Mexico 2050 Calculator Including costs Gregory Haigh Presentation on 14/8/2013 Mexico City

Introduction 1.Objectives: why include costs? 2.Gathering evidence: the costs wiki 3.Organising the evidence: cost ranges 4.Sector example 5.Aggregating / amortisation 6.Presentation (context and caveats) 7.What the UK model told us about costs

Objectives 1.Objectives: why include costs? 2.Gathering evidence: the costs wiki 3.Organising the evidence: cost ranges 4.Sector example 5.Aggregating / amortisation 6.Presentation (context and caveats) 7.What the UK model told us about costs

1.Extends feasibility debate 2.Be able to compare the costs of different pathways against: –Each other –Not tackling climate change Objectives

Gathering evidence 1.Objectives: why include costs? 2.Gathering evidence: the costs wiki 3.Organising the evidence: cost ranges 4.Sector example 5.Aggregating / amortisation 6.Presentation (context and caveats) 7.What the UK model told us about costs

1.Three main kinds of costs data: Gathering evidence: the costs wiki Capital costs Operating costs Fuel costs

1.The costs wiki: wiki.decc.gov.uk/pages/59http://2050-calculator-tool- wiki.decc.gov.uk/pages/59 Gathering evidence: the costs wiki

Organising the evidence 1.Objectives: why include costs? 2.Gathering evidence: the costs wiki 3.Organising the evidence: cost ranges 4.Sector example 5.Aggregating / amortisation 6.Presentation (context and caveats) 7.What the UK model told us about costs

1.Cost data collected for 2010 and Ranges drawn around highest and lowest estimates for 2010 and 2050 Organising the evidence: cost ranges High Low Cost of a nuclear power station Default No “new” costs (all from credible, published sources)

Sector example 1.Objectives: why include costs? 2.Gathering evidence: the costs wiki 3.Organising the evidence: cost ranges 4.Sector example 5.Aggregating / amortisation 6.Presentation (context and caveats) 7.What the UK model told us about costs

Very simple: Cost per 3GW power station * number of new power stations… Sector example: nuclear

Aggregating / amortisation 1.Objectives: why include costs? 2.Gathering evidence: the costs wiki 3.Organising the evidence: cost ranges 4.Sector example 5.Aggregating / amortisation 6.Presentation (context and caveats) 7.What the UK model told us about costs

1.Absolute and per capita sheets in workbook 2.Period costs are per year snapshot (*5 for total) 3.Presented as: –Cash flow: Average and NPV –Total cost (from Col BS inc finance costs) –Amortised: (Col CC) annual average over Aggregating / amortisation Main caveat: total system costs – not impact on bills

Presentation 1.Objectives: why include costs? 2.Gathering evidence: the costs wiki 3.Organising the evidence: cost ranges 4.Sector example 5.Aggregating / amortisation 6.Presentation (context and caveats) 7.What the UK model told us about costs

Presentation: costs in context

What the UK model told us about costs 1.Objectives: why include costs? 2.Gathering evidence: the costs wiki 3.Organising the evidence: cost ranges 4.Sector example 5.Aggregating / amortisation 6.Presentation (context and caveats) 7.What the UK model told us about costs

Remains similar as a % of GDP The cost of the energy system will increase Comparison of GDP and the cost of pathways (average , real, per capita basis)

Tackling climate change could be cheaper than not doing so Cost of pathways by capital, fuel and operating costs (average , real, per capita basis)

Total costs will be borne more in transport and will vary across the sectors Contribution of each sector to the costs per person (average 2010 to 2050)

The incremental costs will vary across sectors MARKAL pathway: incremental costs (compared w/ “level 1”, average , real per capita terms)

Decarbonisation would reduce fuel costs but raise capital costs Costs (no dcecarbonisation vs high renewables), cash flow basis (excl. finance costs, real, per capita basis)

The costs of pathways are uncertain: it is risky to base decisions on point estimates of costs The future is uncertain and so the ranking of the costs of pathways is uncertain. We are looking 40 years into the future. Costs are based on the default costs in the 2050 Calculator ~ 1970 ~ 2010 Cost ranges for the example pathways to 2050 (average , real, per capita basis)