Dutton’s nuclear power plan will increase taxes AND power bills
These news items (and updates) posted at https://nuclear.foe.org.au/dutton-nuclear-economics/
* ACF ‘Power Games’ report
* CSIRO GenCost report, May 2024
* Levelised cost of electricity review (Egis / Clean Energy Council)
* Lazard investment firm, LCOE+, June 2024
* Nuclear/SMR economics in a high-renewables grid
* Nuclear is unviable because of economics, not engineering
* Power bills could rise by $1,000 a year under Coalition plan to boost gas until nuclear is ready, analysts say
* Nuclear power would cost households $200 more per year, Rod Sims claims
* Coalition’s taxpayer-funded nuclear con a road to ruin
* Dutton’s nuclear plan could cost up to $600 billion, deliver less than four pct of grid, industry body says
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* Comparing costs of large reactors in the UK and US, and SMR cost estimates, with CSIRO estimates for firmed renewables, nuclear costs (large or small) would need to come down by two-thirds to be competitive with firmed renewables.
* Replacing Australia’s 21.3 gigawatts of coal plants with nuclear, large or small, would cost $500 billion to $650 billion (and much more to train a nuclear workforce etc. etc.)
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CSIRO GenCost report, May 2024
Levelised costs:
|
|
2023 ($/MWh) |
2030 ($/MWh) |
|
Large-scale nuclear |
155-252 |
141-233 |
|
SMR |
387-641 |
230-382 |
|
90% wind and solar PV supply to the National Electricity Market including storage and transmission costs |
100-143 |
89-128 |
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Levelised cost of electricity review
A report prepared for the Clean Energy Council by Egis, a leading global consulting, construction and engineering firm. May 2024.
Key findings:
- The research confirmed that nuclear energy is up to six times more expensive than renewable energy and even on the most favourable reading for nuclear, renewables remain the cheapest form of new-build electricity.
- The safe operation of nuclear power requires strong nuclear safety regulations and enforcement agencies, none of which exist in Australia. Establishing these frameworks and new bodies would take a long time and require significant government funding which would ultimately be borne by taxpayers.
- Nuclear may be even higher cost than currently forecast as waste management and decommissioning of nuclear plants have been omitted by cost calculations in the relevant research available.
- The economic viability of nuclear energy will further diminish as more wind, solar and battery storage enters the grid, in line with legislated targets. Put simply, nuclear plants are too heavy and too slow to compete with renewables and can’t survive on their own in Australian energy markets.
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Lazard investment firm, LCOE+, June 2024
Includes these levelised cost figures (amongst others):
|
|
US$/MWh (A$/MWh) |
|
Solar PV – Utility |
29-92 (44-138) |
|
Solar PV + storage – Utility |
60-210 (90-315) |
|
Wind ‒ onshore |
27-72 (41-108) |
|
Wind + storage ‒ onshore |
45-133 (67-199) |
|
Wind ‒ offshore |
74-139 (111-208) |
|
Nuclear |
142-222 (213-333) |
The nuclear cost is based on the Vogtle project in Georgia (the only nuclear project to begin and reach completion this century), assuming a capacity factor of ~97%, operating life of 60–80 years.
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Nuclear/SMR economics in a high-renewables grid
Apart from the practical constraints (not least the fact that they don’t exist), the economics of SMRs would go from bad to worse if using them to complement renewables. According to the Institute for Energy Economics and Financial Analysis, power from an SMR with a utilisation factor of 25% would cost around A$600 per megawatt-hour (MWh).
Likewise, an article co-authored by Steven Hamilton – assistant professor of economics at George Washington University and visiting fellow at the Tax and Transfer Policy Institute at the ANU – states:
“Opposition Leader Peter Dutton said: “Labor sees nuclear power as a competitor to renewables. The Coalition sees nuclear power as a companion to renewables”.
“The trouble is that nuclear is a terrible companion to renewables. The defining characteristic of being “compatible” with renewables is the ability to scale up and down as needed to “firm” renewables.
“Even if we don’t build a single new wind farm, in order to replace coal in firming renewables, nuclear would need to operate at around 60 per cent average utilisation (like coal today) to keep capacity in reserve for peak demand. This alone would push the cost of nuclear beyond $225/MWh. To replace gas as well, the cost skyrockets beyond $340/MWh.”
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Nuclear is unviable because of economics, not engineering
Even if all that mattered was the cheapest possible energy that meets minimum levels of reliability and emissions, the Coalition’s plan fails.
June 23, 2024, Australian Financial Review, Steven Hamilton and Luke Heeney
…
The numbers don’t stack up for nuclear
The CSIRO estimates the cost of 90 per cent renewables, with firming, transmission, and integration costs included, at $109 per megawatt hour. Based on South Korean costs (roughly one-third of the US and Europe), a 60-year lifespan, a 60 per cent economic utilisation rate (as per coal today), and an eight-year build time (as per the global average), nuclear would cost $200 per megawatt hour – nearly double.
The same electrons delivered with the same reliability, just twice as expensive under what is a fairly optimistic scenario.
Opposition climate and energy spokesman Ted O’Brien has raised two issues with the CSIRO’s assumptions for nuclear: first, lifespan (Ted says it should be 80 years); second, utilisation (Ted says it should be close to 100 per cent).
His first concern makes little difference. Thanks to the time value of money, extending the lifespan from 60 to 80 years reduces the cost above by just $4 per megawatt hour – or 2 per cent. His second concern misunderstands the Australian energy market.
Because the vast majority of nuclear costs are up-front capital, utilisation has a dramatic effect on economic viability. Even if nuclear were to supply 100 per cent of electricity, utilisation would not be 100 per cent because demand varies dramatically.
In France, where nuclear accounts for most of the supply, utilisation is just 70 per cent —and that’s with a big boost to utilisation as energy can be exported to countries to its east and west, which plainly Australia could not do.
Underutilisation then gets even worse as the supply of renewables increases. When competing with zero-marginal-cost renewables, nuclear must either decrease output (thus utilisation) or supply at negative prices (reducing economic viability, as with coal today).
Renewables already routinely produce more than half our electricity during the day and AEMO expects average renewables output to exceed 95 per cent (and up to 100 per cent at times) by 2035, when the Opposition plans the first nuclear plant to come online. In that environment, even the 70 per cent achieved in France would be wildly optimistic.
The same electrons delivered with the same reliability, just twice as expensive under what is a fairly optimistic scenario.
It’s worth noting that, even at 93 per cent utilisation (the highest ever achieved in the US where nuclear is a small share of supply), nuclear is still 25 per cent more expensive than renewables.
This is also where the opposition’s claim that nuclear will ensure system reliability falls apart. For nuclear, the goals of reliability and viability are fundamentally opposed. To bring nuclear closer to economic viability, it must play a minor role in the system to consistently run at full capacity, with nothing more to give when called upon.
A genuine reliability solution should be available when needed at minimum cost. Today, that means gas, batteries and pumped hydro. In 2050, it could also mean small modular nuclear reactors. But we have a quarter-century to wait and see if they become economically viable.
Are there uncertainties around the cost of firmed renewables? Independent analysis by Lazard and peer-reviewed academic research produce similar estimates to the CSIRO. We must make decisions today based on our best guess of the costs. But any concerns about delays, social license and cost blowouts are surely even greater under nuclear, and it starts at a 100% cost disadvantage before these even enter the picture.
If you need external validation of these basic economics, look no further than the opposition’s own announcement. Rather than lift the moratorium and allow private firms to supply nuclear energy if it’s commercially viable, the opposition has opted for government to be the owner and operator. A smoking gun of economic unviability if ever there were one.
In the face of an intractable productivity crisis, in which we must take every 10th of a percentage point of GDP we can get, choosing to pay more for electricity for no benefit whatsoever is unacceptable self-harm.
In these circumstances, the pragmatist should view the opposition’s plan as nothing more than a vanity project our economy cannot afford.
— Steven Hamilton is an assistant professor of economics at George Washington University and Luke Heeney is a graduate researcher at the MIT Centre for Energy and Environmental Policy Research.
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Experts predict major electricity price hikes if opposition proposal to slow rollout of large-scale renewable projects goes ahead
Adam Morton and Paul Karp, 21 June 2024, The Guardian
Australians’ annual household power bills could increase by hundreds of dollars, and up to $1,000, under a Coalition plan to slow the rollout of large-scale renewable energy and use more gas-fired electricity before nuclear plants are ready, analysts say.
Few details of the opposition’s proposal have been released, but Dutton told a press conference on Wednesday that the Coalition would restrict investment in solar and windfarms and cover the electricity shortfall created as old coal-fired plants shut over the next two decades by using more gas power.
Analysts said gas was a far more expensive power source in the national grid than renewable energy or coal, and opening new gas basins was unlikely to change this as the country’s cheap gas had already been extracted. They said adding more gas power could also increase greenhouse gas emissions, accelerating the climate crisis.
Tristan Edis, a director with the firm Green Energy Markets, said the wholesale electricity price was set by the most expensive fuel being used at any given time. Those prices were “very high” – between $250 and $300 per megawatt hour of electricity, about three times the average price – whenever fast-start gas plants were used to complement cheaper coal, solar, wind and hydro energy.
Gas now provides less than 5% of electricity in the national electricity market, and is only called on when needed to meet demand.
Edis said if a Coalition government put a hold on investment in solar and windfarms and boosted gas power so that it was replacing coal and always setting the price, “you’re talking about an increase of $500 to potentially even $1,000 per annum for a household power bill”.
Dr Roger Dargaville, an associate professor and the interim director of the Monash Energy Institute, said it was difficult to predict what the Coalition’s announcement would mean for bills due to a lack of detail, but agreed the increase in an annual bill could be $1,000.
“It seems the options being presented will either lead to extraordinary maintenance bills to keep old coal plants going or using a lot more gas,” he said. “Coal is a very cheap fuel, so if you’re going from a coal-dominated system to a gas-dominated system, you are going to see very steep energy prices.”
Dargaville said more renewable energy backed by “firming” support – including energy storage, new transmission lines and gas power only when required – was “the only sensible option and almost certainly the least cost option”. …
On Friday the progressive thinktank the Australia Institute released the results of a survey of 1,005 Australians that it commissioned from the firm Dynata in May. It found nearly two-thirds (65%) said they were not prepared to pay extra to have nuclear power in the mix. …
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Nuclear power would cost households $200 more per year, Rod Sims claims
The former ACCC chief Rod Sims, who now chairs the renewables thinktank the Superpower Institute, has told ABC radio that nuclear power will increase household power bills:
“I think at best it would probably increase household energy costs by well over $200 per annum. That’s at best.
“And let me just unpick that if I could. So at the moment, if you want to use wind and solar, that’s about $60 to $80 per megawatt hour. If you want to firm that up, which we do because we want it completely reliable, that would cost about $110 a megawatt hour give or take a bit, and you’d be using solar wind up, using hydro pumped hydro gas batteries, so a whole mix of things. And it would be 100% reliable at a cost of give or take $110 a megawatt hour.
“If you use nuclear, and you look at the most recent new-build plants around Europe, the UK the US, you are talking at least between 2 [200] and $300 per megawatt hour.”
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Coalition’s taxpayer-funded nuclear con a road to ruin
Tim Buckley and Annemarie Jonson, 25 June 2024, Australian Financial Review
We now know that if the federal opposition wins the next election, it proposes to gouge Australians to bankroll a national build-out of government-owned nuclear reactors across seven locations – because private capital won’t touch nuclear.
Opposition Leader Peter Dutton’s fact-free, 900-word press release on the topic – the totality of the Coalition’s policy announcement – failed to produce costings for what would be a long-term, multibillion-dollar “nuke builder” tax. We estimate that the fiscal damage would be in the order of a minimum $100 billion, but likely considerably more given the international experience.
It beggars belief that the alternative government proposes nationalising an uncosted nuclear debt bomb and detonating it at the heart of domestic energy and climate policy.
Meanwhile, momentum has been accelerating into firmed renewables, as capital responds to the decarbonisation ambition of the Albanese government.
Energy Minister Chris Bowen this week announced that the first tranche of six gigawatts of new capacity under his centrepiece Capacity Investment Scheme was oversubscribed nearly seven-fold, with 40GW of tenders for firmed renewables in the pipeline.
Dutton, by contrast, centres nuclear in Australian energy policy against the unequivocal advice of the CSIRO, which warned that nuclear could not be operational until 2040 at the earliest, and the energy generated would be two to four times as expensive as fully firmed renewables.
Our national scientific agency says nuclear “won’t be able to make a meaningful contribution to achieving net zero emissions by 2050”.
The LNP’s nuclear con is essentially an egregious exercise in bad faith, designed to disrupt and delay the firmed renewables rollout.
The CSIRO’s assessment is justified by a cursory examination of nuclear deployments in Western economies. The Vogtle nuclear plant expansion debacle in Georgia, in the US, completed seven years late in 2023, is the most expensive public works project in US history at $US35 billion ($52.6 billion), with consumers carrying the can for the runaway costs.
England’s Hinkley Point C plant – started in 2016, with completion now delayed to 2031 – is an $88 billion millstone around citizens’ necks for the next 60 years.
In Canada, which opposition energy spokesman Ted O’Brien admiringly cites, the last nuclear plant was approved in 1977 and commissioned 15 years later in 1993, five years late. The original capital cost of $C3.9 billion blew out 400 per cent to $C14.4 billion, including a $C600 million refurbishment immediately on commissioning, and it now needs another $C12 billion ($13.2 billion) refurbishment.
The Coalition’s government-owned nuclear scheme emulates its great public infrastructure debacles – Snowy 2.0 and the NBN. Snowy 2.0 was due in 2021 at a cost of $2 billion. After a rolling series of crises, it’s now expected to come online after 2028 and cost $15 billion.
Dutton’s assertion that nuclear could be operational here in 2035-37 is fanciful. Community opposition, inevitable legal challenges, absence of development pipeline in a country with zero history of nuclear energy, and legislative bans make this impossible.
Critically, the Clean Energy Investor Group, which includes global investment giant BlackRock, Neoen and Macquarie, has condemned the Coalition’s “catastrophic” intervention, saying it puts at imminent risk the influx of private capital investment into Australian decarbonisation, as policy uncertainty destroys investor confidence and makes clean energy proposals uninvestable. This creates sovereign risk as it undermines our energy security.
The medium-term energy price implications are horrendous. Prices would skyrocket as private investment in new zero emissions replacement capacity is crowded out, resulting in undersupply for the next 15 to 25 years while we wait for the LNP’s nuclear white elephants to lumber into view, locking in higher power bills for consumers crushed by cost of living, and for domestic industry, reducing competitiveness.
In short, while nuclear may be part of the energy mix in some countries with a long-established history of deploying the technology – in Canada, for example, it was 14 per cent of total generation in 2023 (down from 16 per cent a decade ago), while renewables are 65 per cent and increasing – it is simply not viable here.
The LNP’s nuclear con is essentially an egregious exercise in bad faith, designed to disrupt and delay the firmed renewables rollout and entrench decades more of volatile, hyper-inflated fossil fuel energy for perceived political, donor and electoral advantage, even as the climate crisis escalates.
This is consistent with Dutton’s retreat from our 43 per cent by 2030 emissions reduction target, trashing our Paris Agreement commitments and exposing the Coalition’s unreconstructed climate denialism.
Firmed renewables can deliver secure, reliable and affordable supply at a fraction of the cost, as the CSIRO confirmed. We need to speed the rollout, as the Albanese government is doing, including making material progress on establishing huge offshore wind zones in Victoria and NSW, complementing the firmed renewables investment boost under the Capacity Investment Scheme.
By contrast, the Coalition’s nuclear road to ruin is a betrayal of the national interest – economic and fiscal vandalism on an epic scale and rank political opportunism.
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Samantha Lock, AAP, 23 June 2024
The cost of building seven reactors under Peter Dutton’s nuclear proposal could be up to $600 billion and “at best” deliver just 3.7 per cent of Australia’s energy mix in 2050, an industry body says.
The coalition has pledged to build the nuclear reactors across five states on the sites of coal-fired power stations if it wins government at the next election.
The costs and details of the plans have remained scant, prompting concerns about safety in regional areas where the reactors are due to be built and the drawn-out 2035 completion date for construction of the first facility.
Using data from the CSIRO’s latest GenCost report and the Australian Energy Market Operator’s Integrated System Plan, the Smart Energy Council estimated the cost to taxpayers to be at least $116 billion.
The cost is the same as delivering 82 per cent renewables by 2030, and an almost 100 per cent renewable energy mix by 2050, including the cost of building all of the enabling transmission infrastructure, the council said.
Under the operator’s forecast, the total expenditure required to fund all generation, storage, firming and transmission infrastructure was found to have a 2024-dollar value of $121 billion, to be invested gradually out to 2050.
The bulk of the $121 billion would be invested by the private sector between now and 2050 to deliver about 300 gigawatts of capacity by 2050.
These figures compare to just 11 gigawatts of nuclear capacity funded by the taxpayer in the opposition’s proposal, the council said.
Smart Energy Council chief executive John Grimes said Mr Dutton’s nuclear proposal would deliver “at best” 3.7 per cent of the energy required at the same cost as the government’s current strategy.
“In reality, current cost overruns happening right now in the UK could mean a $600 billion bill to Australian taxpayers, whilst delivering a small proportion of the energy that is actually required,” he said.
Mr Grimes said nuclear had no place in a country with cheap, reliable energy powered by the sun and wind and backed up by renewable energy storage.
“The most optimistic assessment of Peter Dutton’s nuclear proposal indicates it is a pale shadow of the reliable renewables plan outlined and costed by the Australian Energy Market Operator,” he said.
The council has called on the opposition to release its analysis of the costings and generation capacity from the seven proposed nuclear reactor sites.
“They need to explain how their forecasts contradict the experts at the CSIRO and AEMO,” Mr Grimes said.
“It is extraordinary that the details are being hidden from the Australian public.”
(See also Smart Energy Council, 22 June 2024, Nuclear Fallout: $116-$600 billion to build 7 nuclear reactors.)