Fuels used for electricity generation

Fuels used for electricity generation 

These are broadly fall into one of three main categories:

• Fossil fuels – commodities such as coal, fuel oil and natural gas which are traded on the international market.

Characteristics : High specific energy content, therefore cheap to transport from origin. High environmental cost with respect to emissions, e.g. CO2 emissions and SO2 abatement. Favours large, efficient (typically state-of-the-art) plant technologies with extensive infrastructure to support the delivery of fuel and export of electricity.

Cost key drivers : prices set in international markets; subject to UK fiscal policy (import duties and taxes); and liable for CO2 emission related costs.

• Biomass fuels – specially grown crops, for example short-rotation coppice, or by-products from other processes, for example, poultry litter.

Characteristics : Low environmental cost and further incentivized with renewable obligation and climate change, levy exemption certificates. Low specific energy content, therefore very expensive to transport from origin. Variable fuel quality. Also seasonal harvesting can mean poor utilization of harvesting and storage facilities. Favours plants located near to the source of fuel production to avoid high transport costs. Plant size is, therefore, limited by the production capacity of fuel within its vicinity. Wide variability in fuel quality favours simple, robust, plant technology.

Cost key drivers :  prices set in local markets; significant transport cost proportional to distance from power station site; high prices offset by Government incentives for renewable generation. 

• Nuclear – uranium or ‘MOX’ fuel.

The cost of nuclear reactor fuel is small compared to the investment cost of the power plant itself. The sensitivity of nuclear plant economics to fuel price is, therefore, low and, as such, is not discussed in any further detail by this study