Could Fukushima put an end to the French exception? Everybody in France is now talking about, and arguing for or against, a prospective nuclear phase-out. Political Candidates running for the next presidency defend their affirmative or negative position on this issue with figures published in several recent studies assessing the investment costs of an eventual a potential phase-out, as opposed to a continuation of the current power generation model. Unsurprisingly, the numbers differ. Why?
Three studies published in 2011 have attempted to assess the cost of a nuclear exit. In June, UFE (Union Française de l’Electricité), the French electricity producers association, and Global Chance, a think-tank of scientists specialized in sustainable energy, published two detailed reports (here and here), financially assessing several energy scenarios for 2030. It was followed in October by a study of the French think tank “Institut Montaigne”, which tried to put a figure on the left wing candidate’s proposal to reduce nuclear power generation in the electricity mix. This later study is based on the annual report published by RTE, the French transmission system operator. The assessment made in these studies mainly focuses on the cost of the investments needed to reach three different objectives by 2030: maintaining the current nuclear share in the electricity mix at about 70%, reducing this share to 50%, or putting an end to nuclear power generation. They are primarily based on a series of energy and economic assumptions that are identified and discussed below.
The reports mentioned above examine the differences between the cumulative investments needed to achieve each scenario. The UFE assesses the three scenarios: maintaining, reducing or exiting the nuclear power generation, while Global Chance only analyzes the continuation and phase-out ones, and Institut Montaigne focuses on the continuation and reduction options. The total investment costs from now to 2030 in the different reports vary from € 322 to 506 billion. To better understand this discrepancy, one need to look at the relative difference in each report between the investments required to maintain the 70% share of nuclear and the investments required to reduce this share. Indeed, both UFE and Institut Montaigne assess that eliminating or reducing the nuclear share would cost between €60 and €126 billion more than keeping the current electricity mix. On the contrary, Global Chance concludes that exiting nuclear would cost less in investments than maintaining it; the invoice would then be €64 billion lighter. What can explain these fundamental oppositions?
Different figures for similar scenarios
The first factor is the difference in the way each report designs the different scenarios. The expression “continuation of nuclear power” namely has opposed meanings in each report. UFE and Institut Montaigne base their continuation scenarios on the idea of extending the current nuclear fleet lifespan to sixty years and finishing the construction of the third generation nuclear reactor EPR at Flamanville. In contrast, Global Chance sees it as a replacement of the existing reactors by EPRs after about three decades. All in all, the nuclear generation share remains 70%, but the implications are much different in terms of investment because investing in new builds and investing in life-duration of existing reactors is a different financial matter. Hence, in this scenario, UFE estimates the investments needed in nuclear power only at €40 billion, while Global Chance report is based on €175 billion. These different approaches also hold for the phase-out case: In the UFE report, phasing out means closing the nuclear reactors after a forty-year lifespan, but this figure is 33 years in the Global Chance report.
The distribution of the electricity mix between other energy sources follows different trajectories as well (see figure 2). For the continuation scenario, Global Chance estimates the renewable energy share at only 86 TWh, against 130 and 157 TWh in the two other reports, and with no solar power. (It is worth mentioning that the solar power generation capacity in France is currently 1 GWe in 2011 ) The resort to fossil fuel to provide backup to renewable intermittent energies and the peak load also differs significantly, all the more as the share of nuclear power decreases. In the phase-out scenarios, the ratio between fossil and renewables passes from 0.25 to 1 in respectively the Global Chance and UFE reports.
Saving energy, a critical factor
Besides the distribution of the electricity mix, the assumptions about the evolution of energy consumption patterns in the different scenarios and reports has a large incidence on investment costs (See figure 3).
UFE builds its scenarios on the so-called Grenelle environmental objectives, a stakeholders’ consensus achieved in 2009. It takes into account the possible variation of the GDP growth, and sorts out the energy saving initiatives into different categories based on their merit order, that is the relative cost of the saved kWh in comparison with the kWh actualized price. A profitability index on each measure is put to determine which measures are indeed worthwhile to implement. Consequently, UFE concludes on an average saving through energy demand management of 40 TWh per year in 2030, an exogenous figure which is only based on GDP growth hypotheses and is not related to the different scenarios and their impacts on electricity prices. The same is also true for transfers (e.g., electricity use induced by the development of electric vehicles) and market growth, which gives an average 570 TWh consumption in 2030 for the three UFE scenarios.
On the contrary, the two other reports consider energy demand management as a major factor to curb electricity consumption. On the one hand, Institut Montaigne, which does not provide exact figures, argues that a €45 billion investment measure, associated with higher electricity prices, could spare up to 25 TWh per year. On the other hand, Global Chance makes the assumption that major energy savings through energy demand management is possible only in the nuclear phasing-out scenario, with a cumulated €100 billion investment to save 220 TWh per year in 2030. This explains why nuclear phase-out is more profitable in the Global Case report, as the investments to spare 220 TWh (€100 billion) are far less expensive than the one needed to produce these TWh in the continuation scenario (€175 billion). The fact that Global Chance considers energy saving and nuclear power to be antagonist may appear puzzling. The report argues that the centralized panning which has characterized the French nuclear industry will conflict with the decentralization needed to implement energy saving measures such as smart grids.
The electricity grid, another source of differentiation
To a lesser extent, the investment costs assessments also differ from each other due to their differences in the costs necessary to adapt the electricity transmission network to the new context of energy demand management and renewable energies. In this respect, Global Chance investments in the case of a nuclear continuation, assessed at €128 billion over the next twenty years, will increase by 10% to €141 billion in the nuclear phase-out scenario. For UFE, the difference reaches 20 billion, from €135 to €155 billion, mainly because of additional developments in interconnections and import/export with the rest of Europe. The most expensive difference is found in the Institut Montaigne study, as it amounts to €21.6 billion for a mere 50% nuclear share. One could notice that this study also considers the highest investment/energy savings rate.
In terms of investment costs, exiting or maintaining nuclear power generation in France depends on a small number of key parameters. A more global assessment including impacts on employment, on trade balance and on other macroeconomic variables is much more complex and still needs to be done. We are not sure, however, that its findings would significantly change the political stances taken today by the French political candidates running for the Palais de l’Elysée.
Michel Berthélémy, Sébastien Douguet and François Lévêque, Mines-ParisTech