After months of speculation, the Coalition has released the projected costs for its nuclear policy, using modelling undertaken by consultancy Frontier Economics.
The plan covers seven nuclear reactors across Australia. While the modelling claims that a grid with nuclear power will be cheaper than one without it, it doesn’t go into detail about what the plan to build nuclear energy in Australia would look like.
The ABC spoke to some energy experts about what we can and can’t learn from the modelling, and what it means for you.
It doesn’t cost nuclear’s impact on power bills
The Coalition’s costings are about how much money it would take to build an energy system that includes nuclear power.
Peter Dutton says the impact that would have on household bills hasn’t yet been modelled, but he will have more to say on that at a later date.
Experts slam Dutton’s $331b nuclear gamble
The first nuclear plant wouldn’t come online for at least a decade under the Coalition’s timeline, so it’s not a solution for high power prices in the short term.
Earlier this year, energy think tank IEEFA modelled nuclear power’s potential impact on household bills.
It looked at six different scenarios based on international examples of nuclear reactor construction budgets, and found an increase in household bills under every scenario.
“The annual bill increase was anywhere between $260 and $1,259 for a household using a median amount of electricity, depending on which international nuclear example is used to indicate Australian nuclear costs, and which state the household is in,” IEEFA concluded.
Tristan Edis, an analyst at Green Markets, told the ABC the Coalition’s nuclear plan was a “recipe for higher electricity bills”.
Under the government’s plan, which relies more heavily on renewables, however, “households that switch to electricity [from gas and other fossil fuels] can be expected to reduce overall energy costs by 70 per cent,” he said, citing data from the Australian Energy Market Operator (AEMO).
Loading…Costings are complicated by different scenarios
The Coalition claims its plan is significantly cheaper than the government’s for a number of reasons.
It says its nuclear plan will mean fewer renewable projects and new transmission lines are needed.
But the cost savings it is claiming are clouded by comparing different scenarios, and how long it takes to cover the costs.
Firstly, the modelling done for the Coalition assumes that Australia will use much less electricity than the government is forecasting.
Frontier has modelled the government’s approach and claims it will cost $594 billion. But that’s assuming a bigger electricity system with more electric cars, manufacturing, and Australia reaching its climate targets.
Using a lower-energy-usage scenario for its own costings, the Coalition assumes that adding nuclear energy into the mix will cost $331 billion, with the first nuclear reactor coming online in about a decade.
“Regardless of what form of electricity you use, obviously one [of those two scenarios] is going to be much cheaper because you don’t need as much. So one of the biggest differences being talked about is that,” the Grattan Institute’s Tony Wood said.
When comparing the same energy scenarios, Frontier’s modelling still found a grid with nuclear was cheaper — but not by the $260 billion difference the Coalition put forward in its announcement.
However, that cheaper cost is also partly because the Coalition “spreads out” the cost of the nuclear plants over their 50-year life span, an accounting measure that means the bulk of the costs are recorded outside the 25-year costing window.
It’s relying on an optimistic time frame
The Coalition’s modelling has the first nuclear reactor coming online in around a decade, in the mid-2030s.
Not only would that be much faster than typical build times for reactors in Western countries like the United States and Finland, but it would be faster even than the United Arab Emirates, which managed to build its first reactor in 12 years.
The Alvin W. Vogtle nuclear power plant in the US state of Georgia. (Four Corners: Ryan Sheridan)
Experts say that, unlike the UAE, the hurdles an Australian government would have to jump are likely to blow that timeline out significantly.
Firstly, nuclear power is currently illegal at the federal level, as well as in a number of states, including New South Wales, Queensland and Victoria. Each ban would have to be overturned individually.
Leonard Quong, Bloomberg NEF’s head of Australian research, says Australia would need to establish a whole host of frameworks and standards before building any reactors, massively slowing down the process and increasing costs.
“When we look at nuclear in Australia in particular, it is effectively impossible to say how much it would cost to build,” he says.
“There’s a bunch of reasons that go into that, but probably the most important is that the standards, the rules, the regulation, the social licence … the practical things about how thick you have to pour your cement, what materials you’re allowed to use in the plant, what companies are allowed to be involved in the fuel supply chain, where you dispose of your waste, what insurance policies have to look like by regulation and law — [these] do not exist in Australia right now.”
It doesn’t detail how Australia would actually build nuclear plants
Frontier’s modelling also didn’t get into the issues of nuclear waste, or the high water use that comes with nuclear energy.
Quong says these factors also have an “enormous, enormous impact” on the cost for other countries building reactors.
He believes that the cost for building a first-of-its-kind nuclear asset in Australia would be higher than the CSIRO’s own modelling, which came out this week and again found renewables were the cheaper option.
“Now that’s not to say costs can’t come down over time, but you really can’t avoid the argument that the first few plants, the first few investors and developers, have to wear those overhead costs,” he says.
“Coming online before 2040, from where we are right now — you could probably say that’s about as optimistic as you could possibly be.”
It needs coal to stick around for longer
Opposition energy spokesman Ted O’Brien said in the Coalition’s press conference that under its plan, coal power stations would keep operating past their scheduled retirement dates, until the nuclear plants come online.
“We need to get prices down. That means we need to pour more gas into the system,” he said.
“We shouldn’t be closing our base-load power stations prematurely as we continue to roll out renewables. As coal retires from the system, it should be replaced with zero-emissions nuclear energy.”
As things currently stand, according to AEMO, 90 per cent of the country’s coal fleet is expected to retire between now and 2035.
Grattan’s Tony Wood says keeping those power stations operating longer will cost money.
“Not only do the costs of keeping them open longer go up, [but] the fact that they’re offline a bit more for maintenance means that reliability is more of a problem,” he says.
At its press conference, the opposition said some states were already negotiating to keep coal-fired power stations open longer.
“We can’t afford for the lights to go out, and there’s a reason why some of the state governments are needing to extend coal,” O’Brien said.
Coal power plants are largely privately owned, so it’s up to their owners when they shut down — meaning taxpayers would have to foot the bill to keep them open beyond those companies’ plans.
In New South Wales, taxpayers have had to provide $450 million just to keep Eraring Power Station open for an extra two years.
It needs emissions to be higher for longer
As outlined above, the Coalition’s plans rely on more coal and gas being in the mix for longer. Both electricity sources are fossil fuels and cause planet-warming emissions.
Frontier Economics’s report shows that the emissions intensity of the electricity sector would be considerably higher under the Coalition’s nuclear plan than under Labor’s, in which renewables dominate.
A Frontier Economics chart showing the Coalition’s plan for an electricity grid with nuclear power will produce far higher emissions. (Supplied: Frontier Economics)
“So if you keep coal longer and slow down renewables, emissions will be higher at least for the next five to 10 years,” Tony Wood says.
That’s bad news for Australia’s 2030 climate target, which relies on us shifting most of our electricity to renewables this decade.
Coalition’s nuclear costs compare apples to elephants
The Coalition says its nuclear plan would still get Australia to net zero emissions by 2050 — but higher emissions over the next 25 years means more warming.
“Climate science tells us that the end destination isn’t necessarily what’s important when it comes to climate change — it’s the journey. It’s the cumulative emissions year on year [of] carbon released into the atmosphere that matters,” Leonard Quong points out.
“If we do delay reducing our emissions — not just from Australia, but around the world — even if we end up at net zero by 2050, that damage is done. The overshoot could be real, and we would be seeing far greater temperature rises across the world.”
It would mean a ‘go-slow’ for renewables
Renewables made up almost 40 per cent of the total electricity delivered through the grid in 2023, according to AEMO, and that share is expected to reach nearly 50 per cent by the end of next year.
Some 4 million Australian homes have rooftop solar already.
The Coalition’s modelling, on the other hand, has renewables still making up about half of the energy mix in 2050.
“Under this scenario, wind and solar generate about 50 per cent of electricity and nuclear generates 38 per cent of electricity,” the Frontier Economics report states.
Solar power makes up a significant portion of Australia’s power mix already. (ABC News: Billy Cooper)
Bloomberg NEF’s Leonard Quong says the Coalition’s plan for fewer renewables “would imply a go-slow order on almost all new large-scale renewable energy investment and deployment across the country for at least the next 15 years”.
“That is really at odds with what we’ve seen federally … but also significantly at odds to what we’re seeing from state governments,” he says.
“When we look at what can do most of the heavy lifting to get Australia to our current legislative targets and broader decarbonisation efforts, we find that other technologies, like wind, solar, batteries, demand side participation and many, many more, offer a more cost-effective solution with what is on offer right now.”
Tony Wood says the Coalition’s plan relies on nuclear operating as “always on” power.
“If they’re running 90 per cent of the time, because there’s a high capital investment here, the more you run them, the less per-unit cost the electricity is,” he says.
Would a nuclear power plant fit Australia’s needs?
“They’re assuming you can run nuclear power plants pretty much steady all year round.”
He says that won’t necessarily mix well with the fluctuating yet cheap nature of renewables.
“That’s one of the challenges that I don’t think has been modelled, that when you’ve got a system which the opposition says we’ll have, the interaction becomes quite difficult,” he says.
“That’s one of the reasons why our existing coal stations have been coming under pressure.
“I don’t yet understand why that would not be a problem for nuclear … unless the Coalition has a different view about how we would structure the market.”
Quong says that if nuclear is “always on”, then it’s likely rooftop solar would have to be turned off or down to support the new system.
“This would mean that new market dynamics to support either that base-load profile of nuclear power as it begins to scale, to either turn off rooftop solar generation or to somehow flex these more traditionally inflexible nuclear assets would have to evolve,” he says.