Cost of Carbon and Capital Financing Keys to Future Costs of Generating Electricity According to New IEA and OECD Study

The price of carbon and the costs of raising capital will be the two most important elements to the cost of generating electricity in the future according to a new study by the International Energy Agency and the OECD Nuclear Energy Agency (NEA).

NEA Director General Luis Eschavarri, noted in particular that "to bolster competitiveness of low-carbon technologies such as nuclear, renewables and carbon capture and storage, we need strong government action to lower the cost of financing and a significant carbon dioxide price signal to be internalised in power markets."

The report, Projected Costs of Generating Electricity: 2010 Edition, also noted the important role that governments play in decisions about electricity generation:

Governments play a key role when it comes to the cost of raising financial capital and the price of carbon. The cost of capital is essentially a function of the risk faced by each option for generating electricity -- market risk, technology risk, construction and regulatory risk. With their high capital costs, low-carbon technologies such as nuclear, renewables and carbon capture and storage are particularly vulnerable. Smart government action, however, can do much to reduce these risks.