Nuclear energy would cost twice as much as renewables, CSIRO says

Building a large-scale nuclear power plant in Australia would cost at least $8.5 billion, take 15 years to deliver and produce electricity at roughly twice the cost of renewable sources, the country’s leading scientific institution has found.

In a report that has for the first time compared conventional nuclear power with other options in Australia, the CSIRO concluded that the technology’s costs were broadly similar to gas- and black coal-fired generation with carbon capture and storage.

But the CSIRO’s GenCost report noted that nuclear was still likely to be at least 50 per cent more expensive than large-scale wind and solar power backed by ‘firming’ technologies such as batteries.

And it warned that the true costs of utility-scale nuclear were likely to be far higher still, given the major risks of cost and time-frame blowouts for a technology that had never been built in Australia before.

It said a nuclear power plant in Australia would be a “first of a kind” and, as such, “premiums of up to 100 per cent cannot be ruled out”.

“We did a lot of work to determine what nuclear power would cost in Australia,” Paul Graham, chief economist of the CSIRO’s energy business unit, said.

“We’ve previously reported on small modular reactors.

“But this time, we did an update and looked at the cost of large-scale nuclear reactors, and they’re cheaper — in the order of $150 to $250 a megawatt hour.

“That’s still one-and-a-half to two times the cost of renewables.

“So they are still higher in cost than deploying solar and wind.”

As part of its process, the CSIRO looks at technologies using a measure called the ‘levelised cost of energy’, which calculates how much money a generator would need for its power to break even.

The GenCost report is prepared each year by the CSIRO and the Australian Energy Market Operator (AEMO). It gives an updated estimate of costs for building new electricity generation and storage projects.

Debate over nuclear role in Australia

The report comes amid a debate in Australia about what part — if any — nuclear power should play in Australia’s energy transition.

Unlike other sources of conventional power such as coal and gas, nuclear energy can run around the clock while emitting virtually no greenhouse gases.

The federal Coalition has seized on the technology as a solution to help Australia wean itself off fossil fuels and decarbonise by the middle of the century.

While the opposition at first touted the prospect of so-called small modular reactors that were just a few hundred megawatts of capacity in size, it has since pivoted towards large-scale plants.

Opposition Leader Peter Dutton is yet to release his official policy but has floated the idea of building a fleet of large-scale nuclear reactors around the country on the site of retiring coal-fired plants.

But federal energy minister Chris Bowen said the CSIRO report provided further confirmation that renewables were the cheapest form of energy and that nuclear was “by far the most expensive form of energy”.

“So nuclear is slow and expensive and is risky when it comes to the reliability of Australia’s energy system,” he told the ABC.

The CSIRO said there was no technical reason why Australia could not build nuclear plants but it also suggested the risks were considerable.

Chief among them were the costs involved and the time any plants would take to deliver.

It said the “best representation” of a nuclear program was in South Korea, a rich, developed country that had been continuously building reactors for years.

By contrast, the agency noted other Western countries such as the US and the UK were only building nuclear plants “sporadically”.

As a result, they had suffered major blowouts in the costs and time required to finish projects.

The CSIRO said even if Australia could emulate South Korea, it would still likely face higher costs given the price of labour, the lack of existing skills and governance and standards differences.

Nuclear will not meet coal deadline

What is more, Mr Graham said any nuclear power plant would be unlikely to be built until 2040 or later — well after much of Australia’s coal-fired generation capacity needs to be replaced.

And he said regardless of whether Australia might opt for small- or large-scale nuclear, the country’s outright ban on the underlying technology would have to be overturned in a process that could take many years.

To that end: “The inclusion of large-scale and SMR nuclear in the 2030 cost comparison is only as a point of interest rather than practicality.”

“The second issue we found with large-scale nuclear, or the small modular reactors, is that they’ll take around 15 years before we can have the first operational plant,” Mr Graham said.

“When we deploy any technology in Australia, there’s a lead-up time where you have to plan, get [permission], organise some financing and maybe who you’re going to sell the electricity to.

“That all takes time before you can even start construction. What we found with large-scale nuclear was that they’ve got a longer development time than other technologies in Australia.

“The first is the legal hurdle — we’d have to make it legal to deploy nuclear power.

“The second is they’ve got extra safety and security steps that other technologies don’t have because of the nuclear material.

“And finally, they have the longest construction time of any technology — between about four to six years. That’s why it takes so long to deploy nuclear.”

According to the CSIRO, reliably estimating any “first-of-a-kind premium” for nuclear was too fraught to try because the technology had never been built locally.

But it noted this was not unique to nuclear, saying similar caveats applied to the cost estimates for coal- and gas-fired power with carbon capture and storage as well as offshore wind.

The agency said onshore wind and solar were still the cheapest forms of new electricity even when accounting for the cost of the capacity – such as batteries, pumped hydro plants and high-voltage power lines – needed to back them up.

It said the average cost of new “variable renewable energy projects” was $119/MWh in 2023 and it would fall to $99/MWh by 2030.

This was despite wind suffering a major increase in costs and being the “slowest” to recover from the “global inflationary pressures associated with the pandemic”.

Mr Graham noted offshore wind was likely to be about twice as expensive as onshore wind.

Solar thermal plants, which are different from the photovoltaic cells that dominate the solar industry now, were more competitive but still relatively expensive, he added.

With a complete overhaul of Australia’s electricity system already well underway, Mr Graham said getting the balance right between low costs and timely new supply was critical.

“We also have to manage the supply and demand balance as we go,” he said.

“If we retire things too quickly without replacing them with capacity, new capacity, then we run the risk of creating a supply-demand imbalance, which can then lead to higher prices.

“We have to make sure that we’re replacing the capacity that retires with a like level of new capacity.”

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