While the Coalition faces an uphill battle in getting its nuclear ambitions off the ground, including having to amend state and federal laws, researchers warn nuclear energy alone isn’t a silver bullet for decarbonisation.
Earlier this month, Opposition Leader Peter Dutton outlined a plan to put Australia on the nuclear map with the construction of seven nuclear power plants at the sites of former coal plants.
“The Coalition believes Australia must have a balanced energy mix to deliver cheaper, cleaner and consistent 24/7 electricity. Ninety per cent of baseload electricity, predominantly coal-fired power stations, is coming to the end of life over the next decade,” he said in a statement.
“Nuclear energy for Australia is an idea whose time has come.”
However, BloombergNEF’s latest report casts doubt on Australia’s nuclear future, emphasising that any nuclear development would need to complement existing renewable capabilities like wind and solar.
“Australia has exploded into furious political debate over the future of nuclear power. Despite the technology having been outlawed in the country for more than 25 years, the federal opposition has proposed seven sites for new plants to be operational as soon as 2035,” the report stated.
“Legal hurdles aside, an abundance of high-quality renewables and an ageing coal fleet stand in the way of Australia’s nuclear industry before it even starts.”
It pointed out that Australia is a leader in decentralised energy generation, thanks to its vast land and high-quality renewable energy resources, making it one of the world’s most cost-effective locations for building new wind and solar projects. Currently, renewable energy meets an average of 60 per cent of midday electricity demand in the east coast market.
Meanwhile, coal, which has been the backbone of Australia’s power system for decades, is rapidly declining. BloombergNEF noted that current analysis suggests 83 per cent of the country’s remaining coal generators could retire by 2035 due to worsening economics and decarbonisation targets.
“To ensure a stable supply of electricity, new generation capacity must be built to replace existing supply. Currently, federal and state governments are relying on a mix of low-cost renewables, storage, and peaking capacity to come online by the early 2030s,” it stated.
“Nuclear alone will not be enough to plug the gap – it will simply take too long to come online.”
Additionally, it warned that nuclear energy will carry a hefty price tag, especially since Australia does not have an existing nuclear industry.
“BNEF would expect any new nuclear generators in the country to be on the higher end of the global cost scale – making it very expensive compared to existing technologies in the local market,” it said.
“Any new nuclear project would also face first-of-a-kind cost impediments across regulatory, policy, legal, supply chains, and procedural processes (a common phenomenon new entrant technologies face until they achieve scale) – making it extremely expensive compared to existing technologies in the market.”
Similarly, BloombergNEF noted that small modular nuclear reactors (SMRs) remain expensive, projecting that their capital expenditure per megawatt-hour can be 2–3.5 times higher than that of large-scale conventional nuclear plants.
According to BloombergNEF, net zero is a “herculean task,”; however, it can still be achieved without nuclear power. Meanwhile, nuclear will not be able to bring Australia’s power system to net zero without wind and solar.
“While nuclear can provide a valuable, dispatchable, low-carbon source of electricity to the market, if developing it serves as a distraction from scaling up renewable energy supply, it would sound the death knell for Australia’s net-zero ambitions,” it said.
Australia too far back on the nuclear curve
Earlier this week, Nanuk Asset Management CIO Thomas King also outlined that Australia’s nuclear ambitions would have made economic sense five decades ago.
In the current context, he said, the truth is the financial viability of nuclear energy is simply “not as compelling”.
“At that time, costs were significantly lower and, as a country, we were better positioned to deliver projects of this nature. However, economic considerations have changed,” King told InvestorDaily.
“Cheaper sources of generation have emerged and will continue to get cheaper over the next two decades and the costs and regulatory hurdles for nuclear have risen substantially.”
Additionally, King highlighted concerns regarding the higher costs associated with operating a nuclear plant.
“If you do have a nuclear plant in operation, the operating costs are modest. They’re not zero, but they’re modest, and so nuclear plants that were built 30–50 years ago in an environment where regulations made building them much cheaper, and those assets are now depreciated, they produce relatively cheap baseload electricity.
“If you build a new power plant today, it’s going to be several times more expensive than those older plants to build, and by definition, it will only be economically viable if you’re able to sell the power at very high cost and that is only if you are able to utilise the assets at a very high rate,” he pointed out.
