Analyzing the Techno-Economic Role of Nuclear Power in the Transition to the Net-Zero Energy System of the Netherlands Using the IESA-Opt-N Model

Abstract

Intending to analyze the role of nuclear power in an integrated energy system, we used the IESA-Opt-N cost minimization model focusing on four key themes: system-wide impacts of nuclear power, uncertain technological costs, flexible generation, and cross-border electricity trade. We demonstrate that the Levelized Cost of Energy (LCOE) alone should not be used to demonstrate the economic feasibility of a power generation technology. For instance, under the default techno-economic assumptions, particularly the 5% discount rate and exogenous electricity trade potentials, it is cost-optimal for the Netherlands to invest in 9.6 GWe nuclear capacity by 2050. However, its LCOE is 34 €/MWh higher than offshore wind. Moreover, we found that nuclear power investments can reduce demand for variable renewable energy sources in the short term and higher energy independence (i.e., lower imports of natural gas, biomass, and electricity) in the long term. Furthermore, investing in nuclear power can reduce the mitigation costs of the Dutch energy system by 1.6% and 6.2% in 2040 and 2050, and 25% lower national CO2 prices by 2050. However, this cost reduction is not significant given the odds of higher nuclear financing costs and longer construction times. In addition, this study has shown that lower financing costs (e.g., EU taxonomy support) considerably reduce the relevance of nuclear cost uncertainties on its investments. Furthermore, we demonstrate that the economic feasibility of national nuclear power investments can vary considerably depending on the cross-border electricity trade assumptions. Additionally, we found that lowering the cost of small modular reactors has more impact on their economic feasibility than increasing their generation flexibility. In conclusion, under the specific assumptions of this study, nuclear power can play a complementary role (in parallel to the wind and solar power) in supporting the Dutch energy transition from the sole techno-economic point of view.