The national science agency has released a report reaffirming the likely high costs of nuclear power in Australia, at the beginning of a week when the Coalition has promised it will finally reveal the cost of its controversial plan to build taxpayer-funded reactors.
The CSIRO’s GenCost report, produced annually in collaboration with the Australian Energy Markey Operator (AEMO), has attracted criticism – some of it extreme – by nuclear advocates who argue reactors would cost much less, and be built much quicker, than the CSIRO says.
On Monday, Peter Dutton waved away the latest GenCost analysis, contained in a draft released for consultation, and insisted nuclear power could “bring the costs down” for electricity consumers.
So what does GenCost actually say about the cost of electricity and the Coalition’s key criticisms?
How do we work out the cost of nuclear power?
The GenCost report calculates the cost of electricity needed to recover capital costs and give a return on investment over 30 years using a metric known as the levelised cost of electricity (LCOE).
GenCost’s conclusion? Solar and wind power, including the additional costs, such as energy storage and transmission lines to integrate them into the grid, remains the cheapest option.
Nuclear advocates have argued calculating the LCOE over a 30-year time period doesn’t reflect how nuclear plants can operate for at least twice that long, with plans in the US to extend the life of some reactors to as long as 80 years.
CSIRO said accounting for a 60-year life reduced the costs of nuclear by about 9% compared with calculating over 30 years, but found other technologies such as solar and wind saw similar cost reductions of about 7% under the same approach.
For example, about 30% of the initial cost of a nuclear plant has to be invested again once plants get to about 40 years old.
Plus – the cost of building nuclear plants is not expected to fall in the future at anything like the rate of solar, wind and batteries.
The cost of a solar farm operating for 60 years would need to include total replacement of panels and perhaps mounting systems after 30 years, but the rebuild costs would be lower in the future.
“Long operational life provides no major financial benefit to electricity customers relative to shorter-lived technologies,” the report found.
How soon could Australia have nuclear power?
Not until at least next decade, GenCost found. “A practical operation date would be the 2040s, by which time the costs of other technologies will have fallen further.”
Before construction even began, a future Coalition government would need to navigate law changes on several state bans on nuclear power as well as lift the federal ban, facing likely opposition in the Senate.
But the Coalition has claimed a small modular reactor – which is not yet commercially available – could be producing electricity by 2035, with a first large-scale reactor working by 2037.
Overall, GenCost found bringing in regulations, legislation and then planning, financing and permitting for nuclear, followed by construction, would take at least 15 years in Australia.
How does this compare with other countries?
The Coalition has often pointed to the United Arab Emirates as a country with no previous nuclear experience which built large reactors in less than 15 years
GenCost says the UAE’s 12-year timeline for planning and constructing nuclear plants “is unlikely to be achievable in Australia”. Why? Because Australia is a “democracy”, the report says, “and therefore it will likely have processes that require greater consultation than in the UAE”.
Construction times globally for reactors had risen over the past five years, the report said, from six years to 8.2 years. That pushes the total development time to between 12 and 17 years, with western democracies taking the longest.
Would we have the power available to build nuclear reactors?
According to the latest blueprint for development of the national electricity market, produced by AEMO, as many as 90% of the market’s coal-fired power stations are expected to be closed before 2035, “and the entire fleet before 2040”.
Even if one nuclear plant could be running by 2037, the Coalition has not said how quickly it expects further reactors to be built, how large the plants would be, or detail how demand for power could be met until nuclear plants are turned on.
The Coalition has said Australia could rely on more gas and that coal plants could run for longer, while also seeing more renewables entering the grid.
What about capacity factor?
Capacity factor refers to the amount of electricity generated by a plant versus the theoretical capacity of the same plant.
Some nuclear advocates have claimed GenCost should use a 93% capacity factor for nuclear because this is what is achieved by US reactors. Plants that generate for longer recover their costs faster.
But the CSIRO report says comparable baseload generation in Australia – coal – has only achieved factors of 59% on average over the past decade.
The report says a “prudent investor (government or private) must prepare for all plausible eventualities” and says the global average capacity factor for nuclear is 80%.
“On international data alone, the proposition of only considering a 93% capacity factor is not supported by the evidence,” the report says.
