London (Platts)--17Apr2014/719 am EDT/1119 GMT

A reliable power system based on new wind and solar PV with gas as backup generates cheaper low-carbon electricity than a system of new nuclear power plants, Berlin-based think-tank Agora Energiewende said Thursday in a study based on current-feed-in-tariffs for renewables in Germany and the agreed strike price for new nuclear in the UK.

"New wind and solar power systems can generate electricity up to 50% cheaper than new nuclear power plants," said Patrick Graichen, director of the think-tank, which is backed by the Mercator Foundation and the European Climate Foundation.

The findings are based on a study conducted by Prognos AG. The study examines feed-in tariffs for new nuclear power plants in the UK as well as current feed-in tariffs for green power under Germany's Renewable Energy Law (EEG).

The study concludes that nuclear power as well as carbon capture and storage are both more expensive than wind and solar power as a strategy for preventing climate change.

In addition to examining the specific costs of power generation, the study estimates the overall costs of a power production system that uses reserve-capacity power plants fired by natural gas to make up for weather-dependent shortfalls in power generation from wind and solar.

It concludes that a reliable power system based on wind, solar, and natural-gas power plants would be 20% cheaper than a power system based on nuclear. "In the future wind and solar will play an ever greater role in countries across the world as a source of power," the Agora director said in a statement.

"Together with other countries and regions taking the lead on preventing climate change, Germany has an opportunity to showcase how stable and cheap power production can be based on wind and solar."

Agora's previous director, Rainer Baaken, is now under secretary for energy in the German economy and energy ministry, shaping Germany's energy policy of the future. The study excludes any use of coal or lignite-fired power generation without CCS technology as its basic premise for carbon-free power generation. In 2013 this contributed the single largest share of Germany and the UK's energy mix.

Germany wants to increase the share of renewables in the power mix from currently just under 25% to 40-45% by 2025 and 55-60% by 2035 as well as phasing out nuclear energy by 2022.

German electricity users will have to pay 18% more for subsidies paid to renewable power producers in 2014 through the green levy because wholesale power prices have dropped sharply, boosting the sum paid to operators of renewable energy installations to an estimated Eur21.5 billion ($29 billion).

According to the energy minister, annual costs of more than $30 billion a year to support renewable energy are the limit even for the German economy. However, the lion's share of such costs are a legacy of much higher feed-in-tariffs for wind and solar over the past decade.

"Two decades of technological development have led to a strong reduction in the cost to produce power from wind and solar energy," the study said, adding that feed-in tariffs for solar power in Germany have plunged 80% over the past five years alone.

New nuclear power in the UK will be subsidies at Eur112/MWh, based on the government's agreed strike price for the Hinkley Point C project, the study said.

By contrast, remuneration for utility-scale solar PV in Germany is now 34% lower at Eur73/MWh and 50% lower at Eur56/MWh for onshore wind, according the the current feed-in-tariffs under Germany's EEG law, the study added.

The model used for the study uses an average of 1,016 full load hours a year for solar PV, 2,497 full load hours for wind (based on weather data for 2011) and 7,500 full load hours for a new nuclear plant.

--Andreas Franke, andreas.franke@platts.com

--Edited by Jonathan Dart, jonathan.dart@platts.com

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