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The Guardian - AU
The Guardian - AU
National
Graham Readfearn and Josh Butler

Five questions Peter Dutton needs to answer about his energy plans

Peter Dutton in a hard hat
Peter Dutton claims ‘[electricity] prices will be cheaper under us’ pointing to Coalition-backed modelling of a plan to build nuclear sites at seven locations around Australia. Photograph: Mick Tsikas/AAP

Peter Dutton swerved questions on Monday over the Coalition’s nuclear electricity modelling and what his energy plans could mean for energy-intensive industries and how it could bring down household electricity bills.

Dutton rejected advice from the federal energy department that Liberal-commissioned modelling may have vastly underestimated the costs and likely complications of setting up a nuclear power industry in Australia, dismissing energy minister Chris Bowen’s claims as “partisan”.

“Why would Chris Bowen wait until we’re into caretaker mode to release this so called report from the department? Why would he have not released it three months ago?” Dutton said, speaking to reporters in Tomago in the Hunter region of New South Wales.

Dutton appeared unprepared or unwilling to say how much waste a proposed nuclear plant nearby would produce each year, declining to repeat his earlier claims that small nuclear reactors would spit out only a Coke can worth of waste.

Dutton’s energy plans, including a proposal to create a so called “gas reserve” to ease supply pressure and costs on the east coast, have dominated the first few days of the federal election campaign.

Here are some key takeaways on the Coalition’s energy plans.

Dutton claims he can reduce electricity prices, but can’t explain how

On Monday, Dutton said “[electricity] prices will be cheaper under us” pointing to Coalition-backed modelling of a plan to build nuclear sites at seven locations.

Dutton claimed that because the modelling, carried out by Frontier Economics, showed an electricity system – including transmission infrastructure like poles and wires and storage like batteries – that was 44% cheaper than Labor’s preferred plan, this would mean cheaper power prices.

But Frontier’s modelling did not look at the effect of the Coalition’s plan on the prices households and businesses would pay.

Dutton also promised a “national gas reserve” would get the cost of gas down to $10 a gigajoule by the end of this year.

The latest ACCC report shows the average east coast retail cost gas was $14.51 a gigajoule in the last six months of 2024, compared with $19.84 across 2023.

When asked if the gas plan would bring down electricity prices, Dutton has said consultancy firm Frontier Economics had carried out analysis “and it does provide some indication”. But the Coalition has so far not released this modelling.

Analyst Tristan Edis at Green Energy Markets has said even if the Coalition could get gas prices down to $10 a gigajoule, “it still leaves us with expensive electricity if we are going to significantly increase our reliance on gas”.

Replacing coal with gas power instead of with renewables would still put upward pressure on prices, he said

A new gas-fired power plant would need to charge about $170 a MW-hour to recover its costs if gas cost $10 a gigajoule, compared with CSIRO estimates of between $40 and $80 a MW-hour for wind and solar.

Dutton wants more gas, but can’t say how the Coalition will get it

Dutton has said the Coalition’s plan will look to divert between 50 and 100 petajoules of gas into the domestic market from LNG exports, and that this would come from spot sales.

That means the Coalition is considering uncontracted gas that would otherwise be sold overseas. Dutton has said this would be done before the end of the year.

The Australian Energy Market Operator’s latest report on gas shows supply gaps could start to emerge on the east coast in the winter of 2028, with annual shortfalls possible from 2029.

But the forecast annual shortfalls remain well below 40pj until at least 2032 in AEMO’s latest report, suggesting the Coalition is looking to force an oversupply of gas on to the market.

The Coalition has not explained how it would force or cajole gas companies into selling their uncontracted gas domestically.

Experts have said the Coalition appears to be planning a major intervention in the market that could undermine or collapse the spot market for gas that is now used to cover unforeseen shortfalls in the electricity market.

Former ACCC chair Rod Sims told the Guardian: “Gas producers want high prices, not low prices, but they’re not going to do anything to lower prices. So, how do you force them to do it?

“How do you get [producers] to do what’s not in their economic interest to do?”

Dutton won’t say what the future is for big industry under nuclear

Modelling of the Coalition’s nuclear plan is based on a scenario developed by the Australian Energy Market Operator known as “progressive change” that assumes an electricity system producing 31% less electricity than Labor’s preferred renewables-based approach.

Dr Dylan McConnell, an energy systems expert at UNSW, said: “The version of the future that the Coalition is relying on is one that has aluminium smelters closing. It assumes a big reduction in large industrial loads.”

Dutton’s main press conference on Monday was in the town of Tomago, home to Australia’s biggest aluminium smelter.

Dutton was asked how his plan would affect businesses, but swerved the question, instead repeating a claim that people’s electricity bills had gone up because of renewable energy, even though experts reject that claim.

Dutton is not being clear on how much nuclear waste reactors would produce

Dutton has previously said small modular reactors, which are not in commercial use anywhere in the world, would produce a Coke can of waste each year.

The Nine newspapers reported last year it would more likely be 30 tonnes of waste for a large plant, which Hunter is slated to be.

Pressed several times on Monday about how much waste a large-scale nuclear plant in the Hunter would produce, he would only say “it depends on the size of the reactor”.

How much would nuclear plants actually cost? Likely more than the Coalition says.

Dutton rejected selected analysis released by Labor and sourced from the energy department that the Coalition’-backed nuclear modelling had vastly underestimated the cost of building nuclear reactors.

The Coalition-backed modelling assumed a 1GW reactor would cost $10bn to build, compared to a CSIRO estimate of $8.6bn.

But CSIRO’s figure assumed that $8.6bn cost was for a plant built after a nuclear program was fully established. CSIRO has warned the cost of the first reactor could be double this amount.

Other western democracies that have recently commissioned new nuclear projects have seen major cost blow-outs of between double and six times initial estimates.

A US Department of Energy report in September found that country’s latest 1GW nuclear plants cost A$23.5bn.

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