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16 Jul 2024 18:18
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  •   Home > News > Business

    Nuclear won't make power bills cheaper, energy analyst says, as Coalition claims scrutinised

    Coalition promises that nuclear power will make for cheaper electricity prices don't stack up, according to an energy analyst, who says there was no evidence anywhere in the developed world to suggest new reactors were pushing down prices.

    Coalition promises that nuclear power will make for cheaper electricity prices don't stack up, according to a senior researcher who says there was no evidence anywhere in the developed world to suggest new reactors were lowering costs.

    Dylan McConnell, a University of NSW energy analyst, said the federal opposition's assertions that nuclear plants could be up and running in Australia by the middle of next decade were unrealistic.

    In a long-awaited announcement, the Coalition yesterday unveiled its plans for nuclear energy in Australia as part of efforts to decarbonise the economy by 2050.

    Opposition Leader Peter Dutton revealed the Coalition wanted to build seven reactors across the country on the site of former or retiring coal-fired power stations.

    Of these, large-scale reactors would be built in Queensland, NSW and Victoria, while so-called small modular units would be constructed in South Australia and Western Australia.

    The plants would be owned and operated by the federal government.

    Coalition's Canada example does not bear scrutiny

    Dr McConnell said there was merit to the idea that Australia should "leave the door open" to the use of nuclear power in future, but it was stretching credulity to argue it would lower power bills.

    He said there was nowhere in the developed world that had built a nuclear reactor since the start of the century without incurring significant cost and time blowouts on the construction.

    As a consequence, he said the electricity generated by those plants — in countries from the US to Finland and the UK — was or would be expensive by Australian standards.

    Ted O'Brien, the opposition's energy spokesman, pointed to the Canadian province of Ontario to argue that nuclear power was delivering relatively cheap electricity to households.

    But Dr McConnell said the wholesale cost of nuclear in Ontario — at $110 a megawatt hour — was comparable to or higher than the wholesale cost of energy across much of Australia.

    If retail electricity prices were relatively low in Ontario, he said, it had little to do with cheap nuclear power and arguably more to do with other factors such as low poles-and-wires costs.

    What's more, he said the cost of nuclear power in Ontario reflected the nuclear plants had been running for a long time and had largely paid off their debts.

    This, he said, meant its costs were likely to be far lower than for any new plant such as Hinkley Point C in England, where the government had agreed to buy power at $237MW/h for decades.

    Similar high costs had blighted new nuclear plants in other developed countries, including the US, he said.

    "The central claim (by the Coalition) seems to be that a nuclear-powered future will lower costs to Australian consumers," Dr McConnell said.

    "And that doesn't really bear up to any sort of scrutiny.

    "They point to the Ontario power grid as having lower retail electricity prices.

    "The reality is that their wholesale cost of nuclear power is actually higher than many regions in Australia.

    "So it's an absolute stretch to say that this will result in lower electricity prices, and certainly not on time frames that anyone will appreciate."

    Any impact at least a decade away

    Under the Coalition's plan, the first nuclear plant would be a small modular reactor and it would be operational by 2035.

    No small modular reactors currently operate in developed countries despite significant efforts to develop the technology.

    The country to most recently establish a nuclear energy industry from scratch was the United Arab Emirates, an authoritarian regime that took 13 years to build its first reactor.

    Mr Dutton said the policy put a sharp difference between the Coalition and Labor government, which has a target for Australia to produce 82 per cent of its electricity from renewable sources by the end of the decade.

    Robert Barr, a power industry veteran and member of lobby group Nuclear for Climate, welcomed the announcement, saying it was "a very good first step".

    Dr Barr said trying to plug too much variable wind and solar power into the grid would ultimately run into limitations that nuclear power could overcome by being available around the clock.

    "With a long-term nuclear plant … it'll bring back some base-load capability that was provided by coal, which transition out of the system," Dr Barr said.

    "And it can be integrated really well with wind and solar if you get the right balance."

    He said the intermittent nature of solar and wind power made it hard to constantly match supply and demand all the time in a cost-effective way.

    He argued the full costs of underpinning so much variable renewable energy — through batteries, transmission lines and pumped hydro plants — would likely be exorbitant.

    [Chart of cost]

    To that end, he said nuclear plants that complemented green energy could be a cheaper and better alternative, provided they were able to run at or near full capacity most of the time to maximise their efficiency.

    As things stood, Dr Barr argued, there would eventually be so much wind and solar power on the system that huge amounts of electricity would need to be wasted — or curtailed — during periods of abundance to avoid overloading the system.

    "What the Coalition policy can do is work towards an optimum mix," Dr Barr said.

    "If they do it well, they can drive down the cost of electricity from where we are at the moment."

    Nuclear no solution for coal exit

    For Dr McConnell, though, the opposition's nuclear plan fell flat in a key respect — it would do nothing to help Australia manage the rapid retirement of its "ancient" fleet of coal plants.

    According to Dr McConnell, the suggestion by the Coalition that gas-fired power could help fill in the blanks as coal plants shut down ignored the structural shortage of supplies in the market.

    [AEMO chart]

    "We have a very ancient fleet of existing coal-fired power stations that are rapidly approaching retirement," Dr McConnell said.

    "And so we have to replace their output and capacity quick smart, plus the need to actually reduce emissions.

    "They have two key drivers affecting dynamics in the industry at the moment. And the nuclear policy doesn't really address either of those. The timescale doesn't match."

    More gas would lead to higher bills

    On top of this, he said any gas that was used was almost certain to be expensive regardless of whether it was developed domestically or imported from overseas.

    "That's not a cheap proposition," he said.

    "Developing new gas — assuming that's what they would want to or need to do — that is not cheap. That would also add cost to electricity bills as well.

    "So this is not some kind of cost-free exercise just to fill the gap with gas."

    Stephanie Bashir from renewable energy industry advisor Nexa, echoed the comments, saying the Coalition's plan would take decades to deliver and do little to help Australia deal with its current problems.

    "Australia is already powered with 40 per cent renewables, technology that is available now that is attracting significant domestic and international investment," Ms Bashir said.

    "We need to get on with it — now."

    © 2024 ABC Australian Broadcasting Corporation. All rights reserved

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