 cents/kWh in the utility finance model and 2.4 cents in the merchantfinance model;
in the Harding study, busbar costs go up
about 2.4 cents per kWh for every $1,000 increasein overnight costs;
in the University of Chicago study, theincrease in busbar costs per $1,000 in overnight
costs was 3.0 cents per kWh.
Averaging these figures would give a $40/
MWh increase if the electricity cost were a figureof $5,500 per kW installed used, which falls in linewith the higher end of the current expected utility

cost prediction and the lower forecast from WallStreet and independent analysts (see Figure 14).
This would make the IEA’s average costs in theorder of $95 to $120 per MWh.
Europe has also been experiencing higher
than expected costs. The first order for a reactor
at the Olkiluoto plant in Finland had a price tag
in 2004 of around €3 billion. After five years ofconstruction, although it should have been completed by last year, it is still about three years fromcompletion and 90% over budget at around €5.7
billion.
Higher construction costs are likely to also
reduce the ability of utilities or governments
to invest in other power plants or alternative
energy management strategies. Currently, the
IEA assumes that the increased use of nuclear
power will require 16% of the total investment.
Assuming an investment cost more in line withcurrent US or European expectations will either
lead to a reduced investment of around 40% ora requirement of a similar increase in finances.
Either option will create potential difficulties forthe power sector.
The Figure 20, from the UK government review
in 2002, shows the carbon abatement costs ofdifferent non-fossil supply options and energy efficiency. Nuclear power was expected to be vastly
more expensive than all other energy efficiency
measures and onshore and offshore wind; on asimilar range as energy crops; but possibly cheaper
than marine energies.

76 IEA, World Energy Outlook 2009, p. 266.
77 See New Nuclear – The Economics Say No, Citi Investment Research & Analysis (November 2009).
78 The cost per kilowatt hour of producing electricity; it includes the cost of capital, debt service, operation andmaintenance, and fuel. The power plant bus, or busbar, is that point beyond the generator but prior to the voltage
transformation point in the plant switchyard.

40

Systems for Change:Nuclear Power vs. Energy Efficiency+Renewables?

Figure 20: Estimated Carbon Abatement Costs in the UK in 2020 (£/tC)

CCS
Nuclear
Energy crops
Marine energy
Offshore wind

Maximum
Minimum

Onshore Wind
Industrial Efficiency
Service Sector Efficiency
Domestic Efficiency
-400

-300

-200

-100

0

100

200

300

400

500

Source: PIU, 2002

Other, more recent analysis suggests that thecosts of nuclear power and renewable energy
may be much closer to that suggested by the UK
government. A 2009 assessment from the consultancy McKinsey79 assesses the abatement costs ofa range of demand and supply technologies andconcludes that “several low-carbon technologies have a similar abatement cost by 2030, thisreflects the high level of uncertainty about which
technologies are likely to prove to be ‘winners.’”
The McKinsey analysis shows a range of newbuild nuclear and renewable technologies having a carbon abatement costs between €5 and 20/
tCO2equivalent; geothermal: 5 €/tCO2 e; nuclear:
10 €/tCO2 e; low-penetration wind: 12 €/tCO2 e;

concentrated solar power: 13 €/tCO2 e; high-penetration wind: 20 €/tCO2 e.80 However, on nuclear
power, the McKinsey analysis uses €3,000 per kW
in 2005 for developed countries (€2,000 per kW
is used for developing countries). This installedcapacity cost-estimate falls below current actual
construction costs and independent analysis.
The CEO of the largest US nuclear utility
Exelon has stated recently that “economics of
low-carbon options have changed dramatically”
in just two years, with the company’s new-nuclear
cost estimates having more than doubled to about$100/t CO2 (see Figure 21), ten times the cost estimated by McKinsey.81

79 McKinsey, Pathway to a Low Carbon Economy – Version 2 of the Global Greenhouse Gas Carbon Abatement Cost
Curve (McKinsey and Company, 2009).
80 Ibid., based on an estimation of exhibit 8.1.3 on page 63.
81 John Rowe, “Fixing the Carbon Problem Without Breaking the Economy”, Exelon, 12 May 2010.

41

Opportunity Costs

Figure 21: Exelon 2010 Carbon Abatement Cost Estimates (in US$/t of CO2)
Clean Coal: $500 / $300 w incentives
Solar: $450 / $175 w incentives
Biomass: $195 / $170 w incentives

$175
$150

$/metric ton of CO2

$125
$100
$75
$50

Projected Long-Run CO2 Price ($40)

$25
$0
15

($25)
($50)
($75)

20

25

30

35

million metric tons of CO2 per year
Energy Efficiency

Retire Coal Plant

RECs / AECs

Clean Coal with CCS

Nuclear Uprates

Cogeneration

Coal-to-Gas-Switch

Biomass

New Natural Gas

New Nuclear

Wind

White line represents price after including effects to tax incentives or loan guarantees

Source: Exelon, May 2010

Infrastructure and grids
Investment in electricity infrastructure willneed to be accelerated in the coming decade,regardless of the energy used for generation. The
latest assessment by the IEA, in its 2009 World
Energy Outlook, concludes for its Reference
Scenario that total investment needed by 2030 in
the power sector is $13.7 trillion, of which 48% will
be needed for transmission and distribution ($2trillion transmission and $4.5 trillion for distribution). Investment costs for a system that produces
less carbon emissions will likely be higher.
The existing grid is largely based on the operation of large centralized power producers that use
high voltage cables to transport the power overlong distances to urban or industrial areas, where
lower voltage wires take the electricity to the end
consumer. These grids were built largely at a time
when the electricity sector was all under state
ownership. Consequently, new power stations
did not have to pay for the grid connections thatenabled them to operate. This potentially creates
an additional cost and economic disadvantage
for new generating capacity entering the mar-ket at locations that are not on the existing grid
system, if they are required to pay for either grid
reinforcement or connections.
The current system is largely based on a “predict and supply” model, whereby the centralized
utilities attempt to ensure that the demand-needsof the consumers are met at all times. However,as has been noted in the previous chapter, thissystem is inefficient and not fit for the creationof a low-carbon and sustainable energy sector.
Furthermore, large-scale changes will be needed
for the scope and functioning of the grid in orderto accommodate renewable energy production
from a geographically wide and varying size-setof generators. In some cases, for example offshorewind, there can be no ambiguity about the needfor the grid investment. Without this investmentin the grid, the development will not take place.
Such changes have been recognized bothin policy statements and investment proposals,
particularly in the economic stimulus packages.
However, in many cases the details are lacking
and there remains confusion over definitions andthe extent to which a radical change is underway.

42

Systems for Change:Nuclear Power vs. Energy Efficiency+Renewables?

In particular, the use of the term “smart” has now
become synonymous with change, but yet there
is no clear and universal understanding of what
this means. One of the most striking examples ofthis was a press release by the UK Departmentof Energy and Climate Change, just prior to the
Copenhagen conference. This statement, entitled“UK energy system gets smart,” used the word
“smart” 22 times in a 19-sentence statement.82
The UK national stimulus packages produced
as a result of the economic crisis highlighted both“green” activities and the need for investment in“smart grids” in particular. According to analysis
by the London-based bank HSBC, the total funding pledged for new grids globally was $92 billion,
although the majority of this, around $70 billion,
was in China (out of total finances for Green activities of $430 billion).83 However, it is clear that not
all of the projects that are classified as “low-carbon” or “green” differ significantly from existing
maintenance or expansion plans.
The EU’s stimulus package for energy
focuses on the European Energy Programme for
Recovery, which created the basis for providing
substantial co-financing from the Union budget
to key energy projects, through a €4 billion
scheme that was said to be aimed at “protecting
jobs and purchasing power, boosting infrastructure and creating jobs in the low-carbon sectorsof the future.” Investment in gas and electricity
infrastructure projects received the largest share,€2.365 billion (60% of budget), then CCS €1.05
billion (26% of budget) and finally offshore windenergy projects €0.565 billion (14% of budget).
Details about the CCS and offshore wind projects
funded have been made available, but not thoseof the gas and electricity infrastructure projects,
which are still under consideration. However,the projects under consideration do not appear
to be related to low-carbon, particularly renew-

able energy, but re-enforce the existing electricity market.84
Furthermore, only 10% of the criteria for judging
the suitability of the projects relate to environmental issues, and even here, there is no reference to“impact of the action inter alia on nature, emissions, noise, land use and the measures to reduceor compensate any negative impacts”.85 Under theoffshore wind subcategory, three major grid infrastructure projects are to be funded that will receive
around €310 million for projects expected to cost in
the order of €1.8 billion.
While the focus remains on heavy investment
in high-tension power transport infrastructure,a thorough, systemic analysis about conflicting
investment dynamics is overdue. The absolutepriority given to the ever growing high-power– and high-loss – centralized transport and distribution systems constitute an effective barrier
for the speedy introduction of highly efficient,
decentralized smart grids that minimize transmission losses and constitute a key ingredient of
future intelligent networks that profoundly redefine the roles of the electricity producer/user.
An electric car, for example, transforms electricity much more efficiently into mechanicalpower than the combustion engine. However, thisphysical reality remains pure theory unless theelectricity is generated in a sustainable way. It is
crucial to reorient the infrastructure investments
toward an entirely different systemic approachrather than to continue to patch up the old, inefficient infrastructure with new devices that will notmake the overall system performance any better.
In recent years, the capacity difficulties ofintegrating larger quantities of intermittent
renewable energy into the grid has already been
seen in a handful of cases. These problems were

82 http://www.decc.gov.uk/en/content/cms/news/pn139/pn139.aspx (16 March 2010).
83 HSBC, A Climate for Recovery; The Colour of Stimulus Goes Green (February 2009).
84 OJ, Regulation (EC) No 663/2009 of The European Parliament and of The Council of 13 July 2009 establishinga program to aid economic recovery by granting Community financial assistance to projects in the field of energy
L/200/31 (31 July 2009).
85 European Commission, Information Day (2009), http://ec.europa.eu/energy/grants/docs/eepr/eepr_info_day_
presentation_interconnections.pdf

43Opportunity Costs

exacerbated by large and unwieldy nuclear
power plants, which require permanent accessto the grid. The growth of renewable energy inrecent years has shown that projects are being
constructed on time and within budget andconnecting to the grid has not been a problem.
Furthermore, it clearly makes sense to give priority access to renewable energy, as they use no fuel.
Unless there is systematic change, then the inefficient use of renewables will increase. Therefore,
there must be a fundamental reform of the management of grids with significant investment for
new infrastructure and product development.
This must be based on higher levels of supply efficiency that prioritizes the localized production
and use of energy, supplies responsive consumption and storage, integrates regional electricity
grids and creates clusters of micro-grids to reduce
the need for backup generation and, where necessary, exploits larger renewable resources suchas offshore wind.

Market mechanisms
Over the last decades, the global trend to
greater market liberalization has resulted in lessstate intervention in the operation of the gas andelectricity markets. However, this has not led to a
total “hands off” approach to energy supply, butrather the introduction of more market-based
mechanisms to support particular technologies.
These market mechanisms have been mostrecently and effectively used – in some, but not
all cases – to help establish renewable energy. In
particular, within the electricity market, mechanisms such as feed-in tariffs and guarantees onmarket share, have been introduced. By early
2009, policy targets for renewable energy existed
in at least 73 countries. This includes state/provincial- level targets in the United States andCanada, which have no national targets.86 These
policy mechanisms are the foundation of the success of renewable energy.
Importantly, it has been stated and legallytested in Europe that these mechanisms do notconstitute state aid. Specifically, in a test-casejudgment delivered in 2001, the European Court ofJustice stated clearly that well-structured feed-in
tariffs did not represent state aid, but are justified
as a means to balance out the external costs thatare not factored into pricing. This ruling has been
expanded upon by the European Commission,
which states that from an economic-efficiency
perspective, a number of market failures justify
state intervention in renewable electricity markets.87 The reasons given for this were as follows.
“Since complete internalisation of […] externals does not appear politically feasible at present
in most countries […] supporting renewables totake account of their lower emissions profile canbe justified on efficiency grounds”.
“Although some renewables, such as windin prime locations, exhibit cost structures close
to those of conventional sources, renewables are
generally considered to be not yet commerciallycompetitive on an unprotected electricity market, especially as this market is still distorted bya large number of direct and indirect subsidies
for the existing electricity system, and is basedon infrastructure that was mainly built whenthe electricity sector was publicly owned […]Despite the long-term prospects of renewables,
the market is still under-investing in research anddevelopment, which is why governments should
provide incentives to innovate”.
“Regulatory systems nowadays favour
conventional energies, which have additionallyprofited from massive government support for
R&D in the past”.

86 REN 21, Renewables Global Status Report 2009 Update: Renewable Energy Policy Network for the 21st Century(2009).
87 European Commission, Communication from the Commission: The Support of Electricity from Renewable Energy
Sources, SEC(2005) 1571, COM(2005)627 final, (2005).

44

Systems for Change:Nuclear Power vs. Energy Efficiency+Renewables?

US Nuclear Subsidies ComparedIn their first 15 years, nuclear and wind technology produced a comparable amount ofenergy (nuclear: 2.6 billion kWh; wind: 1.9
billion kWh), but the subsidy to nuclear outweighed that of wind by a factor of over 40($39.4 billion to $900 million).
Marshall Goldberg, “Federal Energy Subsidies:
Not All Technologies Are Created Equal,” REPP
no. 11 (July 2000).
The lack of orders for new nuclear power in mostliberalized markets has resulted in fewer technology support mechanisms actually being used,although there is increased financing being madeavailable or earmarked. The clearest example isin the United States, in which the 2005 Energy
Act made clear its financial support for nuclear
power, including:
production tax credits: 1.8 cent tax credit foreach kWh from new reactors for eight years for six
reactors – cost to US treasury: $5.7 billion;
loan guarantees for first 6 to 8 reactors (worth
up to $18.5 billion);a support framework against regulatory or judicial delays, worth up to $500 million for the firsttwo reactors and $250 million for the next four;
further research and development funding
worth $850 million;
assistance with historic decommissioning costs(up to $1.3 billion).
In December 2007, Christopher Crane, president of Exelon Generation, one of the utilities
that has stated an intention to build new nuclear
plants, said: “If the loan guarantee program is notin place by 2009, we will not go forward.”88 The
importance of this particular market mechanism
was made clear in January 2010, when President
Obama trebled the potential financing available,

ensuring that up to $54 billion would be madeavailable under his proposed energy bill.
As noted, in other countries with liberalized electricity markets, there are currently fewer overt
market mechanisms purely for nuclear power.
However, broader support mechanisms are being
developed that could enable the further financial
support for nuclear power. At the informal Summit
at Hampton Court in October 2005, during theterm of British Prime Minister Tony Blair, Dieter
Helm put forward an informal paper, “European
Energy Policy, Securing Supplies and Meeting the
Challenge of Climate Change”.89 This paper suggested that the need for investment – due to theretiring of much of the current generating capacity– was an ideal opportunity to invest in “non-carbon
energy sources.” Furthermore, the paper stated“the EU should consider widening the definitionof renewables towards a definition that includes anumber of emissions reductions technologies”.
In some cases, more explicit attempts have been
made to reclassify nuclear power as a renewableenergy source. In the US state of Arizona, language in legislation on the renewable energy bill
was defeated in February 2010 – it had proposed
to include nuclear power within the definitionof renewable energy. This would have enabled
nuclear to be included in the target that required
utilities source to acquire 15% of their electricity
from renewable sources. Arizona Governor Jan
Brewer issued a statement when the nuclear elements were withdrawn from the bill: "This sends
a clear and united message to employers aroundthe world – Arizona remains the premier destination for solar industries”.90
The European Commission released on 8 March
2006 the Green Paper, “A European Strategy for
Sustainable, Competitive and Safe Energy”.91 It
included the following section on low-carbon
technologies:

88 “Loan Guarantees Tagged as Key for Nuclear Builds”, Power, Finance and Risk (21 December 2007).
89 http://www.fco.gov.uk/Files/kfile/PN%20papers_%20energy.pdf
90	“Bill to Classify Nuclear as Renewable Energy Killed”, Phoenix Business Journal (22 February 2010),
http://phoenix.bizjournals.com/phoenix/stories/2010/02/22/daily51.html
91 http://europa.eu.int/comm/energy/green-paper-energy/index_en.htm

45

Opportunity Costs

Furthermore, it might be appropriate to agree
an overall strategic objective, balancing thegoals of sustainable energy use, competitiveness and security of supply. They would need
to be developed on the basis of a thoroughimpact assessment and provide a benchmark
on the basis of which the EU’s developing
energy mix could be judged and would help
the EU to stem the increasing dependence on
imports. For example, an objective might beto aim for a minimum level of the overall EU
energy mix originating from secure and lowcarbon energy sources. Such a benchmark
would reflect the potential risks of importdependency, identify an overall aspiration
for the long term development of low-carbon
energy sources and permit the identificationof the essentially internal measures necessary to achieve these goals.

the construction of infrastructure that occurred
when the system was state owned. These same
justifications cannot apply to nuclear power as
the technology has, and continues to, receive thelargest share of research and development; hasbeen favoured by the implementation of infrastructure; and is not responsible for the full costof its actual and potential environmental cost.
However, as noted, measures are now being introduced in the United States to financially support
the introduction of nuclear power once again,
while in Europe attempts are being made to moveaway from specific targets for the introduction ofrenewable energy and to create a “low-carbon”
target. These measures will potentially dilute theeffectiveness of renewable policies and, more
importantly, raise doubts in the minds of investors about the seriousness of the commitment bygovernments to renewable energy.

Such measures are now being proposed inEurope and in February 2010, the UK energy
regulator – OFGEM – announced that “there is anincreasing consensus that leaving the present system of market arrangements and other incentives
unchanged is not an option” for security of supply
and environmental reasons.92 One of the measures that OFGEM was considering was capacity
tenders for all forms of generation, including
renewables and nuclear power, to provide clearer
long-term investment signals.

This section has looked at the opportunity costs ofnuclear power and renewable energy. However,there are many other issues that a detailed
comparison would address. One study by Mark
Jacobson published in the journal Energy andEnvironmental Science 93 looked at a range ofenergy sources and their potential to address climate change, air pollution and energy security,
while considering a range of other issues, such as
water supply, land use, wildlife, resource availability, thermal pollution, water pollution, nuclear
proliferation and malnutrition. The conclusionsof Professor Jacobson’s research shows that
nuclear power94 is ranked below all renewableenergy options that are used for generating electricity. The technologies considered were solarPV, concentrated solar power, wind, geothermal,hydroelectric, wave, tidal, nuclear and coal with
CCS, along with biofuels, corn and cellulosic.

The use of market mechanisms for the wider
deployment of renewable energy has been legallyjustified, in Europe, as they seek to balance theexisting environmental and economic distortions
that exist in the market. Furthermore, they facilitate the development of new technology that has
not benefited either from the historically muchlarger research and development budgets or from92 OFGEM, “Action Needed to Ensure Britain’s Energy Supplies Remain Secure,” press release (4 February 2010).
93 Mark Z. Jacobson, “Review of Solutions to Global Warming, Air Pollution and Energy Security”,
Energy and Environmental Science (1 December 2008).
94 The impact of nuclear energy policy on climate change and the environment has been assessed in more depth in anarticle by Felix Matthes, see http://www.boell.de/downloads/ecology/NIP6_MatthesEndf.pdf

Systems for Change:Nuclear Power vs. Energy Efficiency+Renewables?

Warren Rohner46

Conclusions
Nuclear power has already been and continues to be the recipient of large government
interventions. As one example notes, in theirfirst 15 years, nuclear and wind technologies
produced comparable amount of energy in the
United States (nuclear: 2.6 billion kWh; wind:
1.9 billion kWh), but the subsidy to nuclear outweighed that to wind by a factor of over 40 ($39.4
billion to $900 million). Even today, with thedemise of new orders for nuclear power and therise of other technologies, nuclear power continues to enjoy unparalleled access to government
research and development funding.
Furthermore, it continues to receive large,
indirect subsidies95 through the lack of inclusionof environmental costs into the electricity prices,
particularly through government guarantees forthe final storage or disposal of radioactive waste.
More direct financial assistance is made available
through the limitations and government financial guarantees for third-party liability insurance,
through export credit agency guarantees, production tax credits or loan guarantees.

Global experience of nuclear construction
shows a tendency of cost overruns and delays.
The history of the world’s two largest construction
programs, that of the United States and France,shows a five- and threefold increase in construction costs respectively. This cannot be put down
to first of a kind costs or teething problems, butsystemic problems associated with such large,
political and complicated projects. Recent experience, in Olkiluoto in Finland and the Flamanvilleproject in France, highlight the fact that thisremains a problem. The increased costs anddelays with nuclear construction not only absorb
greater and greater amounts of investment, but
the delays increase the emissions from the sector.
From a systemic point of view the nuclear andenergy efficiency+renewable energy approaches
clearly mutually exclude each other, not only ininvestment terms. This is becoming increasingly
transparent in countries or regions where renewable energy is taking a large share of electricity
generation, i.e., in Germany and Spain. The main
reasons are as follows.

95 For a more in-depth discussion of historic government subsidies to nuclear energy in Germany, see Green Budget
Germany (2009) “Staatliche Förderungen der Atomenergie im Zeitraum 1950 bis 2008”.

Conclusions

Competition for limited investment funds.
A euro, dollar or yuan can only be spent once andit should be spent for the options that provide thelargest emission reductions the fastest. Nuclear
power is not only one of the most expensive but
also the slowest option.
Overcapacity kills efficiency incentives.
Centralized, large, power-generation units tend tolead to structural overcapacities. Overcapacities
leave no room for efficiency.
Flexible complementary capacity needed.
Increasing levels of renewable electricity sources
will need flexible, medium-load complementary
facilities and not inflexible, large, baseload power
plants.
Future grids go both ways. Smart metering, smart appliances and smart grids are on theirway. The logic is an entirely redesigned system
where the user gets also a generation and storage
function. This is radically different from the topdown centralized approach.
For future planning purposes, in particular for developing countries, it is crucial that thecontradictory systemic characteristics of thenuclear versus the energy efficiency+renewableenergy strategies are clearly identified. There
are numerous system effects that have so far
been insufficiently documented or even understood. Future research and analysis in this area isurgently needed.
This is particularly important at the current
time because the next decade will be vital in determining the sustainability, security and financial
viability of the energy sector for at least a generation. Three key policy drivers and considerations
have come together that must transform the way
in which energy services are provided and energy
carriers (electricity, hydrogen…) and fuels are
generated, transported and used. These are:the growing awareness of the need foraction to reduce the threats of dangerous climatechange and the realization of the important contribution of the energy sector;
increased and expected further increases
in global competition for traditional energy

47

resources, with this increased demand not being
matched by new discoveries of larger resource
reserves;
and a need for accelerated investment in
the energy sector, in OECD countries, as a resultof the obsolescence of existing infrastructure,and in developing countries as a result of accelerated urbanization and demand for different andamplified energy services.
As has been noted by the OECD’s International
Energy Agency and others, business as usual is not
an option. Renewable energy has been a, if notthe, major industrial success story of the last decade. Globally in 2009 spending on new renewableenergy capacity, excluding large hydro, was for thesecond year running bigger than investment in new
fossil fuel capacity. In 2009 in Europe, €13 billionof wind investment was made, which led to wind
power plants accounting for 39% of new power
production installations – the second year running that more wind power was installed than any
other generating technology. Furthermore, renewable power installations in general accounted for
61% of new EU grid connections in 2009. The EU
power sector continues its move away from coal,fuel oil and nuclear, each technology continuing todecommission more than it installs. While it is clearthat some countries are more successful in theirrenewable energy deployment, there is a global
attempt to increase the use of the technology with
policy targets for renewable energy existing in atleast 73 countries. Importantly, many developing
countries are at the forefront of the manufacturing
and use of renewable energy. China already leads
the world in the use of solar thermal, is expected to
become the largest manufacturer of wind turbines
shortly and, in 2009, was responsible for the largest
increase in installed wind capacity. Furthermore,
the use of renewable energy in Europe is expected
to treble in the coming decade and significantly
increase in most OECD countries.
The use of renewable energy has shownthat it is a key set of technologies for reducing
greenhouse gas emissions from the power sector. However, to date, its role for other sectors,
in particular for transport and heat and cooling,

48

Systems for Change:Nuclear Power vs. Energy Efficiency+Renewables?

has yet to be fully recognized. Consequently, its
contribution to the energy mix is considerably
less than for electricity in many countries, when
not considering traditional and non-commercial
energy sources.
It is crucial, however, to realize that renewableenergy policies will not achieve the indispensable
emission reduction results without a massive
effort in energy efficiency throughout all energy
systems. Germany’s power sector is a striking example, as consumption increased fasterthan the decarbonisation of the kWh, wiping
out most of the beneficial environmental effectsof the highly successful renewable energy program. This starts with the appropriate layout for
long-term infrastructure investments, in particular in urban planning, building design andland use. We cannot afford to continue creating
additional artificial transport needs because webuild office buildings and shopping malls where
there are no homes. We have neither the time nor
the resources to waste by investing in inefficientbuildings first and (maybe) retrofit after.

Confidence in the longevity and effectivenessof government policies are vital if private finance is
to be attracted to the energy efficiency+renewableenergy sector. “Investment grade”96 renewableenergy policies must remain in place and be
extended into the long term. Ideally, these policies and targets should spell out the opportunities
and objectives for each renewable energy sector,
reflecting the status of the market and each technology, to ensure that adequate, but not excessive,
support is made available. However, the relatively
low contribution of non-hydro renewable energy
to the global electricity supply demonstrates boththe potential market that exists and the scale ofinvestment that will be needed on the short- andlong term. Therefore long-term, clear signals
must be introduced that demonstrate the commitments by governments to this sector. Sending
mixed signals with proposals to blend renewableenergy targets with “low-carbon” objectives will
create uncertainty and undoubtedly delay or halt
investment.

Antony Froggatt is a Senior Research Fellow at Chatham House, London, where he specializes in issues relating to climate change, EU energy policy and nuclear power. For over 20 years he has worked extensively on EU
energy policy for NGOs and think tanks and as a consultant to European governments, the European Commission
and Parliament and commercial bodies. At Chatham House he has co authored reports on the synergies andconflicts between energy and climate security policies and low-carbon development in China.
Mycle Schneider works as an independent international consultant on energy and nuclear policy, based in Paris.
He is currently advising the USAID funded program ECO-Asia on energy efficiency and renewable energy policy.
Between 1983 and April 2003, Mycle Schneider was executive director of the energy information service WISEParis and chief editor of the web-based Plutonium Investigation. Between 2000 and 2009 he has been an advisor
to the German Environment Ministry. Since 2004 he has also been in charge of the Environment and Energy
Strategies Lecture of the International Master of Science for Project Management for Environmental andEnergy Engineering at the French école des Mines in Nantes, France. In 2006/2007 he was part of a consultants’ consortium that assessed nuclear decommissioning and waste-management funding issues on behalf of theEuropean Commission. Mycle Schneider has provided information and consulting services to a large variety ofclients, including the International Atomic Energy Agency (IAEA), Greenpeace International, UNESCO, World
Wide Fund for Nature (WWF), the European Commission, the European Parliament’s General Directorate for
Research, and the French Institute for Radiation Protection and Nuclear Safety (IRSN). In 1997 he was honoredwith the Right Livelihood Award (“Alternative Nobel Prize”) together with Jinzaburo Takagi for their joint workon plutonium issues.

96 See Kirsty Hamilton, Unlocking Finance for Clean Energy: The Need for “Investment Grade” Policy; Hamilton is
Research Fellow at the Chatham House, http://www.chathamhouse.org.uk/files/ 15510_bp1209cleanenergy.pdf(15 March 2010).

Rue d’Arlon 15, -1050 Brussels, Belgium
T +32 2 743 41 00 F 32 2 743 41 09
E brussels@boell.eu W www.boell.eu

strategies? To what extent is the unit size co-responsible for structural overcapacities and thus a lack of incentives for efficiency?
How do government grants/ subsidies stimulate long-term decision-making? Will large renewable power plants reproduce
the same system effects as large coal/nuclear plants? The present
report presents the basic situation and raises questions thaturgently need to be addressed. It is obvious that nuclear power
did not lead to broad-scale and just access to energy services
in the countries that opted for nuclear energy. But is a nuclear
strategy actually counterproductive for the development of a cleanenergy service future based on efficiency+renewables? There isstrong evidence that this is the case.

Systems for Change: Nuclear Power vs. Energy Efficiency+Renewables?

Nuclear power as a “bridging technology”? On windy and lowconsumption days the energy demand in Germany is alreadycovered to a large extent by the wind energy supply. As theoutput of existing nuclear power stations (as well as the big coalfired power stations) is not reduced at short notice for economic
reasons, the surplus energy has to be exported to other countries
at a loss. There is method in this madness. Many systemic issues
have not been thoroughly investigated yet when it comes to compatibility or incompatibility of the centralized nuclear approachversus the decentralized efficiency+renewables strategy. What
are the consequences for grid development or how do choices
on grid characteristics influence power generation investment

Systems for Change:
Nuclear Power vs. Energy
Efficiency+Renewables?
By Antony Froggatt with Mycle Schneider