CSIRO refutes Coalition case nuclear is cheaper than renewable energy due to operating life | Nuclear power

The CSIRO has rejected Coalition arguments that nuclear power plants could be developed in Australia in less than 15 years and that their long operating life would make them cheaper than other options.

Instead, it has again found that “firmed” solar and wind are the cheapest new electricity options.

A draft GenCost report – the national science agency’s annual assessment of electricity costs – dismissed arguments by nuclear proponents that the technology’s economics have not been adequately considered.

The opposition leader, Peter Dutton, said he was preparing to release further details of his proposal this week to eventually build seven taxpayer-funded nuclear power plants, arguing it would be cheaper than renewable energy once the costs of firming technology – mostly energy storage and transmission lines – were included.

But CSIRO’s analysis, conducted with the Australian Energy Market Operator (Aemo), found several claims by nuclear advocates supporting the technology and attacking renewable energy were not accurate.

It calculated the cost of electricity generated on a grid dominated by renewable energy with firming support in 2030 would be at least 50% cheaper than the cost from a potential nuclear energy plant. Electricity from small modular nuclear reactors, which do not yet exist commercially, would be significantly more expensive again.

CSIRO found the capital cost of building large-scale batteries and photovoltaic solar farms was forecast to fall by 20% and 8%, respectively, this financial year due to the scale of investment under way in China and easing inflationary pressures. The capital cost of building a windfarm is expected to rise 2%, less than the past two years.

It said the expected cost of building a 1,000-megawatt nuclear plant in Australia had increased to about $9bn once an industry was established. It found the additional costs involved in building a first-of-a-kind nuclear plant meant it could have up to a 100% premium to this, pushing the potential price tag to $18bn.

Dutton and the opposition’s climate change and energy spokesperson, Ted O’Brien, have criticised previous GenCost reports, arguing they had not properly considered the cost of a nuclear plant spread across its potential 60-year operational life.

But CSIRO’s chief energy economist and the report’s lead author, Paul Graham, said it found nuclear technology’s longer operational life compared with renewable energy did little to change the economics and gave it “no unique cost advantage”. He said this largely because nuclear plants need substantial re-investment during their life to survive that long.

“Similar cost savings can be achieved with shorter-lived technologies, including renewables, even when accounting for the need to build them twice,” he said.

Nuclear advocates have argued that GenCost treated nuclear plants unfairly because it assumed they would run between 53% and 89% of the time, rather than 93% of the time, as they do in the US.

CSIRO’s report said it had examined the issue and found the 53-89% range was fair. It said it was possible for nuclear plants to run at more than 90% of their capacity, but the global average capacity factor for nuclear was 80% and 10% of plants ran less than 60% of the time.

The agency said it preferred to rely on Australian data, and the closest comparison to nuclear plants was black coal generators – the “baseload” plants that the Coalition has said nuclear would largely replace. Australian black coal stations have run at only 59% of their capacity over the past decade.

The CSIRO found that nuclear construction times had increased over the past five years from six years to 8.2 years, which meant the total time to develop a generator was between 12 and 17 years, with western democracies such as the US and Finland at the top end.

The science agency concluded the development time in Australia would be at least 15 years, meaning a plant would not be built before 2040 – later than the Coalition’s claim of 2035 or 2037, depending on the type of technology chosen.

The Coalition has said it would slow the growth of large-scale renewable energy and burn more fossil fuels – coal and gas – until it could develop a nuclear industry. This would increase Australia’s greenhouse gas emissions. Dutton has said he would abolish Australia’s legislated 43% emissions reduction target for 2030.

Experts, including the chair of the Australian Energy Regulator, Clare Savage, have said Australia’s ageing coal fleet could not keep operating until nuclear energy was possible in Australia and grid reliability would be at risk if it was expected to fill the gap. Analysts have also said using more gas-fired power would push up bills. Gas is the most expensive form of energy used in the national grid.

The Coalition’s plan will rely on analysis by the economist Danny Price from consultants Frontier Economics, who advised the federal Coalition on climate policy under Tony Abbott and Malcolm Turnbull.

The first stage of Price’s analysis argued Aemo had substantially underestimated the cost of running the grid predominantly on renewable energy and storage, mostly because the agency had adjusted for inflation, a standard accounting practice. The Coalition and News Corp claimed this disagreement over accounting methods was evidence of a “$500bn green hole” in Labor’s plan.

The GenCost report is open for public consultation until February.