Press release
Paris, 8 October 1998

Projected costs of generating electricity in 2005-2010: increasing competitiveness of gas, versus coal and nuclear

In a joint study, published today, on future costs for producing base-load electricity, the OECD Nuclear Energy Agency (NEA) and the International Energy Agency (IEA) conclude that no single technology is the clear winner economically. However, the study says that as compared with earlier reports in the same series gas-fired generation has become a more attractive near-term option.

Data and information for this study were provided by national experts from governmental bodies and utilities from 14 OECD and 5 non-OECD countries. The study was conducted in association with the International Atomic Energy Agency (IAEA) as well as the International Union of Producers and Distributors of Electrical Energy (UNIPEDE).

The study presents cost estimates for base-load plants that could be commissioned by 2005-2010, i.e., essentially gas-fired combined cycle, coal-fired, and nuclear power plants. The projected costs of generating electricity were calculated using the levelised lifetime cost methodology and commonly agreed assumptions for a reference case and sensitivity analyses. Comprehensive input data and results are provided in 20 tables and 18 figures. They show the detail on costs of investment, operations and maintenance, and fuel for all estimates.

As compared to previous studies in the series, this new study shows an increasing competitiveness of gas-fired power plants versus coal-fired and nuclear power plants. At a 5 per cent discount rate, gas and coal appear to be the least expensive options by a margin of at least 10 per cent in three countries each; nuclear is the least expensive in five countries. In seven countries, there is less than a 10 per cent difference between the least cost technology and the next cheapest.

At a 10 percent discount rate, gas is the clear winner. In nine countries it appears to be the least expensive by a margin of at least 10 per cent, while coal is the least expensive in one country; nuclear is never the clear winner in any country. In eight countries, there is less than a 10 per cent difference between the least cost technology and the next cheapest.

The report addresses factors affecting generation costs such as technology, fuel prices and fuel price escalation, environmental protection, electricity market liberalisation and energy policies. Their influence on levelised electricity generation cost is analysed.

In nearly all countries, the generation costs reported in the present study are lower than those reported in the previous study. The cost of base-load electricity generation is likely to remain stable in the near term.

This publication updates four similar studies published in 1983, 1986, 1990, and 1993. An authoritative reference in the field, the publication is especially useful to electricity system analysts and experts in electric power economics.

Projected Costs of Generating Electricity - Update 1998
OECD, Paris 1998
ISBN 92-64-16162-7

Please quote title and reference in any review.

Media enquiries: