Scandinavian Working Papers in Economics
Discussion Papers,
Norwegian School of Economics, Department of Business and Management Science
No 2024/9: Compact contenders? Investigating cost competitiveness requirements of small modular nuclear reactors and their potential impact on the European energy system
Chunzi Qu (), Rasmus Noss Bang () and Leif K. Sandal ()
Additional contact information
Chunzi Qu: Dept. of Business and Management Science, Norwegian School of Economics, Postal: NHH , Department of Business and Management Science, Helleveien 30, N-5045 Bergen, Norway
Rasmus Noss Bang: SNF - Centre for Applied Research at NHH, Postal: SNF - Centre for Applied Research at NHH, Helleveien 30, N-5045 Bergen, Norway
Leif K. Sandal: Dept. of Electrical Engineering, KU Leuven, Postal: NHH , Department of Business and Management Science, Helleveien 30, N-5045 Bergen, Norway
Abstract: Europe is currently in the process of executing a strategy to increase the share of renewable energy in its electricity mix. However, concerns about energy system instability, higher transmission costs, and energy security have sparked discussions about the potential integration of alternative technologies, such as small modular nuclear reactors (SMR), which offer stable output and high flexibility. In view of the ongoing debate and the uncertainty surrounding the cost estimations of SMR, this study first attempts to establish a reference range for SMR that would ensure its economic viability for inclusion in the energy system. We then perform a comparison of European energy systems, with and without SMR, to explore how the inclu sion of SMR can impact the energy system. Lastly, we delve into learning effects to assess the potential for increased competitiveness in the future. Our results show that if the construction cost of SMR remains below 7392 euros/kw and operational cost does not exceed 230 euros/kw, SMR could become competitive and reduce overall energy system costs. This potential cost reduction arises from SMR’s ability to replace traditional large-scale nuclear power plants, which have high upfront and operating expenses, and to compete with variable renewable energy sources by lowering transmission cost. Furthermore, learning effects could enhance the competitiveness of SMR in the future, even if they currently lack a cost-related advantage.
Keywords: European energy system; Small modular nuclear reactor (SMR); Optimization model; Generation mix; Transmission grid planning
Language: English
26 pages, September 24, 2024
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