The Coalition’s nuclear energy plan takes a sharp turn away from a cheaper, cleaner future | Simon Holmes à Court
On the front cover of Frontier Economics’ costings of the Coalition’s nuclear policy is a stock photo entitled fork in road, implying that we’re at some kind of juncture where we must decide between a nuclear or renewables path.In 1969 John Gorton’s Liberal government chose the nuclear path with the construction of the Jervis Bay nuclear power plant project. As Gorton later said, “We were interested in this thing because it could provide electricity to everybody and it could, if you decided later on, it could make an atomic bomb.”In 1971 Billy McMahon’s Liberal government cancelled the project after a review deemed it too expensive. The cleared site became a massive car park at Murray’s Beach.No nuclear power station was built in the intervening 27 years before John Howard introduced a federal ban on nuclear power. There were no attempts to overturn the ban during the next 18 years of Liberal government.At the start of the 1970s we were indeed at an energy crossroads, we took the road towards coal, and as one of those who’d like to pass a safe climate on to the next generation, I wish we had taken the road towards nuclear instead. Our emissions would be dramatically lower.In 1997, just before he banned nuclear, Howard took us down a different path – he announced the mandatory renewable energy target, a plan to add a tiny slice of renewable energy to our sliver of hydroelectricity. In 2009, in what was perhaps the last act of bipartisanship on domestic energy, parliament agreed to massively increase the target to 20% renewables by 2020. Today we’re just shy of 40%, and the government’s policy is to double it again by the end of this decade.Howard’s modest renewable energy target was surely more successful than he ever intended, in great contrast to the 22 failed energy policies the Coalition famously held during its last tenure. Its latest energy policy began shortly after the last election, when in August 2022 Peter Dutton tasked Ted O’Brien to “examine the potential for advanced and next-generation nuclear technologies to contribute to Australia’s energy security and reduce power prices”. We had to wait until Friday for the costings, published after many of the country’s journalists had filed their last stories for the year.Here are four reasons why in my opinion the costings, prepared by Frontier Economics, completely undermine the Coalition’s 23rd energy plan:1. The Coalition plans for lower household income and the collapse of heavy industryOf the three scenarios the independent market operator Aemo published in June, the Coalition has chosen what’s known as progressive change, giving Aemo’s preferred scenario, known as step change, to Labor.Under the Coalition’s scenario, large industrial load collapses in 2030, signalling the closure of smelters and presumably datacentres – goodbye AI! By 2050 industrial demand is down by 62%. Over the 25-year modelling period, household disposable income will be down a whopping $2.8tn more compared to Labor’s plan.With a pivot away from electrification, under the Coalition’s plan Australians will burn an additional 273bn litres of petrol and diesel through to 2050 costing $465bn and an additional 1,831 PJ of gas costing at least $36bn. Even if the Coalition’s purported cost savings were credible, this $501bn would mean that Australia’s total energy bill would be considerably higher.Should Australia go nuclear? Why Peter Dutton's plan could be an atomic failure – videoOn top of this, the Coalition’s plan would see a 61% reduction in rooftop solar, meaning that millions fewer Australians would be able to slash their electricity bills.Currently we are paying hundreds of millions to three coal power stations to stay open for a couple of years. The Coalition budgets nothing to coax the other 14 coal power stations on the east coast to extend their lives by a decade or more.Economist Steven Hamilton has calculated that the Coalition’s plan would see the power sector emit about 1,000 million tonnes of carbon dioxide above our current trajectory. The Coalition’s crabwalk away from electrification would add a further 723 MtCO2.The Coalition has chosen an energetically and fiscally poorer Australia with higher energy bills and higher emissions. I’ve long suspected that the Coalition hasn’t bothered to read or understand Aemo’s last seven years of modelling, and this pretty much clinches it.2. The analysis lowballs nuclear’s cost then punts it over the horizonFrontier appears to have made the rookie error of confusing the nuclear industry term nth of a kind (Noak) with next of a kind. The Noak cost is not what we’d pay for the next reactor built, but a cost target we’d theoretically hit eventually if we got really good at building them. If you build, say, eight identical reactors on a site, the last one should cost a lot less – and provided nothing goes wrong, theoretically you’d approach the Noak cost.skip past newsletter promotionSign up to Breaking News AustraliaGet the most important news as it breaksPrivacy Notice: Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Privacy Policy. We use Google reCaptcha to protect our website and the Google Privacy Policy and Terms of Service apply.after newsletter promotionIf Australia were to achieve Frontier’s costs, it’d be the cheapest nuclear built in the western world this century, by a wide margin. Frontier’s head, Danny Price, told the ABC on Friday that he wouldn’t put himself in the category of a nuclear expert, so maybe it’s no surprise that the modelling appears to confuse Noak with next-of-a-kind pricing.Frontier are, however, modelling experts, so the next thing they did was with eyes wide open. The modelling pushes the vast majority of the cost of nuclear beyond 2050, so if the program is delayed it would appear cheaper and if the cost triples, it’d barely show in the analysis. Nice work!Next, Frontier assumes that building nuclear reactors will get cheaper every year – what’s known as a positive learning rate. In reality, the US nuclear industry is famous for its negative learning rate – is that a forgetting rate? – meaning that Noak costs are more theory than practice.3. The Coalition’s unrealistic schedule leaves us short of powerAs I told a recent nuclear inquiry – the eighth since 2005 – there’s not a hope in hell that Australia can deliver its first nuclear power reactor producing power before 2040. Even with fantastical assumptions, such as a Coalition that controls both Houses of Parliament, states quickly overturning their bans, the first project sailing through environmental approvals and court challenges and fast build times, it’s almost impossible to achieve the first nuclear kilowatt hour before 2044.Czechia, a country with 66 years of nuclear experience, embarked on a nuclear construction project in 2022. If all goes well the first unit will start commercial operation in 2038. Australia is at least six years behind this project, and we face many more barriers, so 2044 for our first really does seem optimistic.4. Our grid doesn’t have room for these reactorsFrontier’s analysis assumes that Australia builds 13.3GW of nuclear, equivalent to 12 AP-1000 reactors, and that these run flat out when they’re not off for refuelling and maintenance.The problem is that for much of the year Australia uses less power. Our minimum system load (MSL) is already below 10GW and on its way down to 2GW around the end of this decade, thanks to rooftop solar. The inflexible manner in which the Coalition plans to run the reactors would result in masses of excess power and require that we turn off massive amounts of renewables, both utility-scale and rooftop solar. Alternatively we could soak up the excess nuclear energy with gigantic battery farms.Over the weekend I sent a polite text message to Danny Price, the consultant behind the Coalition’s modelling, explaining that I’m not a newcomer to nuclear and outlining three of the above flaws. Price replied:“Thanks for sending me your credentials and your generous offer to set me straight, but I will decline. I’ve got all the help and technical advice I need. I know you are just protecting you (sic) financial interest. I get it, but please don’t contact me again.”Contrary to Coalition belief, I am not a large investor in renewable energy (nor am I a billionaire). This shows the depths of the culture wars we’re in – where impugned motives trump rational discussion. I took the opportunity to reply:“Since you misinterpreted my motives, allow me this: Less than 2% of my investments are in Australian renewables – similar to millions of superannuation accounts I’m advised – and if the renewables transition slows, the value of those investments would likely increase.”If we’re at a crossroads it’s one where the Coalition took a sharp turn, based on what looks like to me some really sloppy advice. Let’s hope that Australians stay on the path to a cheaper, cleaner and more prosperous energy future.
After 22 failed energy policies, the Coalition is being guided by a roadmap to higher bills and higher emissionsFollow our Australia news live blog for latest updatesGet our breaking news email, free app or daily news podcastOn the front cover of Frontier Economics’ costings of the Coalition’s nuclear policy is a stock photo entitled fork in road, implying that we’re at some kind of juncture where we must decide between a nuclear or renewables path.In 1969 John Gorton’s Liberal government chose the nuclear path with the construction of the Jervis Bay nuclear power plant project. As Gorton later said, “We were interested in this thing because it could provide electricity to everybody and it could, if you decided later on, it could make an atomic bomb.”Sign up for Guardian Australia’s breaking news email Continue reading...
On the front cover of Frontier Economics’ costings of the Coalition’s nuclear policy is a stock photo entitled fork in road, implying that we’re at some kind of juncture where we must decide between a nuclear or renewables path.
In 1969 John Gorton’s Liberal government chose the nuclear path with the construction of the Jervis Bay nuclear power plant project. As Gorton later said, “We were interested in this thing because it could provide electricity to everybody and it could, if you decided later on, it could make an atomic bomb.”
In 1971 Billy McMahon’s Liberal government cancelled the project after a review deemed it too expensive. The cleared site became a massive car park at Murray’s Beach.
No nuclear power station was built in the intervening 27 years before John Howard introduced a federal ban on nuclear power. There were no attempts to overturn the ban during the next 18 years of Liberal government.
At the start of the 1970s we were indeed at an energy crossroads, we took the road towards coal, and as one of those who’d like to pass a safe climate on to the next generation, I wish we had taken the road towards nuclear instead. Our emissions would be dramatically lower.
In 1997, just before he banned nuclear, Howard took us down a different path – he announced the mandatory renewable energy target, a plan to add a tiny slice of renewable energy to our sliver of hydroelectricity. In 2009, in what was perhaps the last act of bipartisanship on domestic energy, parliament agreed to massively increase the target to 20% renewables by 2020. Today we’re just shy of 40%, and the government’s policy is to double it again by the end of this decade.
Howard’s modest renewable energy target was surely more successful than he ever intended, in great contrast to the 22 failed energy policies the Coalition famously held during its last tenure. Its latest energy policy began shortly after the last election, when in August 2022 Peter Dutton tasked Ted O’Brien to “examine the potential for advanced and next-generation nuclear technologies to contribute to Australia’s energy security and reduce power prices”. We had to wait until Friday for the costings, published after many of the country’s journalists had filed their last stories for the year.
Here are four reasons why in my opinion the costings, prepared by Frontier Economics, completely undermine the Coalition’s 23rd energy plan:
1. The Coalition plans for lower household income and the collapse of heavy industry
Of the three scenarios the independent market operator Aemo published in June, the Coalition has chosen what’s known as progressive change, giving Aemo’s preferred scenario, known as step change, to Labor.
Under the Coalition’s scenario, large industrial load collapses in 2030, signalling the closure of smelters and presumably datacentres – goodbye AI! By 2050 industrial demand is down by 62%. Over the 25-year modelling period, household disposable income will be down a whopping $2.8tn more compared to Labor’s plan.
With a pivot away from electrification, under the Coalition’s plan Australians will burn an additional 273bn litres of petrol and diesel through to 2050 costing $465bn and an additional 1,831 PJ of gas costing at least $36bn. Even if the Coalition’s purported cost savings were credible, this $501bn would mean that Australia’s total energy bill would be considerably higher.
On top of this, the Coalition’s plan would see a 61% reduction in rooftop solar, meaning that millions fewer Australians would be able to slash their electricity bills.
Currently we are paying hundreds of millions to three coal power stations to stay open for a couple of years. The Coalition budgets nothing to coax the other 14 coal power stations on the east coast to extend their lives by a decade or more.
Economist Steven Hamilton has calculated that the Coalition’s plan would see the power sector emit about 1,000 million tonnes of carbon dioxide above our current trajectory. The Coalition’s crabwalk away from electrification would add a further 723 MtCO2.
The Coalition has chosen an energetically and fiscally poorer Australia with higher energy bills and higher emissions. I’ve long suspected that the Coalition hasn’t bothered to read or understand Aemo’s last seven years of modelling, and this pretty much clinches it.
2. The analysis lowballs nuclear’s cost then punts it over the horizon
Frontier appears to have made the rookie error of confusing the nuclear industry term nth of a kind (Noak) with next of a kind. The Noak cost is not what we’d pay for the next reactor built, but a cost target we’d theoretically hit eventually if we got really good at building them. If you build, say, eight identical reactors on a site, the last one should cost a lot less – and provided nothing goes wrong, theoretically you’d approach the Noak cost.
after newsletter promotion
If Australia were to achieve Frontier’s costs, it’d be the cheapest nuclear built in the western world this century, by a wide margin. Frontier’s head, Danny Price, told the ABC on Friday that he wouldn’t put himself in the category of a nuclear expert, so maybe it’s no surprise that the modelling appears to confuse Noak with next-of-a-kind pricing.
Frontier are, however, modelling experts, so the next thing they did was with eyes wide open. The modelling pushes the vast majority of the cost of nuclear beyond 2050, so if the program is delayed it would appear cheaper and if the cost triples, it’d barely show in the analysis. Nice work!
Next, Frontier assumes that building nuclear reactors will get cheaper every year – what’s known as a positive learning rate. In reality, the US nuclear industry is famous for its negative learning rate – is that a forgetting rate? – meaning that Noak costs are more theory than practice.
3. The Coalition’s unrealistic schedule leaves us short of power
As I told a recent nuclear inquiry – the eighth since 2005 – there’s not a hope in hell that Australia can deliver its first nuclear power reactor producing power before 2040. Even with fantastical assumptions, such as a Coalition that controls both Houses of Parliament, states quickly overturning their bans, the first project sailing through environmental approvals and court challenges and fast build times, it’s almost impossible to achieve the first nuclear kilowatt hour before 2044.
Czechia, a country with 66 years of nuclear experience, embarked on a nuclear construction project in 2022. If all goes well the first unit will start commercial operation in 2038. Australia is at least six years behind this project, and we face many more barriers, so 2044 for our first really does seem optimistic.
4. Our grid doesn’t have room for these reactors
Frontier’s analysis assumes that Australia builds 13.3GW of nuclear, equivalent to 12 AP-1000 reactors, and that these run flat out when they’re not off for refuelling and maintenance.
The problem is that for much of the year Australia uses less power. Our minimum system load (MSL) is already below 10GW and on its way down to 2GW around the end of this decade, thanks to rooftop solar. The inflexible manner in which the Coalition plans to run the reactors would result in masses of excess power and require that we turn off massive amounts of renewables, both utility-scale and rooftop solar. Alternatively we could soak up the excess nuclear energy with gigantic battery farms.
Over the weekend I sent a polite text message to Danny Price, the consultant behind the Coalition’s modelling, explaining that I’m not a newcomer to nuclear and outlining three of the above flaws. Price replied:
“Thanks for sending me your credentials and your generous offer to set me straight, but I will decline. I’ve got all the help and technical advice I need. I know you are just protecting you (sic) financial interest. I get it, but please don’t contact me again.”
Contrary to Coalition belief, I am not a large investor in renewable energy (nor am I a billionaire). This shows the depths of the culture wars we’re in – where impugned motives trump rational discussion. I took the opportunity to reply:
“Since you misinterpreted my motives, allow me this: Less than 2% of my investments are in Australian renewables – similar to millions of superannuation accounts I’m advised – and if the renewables transition slows, the value of those investments would likely increase.”
If we’re at a crossroads it’s one where the Coalition took a sharp turn, based on what looks like to me some really sloppy advice. Let’s hope that Australians stay on the path to a cheaper, cleaner and more prosperous energy future.