Because
in fourteen days time the country enters a national federal election
year and, one likely to be dominated by misinformation and downright
lies on the Internet, television, radio and in political flyers
stuffed in letterboxes - especially on the subject of nuclear
powered electricity - here are the basic positions of the three main
parties distributing either political opinion or science-based
information.
Perhaps consider
bookmarking it for future reference as the election campaign heats up.
The
latest Coalition Dutton-Littleproud position on its proposal to insert
nuclear power as a preeminent component in Australia's energy mix
began
with this
media release on 13 December....
Frontier
Economics,
INSIGHT,
13 December 2024:
At
Frontier Economics, we’ve been providing the economic analysis and
frameworks to key energytransition decisions in Australia for more than 25 years. As
independent economic consultants, we regularly inform ourselves on,
and dig deep into, the most important decisions impacting society.
This
is the second independent report in this series on modelling the
economics of including nuclear in Australia’s National Electricity
Market (NEM).
The
objective of the first report, Report1 – Developing the base case to assess the relative costs ofnuclear power in the NEM, was to establish a proper basis for
comparing the cost impacts of nuclear power – based on AEMO’s
Integrated Systems Plan (ISP) results.
Once
again, we expect and welcome robust debate on the work we present.
Our report has been funded and directed solely by Frontier Economics,
and consultation with various government and private sector parties
has been sought to ensure we modelled the inclusion of nuclear power
in the NEM most accurately.
Report
2: Economic analysis of including nuclear power in the NEM
In
this second report, we again using AEMO modelling as our basis for
comparison, using their ‘Step Change’ and ‘Progressive’
scenarios to compare the costs of nuclear power in our energy
ecosystem.
"You
can’t compare renewable energy and nuclear power generation and
costs like apples to apples. We’ve done the modelling in these AEMO
scenarios with a wider, and more detailed, lens on how the two
options compare in real life, and the data speaks for itself. In both
scenarios, including nuclear power in our energy mix is cheaper –
by up to 44% - for Australians in the medium-term future. - Danny
Price, Managing Director, Frontier Economics"
Key
considerations from the report:
Our
modelling in this report has concluded:
DOWNLOAD
REPORT 2
The
Australian Government response begins thus....
Minister
for Climate Change and Energy,
Chris Bowen
Under
the Opposition's nuclear scheme Australians will pay more to sit in
the dark
13
December 2024
Peter
Dutton has today confirmed his nuclear scheme will not bring down
household bills and will instead leave Australians paying billions to
sit in the dark.
Despite
their bold claims that the most expensive form of energy will bring
down bills, the Coalition’s dodgy costings released today are
silent on tackling household bills. The report simply says on page
18: “they do not, at this stage, present any results for price.”
But
experts have previously found that adding nuclear to Australia’s
energy mix would push up power bills by up to $1,200 a year, while it
risks blackouts as households wait 20 years for reactors to come
online.
Aside
from failing to offer anything to households on power bills, there
are three immediate fatal flaws in the Coalition’s nuclear energy
costings.
One,
the Coalition are irresponsibly asserting that costs will be lower
because Australians will use less power. They ignore the independent
advice from the Australian Energy Market Operator.
Peter
Dutton’s nuclear scheme isn’t a plan to meet our growing energy
needs –it’s nothing more than a recipe for bringing our economic
growth to a halt.
Two,
the costs don’t reflect any real world experience. The Coalition’s
modelling spuriously assumes nuclear will be supplied at $30Mwh. The
CSIRO, which bases their work on the international experience, says
that in order to pay off its costs, it needs a price of between
$145-$238Mwh.
The
Coalition is ignoring the massive cost blowouts and delays seen
routinely around the world during the construction of nuclear
reactors, including in countries where the industry is well
established.
These
costings are also silent on how much taxpayers will pay for it, and
exactly what services Peter Dutton would cut to fund his nuclear
scheme. Given his mega costs today are equivalent to more than 10
years of the Medicare budget Australians should be worried.
Three,
the Coalition just takes a guess that there is no need to build
transmission to get power into homes and businesses. They invent a
$52 billion difference in transmission spend, but have no plan to
transport nuclear energy to wherever it’s needed.
Nothing
in today’s so-called “costings” addresses the need for energy
bills coming down now or the near-universal evidence that nuclear
would take too long, cost too much, and slow renewable investment and
generation. This is not a plan to keep the lights on.
Australia
needs new, cheap power now, not expensive power in 20 years. Ageing,
expensive and unreliable coal plants are closing and we have to fill
the gap. Dutton’s nuclear scheme would have us short on power for
two decades – a sure-fire recipe for rolling and expensive
blackouts.
Labor’s
plan is delivering cheaper energy right now. Since coming to
Government we have brought online new electricity that is the
equivalent of more than 3 entire Snowy Hydro schemes.
Australia
is on track to bring more renewable energy online this year than any
other year, and bills are forecast to come down as more renewables
come online over the next decade.
We
are rolling out batteries that can store renewable energy around the
country – providing enough power storage to cater for 90% of peak
household demand to make sure night or day Australians have the power
when and where they need it.
The
considered scientific position.....
CSIRO,
News,
December 2024:
The
question of nuclear in Australia’s electricity sector:
In
Australia's transition to net zero emissions, the electricity sector
has a major role to play. But does nuclear power have a place in our
future grid?
9
December 2024
Key
points
This
explainer was updated on 09 December 2024 to reflect costings
included in the draft GenCost 2024-25 Report.
AEMO's
Integrated Systems Plan
As
Australia works towards emissions reduction targets in the transition
to net zero, we know the electricity sector has a major role to play.
We also know it makes sense to assess a full range of technologies:
some new and emerging, some established and proven.
In
this context some proponents want nuclear to be considered as an
option for decarbonising the electricity sector.
Despite
nuclear power being a component of electricity generation for 16 per
cent of the world’s countries, it does not currently represent a
timely or efficient solution for meeting Australia’s net zero
target.
Here’s
why:
Understanding
GenCost calculations
GenCost
is a leading economic report by CSIRO in collaboration with the
Australian
Energy Market Operator (AEMO)
to estimate the cost of building future electricity generation and
storage, as well as hydrogen production in Australia.
It
is a policy and technology neutral report and the annual process
involves close collaboration with electricity industry experts. There
are opportunities for stakeholders to provide pre-publication
feedback, ensuring the accuracy of available evidence.
Paul
Graham, our Chief Energy Economist and lead author of the report,
said GenCost is an open and public process.
"The
report's data is not just for AEMO planning and forecasting; it’s
also used by government policymakers and electricity strategists who
require a clear, simple metric to inform their decisions," Paul
said.
"To
facilitate a straightforward comparison across different
technologies, the GenCost report conducts a levelised cost of
electricity analysis. This method calculates a dollar cost per
megawatt hour (MWh) over the economic life of the asset,
incorporating initial capital expenses and any ongoing fuel,
operation, and maintenance costs."
The
draft GenCost 2024-25 Report released on 09 December 2024 found
renewables continue to have the lowest cost range of any new build
electricity generation technologies.
Infographic
showing annual change in capital costs and levelised cost of
electricity (LCOE).
One
of the factors that impacts the high and low cost range is the
capacity factor. The capacity factor is the percentage of time on
average that the technology generates to its full capacity throughout
the year. Costs are lowest if technologies. such as nuclear, can
operate at full capacity for as long as possible so they have more
generation revenue over which to recover their capital costs.
Nuclear
technology is capable of high capacity factor operation but globally
its capacity factor ranges from below 60% to above 90% with an
average of 80%. Australia operates a similar steam turbine based
technology in coal generation for which the average capacity factor
over the last decade was 59% with a maximum of 89%.
The
shape of the electricity load and competition from other sources is
very different between countries and so our preference is to always
use Australian data where it is available. Consequently, we apply the
historical coal capacity factors when considering the potential
future capacity factors of Australian nuclear generation.
Capital
cost assumptions
While
nuclear generation is well established globally, it has never been
deployed in Australia.
Applying
overseas costs to large-scale nuclear projects in Australia is not
straightforward due to significant variations in labour costs,
workforce expertise, governance and standards. As a result, the
source country for large-scale nuclear data must be carefully
selected.
GenCost
estimates of the cost large-scale nuclear are based on South Korea’s
successful continuous nuclear building program and adjusted for
differences in Australian and South Korean deployment costs by
investigating the ratio of new coal generation costs in each country.
The
large-scale nuclear costs it reported could only be achieved if
Australia commits to a continuous building program, following the
construction of an initial higher-cost unit or units. Initial units
of all first-of-a-kind technologies in Australia are expected to be
impacted by higher costs. A first-of-a-kind cost premium of up to 100
per cent cannot be ruled out. These assumptions remain for the draft
GenCost 2024-25 Report.
Life
of the investment
GenCost
recognises the difference between the period over which the capital
cost is recovered (the economic life) and operational life of an
asset.
GenCost
assumes a 30-year economic life for large-scale nuclear plants, even
though they can operate for a longer period. It is standard practice
in private financing that the capital recovery period for an asset is
less than its full operational life, similar to a car or house loan.
For power stations, warranties expire and refurbishment costs may
begin to fall around the 30-year mark. As a result, we use a 30-year
lifespan in our cost calculations.
After
the final GenCost 23-24 Report was released in May 2024, nuclear
proponents clarified they will seek to achieve longer capital
recovery periods, closer to the operational life, by using public
financing to realise potential cost advantages.
The
draft GenCost 2024-25 Report has calculated those cost advantages for
the first time (using a 60-year period), finding that there are no
unique cost advantages arising from nuclear technology’s long
operational life. Similar cost savings are achievable from
shorter-lived technologies, even accounting for the fact that shorter
lived technologies need to be built twice. This is because
shorter-lived technologies such as solar PV and wind are typically
available at a lower cost over time, making the second build less
costly.
The
lack of an economic advantage for long-lived nuclear is due to
substantial nuclear refurbishment costs to achieve long operational
life safely. Without new investment it cannot achieve long
operational life. Also, because of the long lead time in nuclear
deployment, cost reductions in the second half of their operational
life are not available until around 45 years into the future,
significantly reducing their value to consumers compared to other
options.
Current
figures for Small Modular Reactors (SMRs)
The
Carbon Free Power Project was a nuclear SMR project in the United
States established in 2015 and planned for full operation by 2030. It
was the first project to receive design certification from the
Nuclear Regulatory Commission, an essential step before construction
can commence. In November 2023, the project was cancelled following a
56 per cent increase in reported costs.
Despite
being cancelled, this project was the first and currently remains the
only project to have provided cost estimates for a real commercial
venture with detailed data. Until now, most sources were for
theoretical projects only.
"The
main area of uncertainty with nuclear SMR has been around capital
costs," Paul said.
"The
Carbon Free Power Project provided more confidence about the capital
costs of nuclear SMR and the data confirms it is currently a very
high-cost technology."
"We
don’t disagree with the principle of SMRs. They attempt to speed up
the building process of nuclear plants using standardised components
in a modular system and may achieve cost reductions over time.
However, the lack of commercial deployment has meant that these
potential savings are not yet verified or realised," Paul said.
Time
is running out for the energy transition
Nuclear
power has an empty development pipeline in Australia. Given the state
and federal legal restrictions, this is not surprising.
But
even if nuclear power was more economically feasible, its slow
construction and its additional pre-construction steps, particularly
around safety and security, limit its potential to play a serious
role in reducing emissions within the required timeframe.
In
the last five years, the global median construction time for nuclear
has been 8.2 years. Furthermore, in the last ten years, no country
with a similar level of democracy to Australia have been able to
complete construction in less than 10 years. Overall, it will take at
least 15 years before first nuclear generation could be achieved in
Australia.
"The
electricity sector is one of our largest sources of emissions and
delaying the transition will make the cost of addressing climate
change higher for all Australians," Paul said.
"The
electricity sector must rapidly lead the transition to net zero, so
other sectors like transport, building and manufacturing can adopt
electrification and cut their emissions."
The
final GenCost
2024-25
report will be released in the second quarter of 2025,
after the close of final consultations on 11 February 2025.
The Draft
GenCost 2024-25
can be found at
https://www.csiro.au/en/research/technology-space/energy/GenCost
