Nuclear priced out of Australia’s future energy equation in new report

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Australia’s official economic forecaster has finally admitted that the cost of nuclear energy is more than double other clean energy alternatives, suggesting it would likely play no role in a decarbonised grid based around lowest costs.

The Australian Power Generation Technology Report – a 362-page collaborative effort from more than 40 organisations, including the CSIRO, ARENA, the federal government’s Department of Industry and Science and the Office of the Chief Economist – clearly shows that solar and wind will be the cheapest low carbon technologies in Australia.

It comes at a critical time, with the nuclear lobby, supported by existing coal generators, pushing nuclear generation heavily, on the basis of previous technology cost assessments that had unrealistically optimistic views of its costs.

But the APGT report has essentially ruled out nuclear power for the whole of Australia, revealing that the technology is becoming more and more prohibitively expensive, at around double the capital cost estimated three years ago – and double the cost of competing technologies.

The research – undertaken by the Electric Power Research Institute (EPRI), Worley Parsons in Australia and Ernst and Young, and peer reviewed by the Australian Government Bureau of Resource Research Economics (BREE) – has been used to provide “credible technology cost and performance data for 2015 to 2030.”

And one of the big take-aways from its findings is that the cost projections for nuclear have changed considerably from previous estimates – particularly the 2012 Australian Energy Technology Assessment (AETA) by BREE, which we described as “astonishing” at the time, given the real-world experience.

As you can see in the tables below, based on the levelised cost of energy (LCOE) – which is the the average cost of producing electricity from that technology over its entire life – nuclear is found to be more expensive than wind and five out of six solar technologies in 2015.

Screen Shot 2015-11-26 at 2.13.48 pm

By 2030 (below), it is more expensive than everything. And this is the figure that counts, because it is an impossibility that nuclear could be built in Australia before that time. Some would suggest it would take another 10 years.

ATSE technologies 2015

The cost inputs (of building new nuclear generation) go from roughly $4500/kW (AETA 2012) to $6000 (AETA 2013) to $9000/kW in today’s update.

As noted above, this is quite a revision. The 2012 AETA by BREE evaluated 40 utility-scale generation technologies including large nuclear plants and small modular reactors, and named the latter two among the six lowest-cost options by 2040.

Similarly, the eFuture study by CSIRO showed that the inclusion of nuclear power as an option caused wholesale prices to be 34-37 per cent lower, and led to a 53 per cent nuclear share in 2050.

In an updated report in 2014 – concluded after “consultation” with various industry sectors – AETA rectified its errors by lifting its estimates of the capital costs of nuclear by around 50 per cent. And we wondered how quickly the CSIRO would amend its own modeling.

Today, a spokesperson from the CSIRO said that “as the outlook for nuclear costs has deteriorated with each update, eFuture has accordingly decreased the role that nuclear can play in Australia’s electricity mix.”

As we said last year, getting the LCOE of different energy generation technologies right – or at least improving on previous efforts – is critical for Australia as it makes decisions about its energy future.

The findings of this new report are particularly salient in light of the current SA Royal Commission into nuclear power, especially considering many of the submissions made in favour of nuclear – like this one from the representatives of coal fired generators, and this one from the World Nuclear Association.

Both of these submissions relied on the previous cost estimates from BREE that suggested nuclear was much more cost effective than solar.

The WNA ignored the 2013 cost estimates, and used the 2012 estimates incorporated by the CSIRO to suggest that the inclusion of nuclear power would cause wholesale prices to be 34-37 per cent lower, and would lead to a 53 per cent nuclear share in 2050. The ESAA reached a similar conclusion on wholesale prices.

Both the nuclear and the coal industry lobbies have a shared advantage in slowing down the deployment of wind and solar, because it narrows and ultimately removes the need for large-scale centralised generation. The energy system of the future will be based around dispatch able generation.

On this note, the latest estimates for solar thermal and storage are also interesting – vastly cheaper than the estimates for nuclear, despite the pretensions of many in the nuclear booster camp.

The new report came one day after nuclear power was ruled out as a contributor to the future low-carbon electricity mix of South Australia by a government-commissioned advisory panel, which said it was too expensive.

The South Australian government embraced its recommendation to target net zero emissions by 2030, although held back on its suggestion of going 100 per cent renewable energy. Presumably it will await the outcome of the nuclear royal commission. Hopefully the commission looks at the new cost estimates, and does not rely on hopelessly out of date and optimistic cost estimates.

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  • lin

    About time. One thing the nuclear industry is good at is claiming a low LCOE by ignoring a whole bunch of expensive externalities and unknowns. Even the figures here are likely to exclude some very significant costs and subsidies.

  • david H

    One thing all the big genco’s are good at is ignoring or totally under estimating the cost of decommissioning and fully rehabilitating power station sites once they become redundant. As for nuclear power stations, I don’t know that any have been, or can be rehabilitated due to the high levels of residual radiation and its very slow decay.

    • Roger Brown

      They closed down a 50 yr old Nuclear plant in the UK . It will take another 50 yrs to make it $afe .

  • David K Clarke

    Could we have the URL for the original report please?

    • january37
      • dhm60

        Thanks for the link.
        Under Latest News I saw this: “BHP and SaskPower partner up to boost global development of CCS technology”.
        Sask Power run the only functioning, commissioned CCS plant in the world. It is inefficient – thermically, economically and environmentally but hey, the Minerals Council are out there spruiking it for dear life and Howard did throw 350 mill at the coal lobby to research it about 10 years ago; so I guess why not.

  • vlady47

    And what is the cost for securing and managing high level nuclear waste, that must be isolated for thousands of years?

    Plus when there is an accident…. Imagine if it was high level waste.

    • Ronald Brakels

      Switzerland levies a fee of one US cent per kilowatt-hour of nuclear electricity for waste disposal. Yep, their waste disposal alone comes to about a third of the average wholesale cost of electricity in Australia.

      • Robert Parker

        A levy and a cost are two entirely different things – the levy is quite likely to be an opportunistic tax

        • Ronald Brakels

          Wow. If you are right it means even the Swiss can’t competently run nuclear power in a non-corrupt way. Thanks for pointing this out.

          • Robert Parker

            No problem Ron, we’ve seen the corrupt featherbedding of renewable energy programmes around the World try to destroy the nuclear industry whose only sin is that it offers our only hope of real carbon reductions.

          • Bob_Wallace

            Would you please link to some examples of the evil your report?

          • Robert Parker

            Sure Bob, try the Swedish thermal nuclear tax for a start. Please refer to:

          • Bob_Wallace

            There’s no meat in that sandwich.

            There’s nothing in that article that says renewable energy caused the taxation of nuclear electricity.

            Got any actually proof of your claims?

            BTW, your claim that nuclear ” offers our only hope of real carbon reductions” is complete bull.

          • Bob_Wallace

            Something else, Robert.

            The Swedish taxes on nuclear were mostly established in or before 2008. That’s before there was any sort of wind or solar industries to influence the tax decision. How about we score your first attempt as a fail?

          • Robert Parker

            Bob, I expected somewhat foolishly that you would research the entire topic starting with that link – I’m not your work monkey

          • Bob_Wallace

            No, Robert, you don’t get to weasel out with that lame tactic.

            You made a claim. It was challenged. It is your responsibility to support your claim or be shown to be dishonest.

            Ball is in your court, old bean….

          • philofthefuture

            Again, nukes time has come and gone. They have priced themselves out of the market. It doesn’t matter that their CO2 is zero, they are not affordable. At least in the US and I suspect around the world wind and solar are far cheaper.
            To be sure, wind and solar have their own issues, storage being the biggest but in most of the world free market capital is flowing into solutions for that, not for new nuke technology.
            The world is also going to a more resilient grid, decentralized power with micro grid technology. Wind and particularly solar are far more suited to that architecture. Large centralized plants are on their way out.

          • Bob_Wallace

            Nuclear also needs storage. Few grids have a need for new late night generation. Nuclear can’t load follow without greatly increasing its already expensive cost. (Cost of electricity = total annual cost/total annual production.)

            Back when we were building nuclear reactors in the US we also built a lot of pump-up hydro storage in order to shift nuclear output from late night to high demand hours.

          • philofthefuture

            That’s the first I ever heard that! Learn something new ever day!

            My take is that the US has plenty of baseline so what we are adding mostly is solar and wind and using existing natural gas as both base and peaking, and coal and nuclear as base. We are also adding more natural gas plants to increase output and replace coal as it continues decommissioning.

            It was originally thought that the grid could only handle 35% intermittent power but experience in Germany suggests that 75% is feasible. Combining solar and wind is quite synergistic. Because of that I think solar and wind will continue 50% growth/year for some time to come

          • Bob_Wallace

            The US built about 21 GW of storage to time-shift nuclear. Mostly pump-up hydro but also one compressed air (CAES) facility. Japan built even more, 25 GW IIRC. I’m not sure how much Europe built.

            I think the best way to look at the replacement of coal is that utilities first reached for natural gas. NG plants are highly dispatchable and can be run a very high percentage of the time if needed. That gave utilities the supply reliability they needed. Then wind and solar get added to the mix which allows the gas plants to be run less, saving fuel costs.

            A mix of CCNG (combined cycle natural gas) wind and solar cost far less to install than a similar amount of nuclear. Then using the wind and solar with their zero fuel costs when available and filling in with NG makes for a reliable, low cost electricity supply.

            Going forward storage will replace most NG use, it’s already starting to do so.

    • Andrew Thaler

      Not all reactors produce ‘high-level waste’.. some designs that we will see in the future consume high-level waste. Our ability to store nuclear waste is very successful, when you consider that we (humans) globally store over 200,000 tonnes of spent nuclear fuel in casks. There is an opportunity for geographically/geologically/geopolitically stable Australia to be a sensible repository for nuclear wastes (even wastes as a consequence of burning our exported Uranium) to consume it back here in a ‘disposal’ process of which the by-product is abundant cheap energy. Why would we not look at that as an option.. electricity as a byproduct of destroying the residues from our exported Uranium ? ps.. we have the Thorium aplenty to do this.

      • Chris Fraser

        I see potential for advanced design reactors to consume what a light water reactor would consider waste. To make a profitable business, somebody would have to design & manufacture and export the technology to other countries, to bring energy where it is needed, and to rid the world of this poison. So perhaps low-capacity modular systems are needed ? And if solar and storage replaces coal and gas, is there an economic opportunity for those ?

        • Bob_Wallace

          Consider the cost gap.

          The Vogtle reactors, if they have no more problems/delays, will generate at $0.13/kW. And that is low price that is unlikely to be matched as Vogtle received super low cost “Great Recession” financing. New reactors were just bid out at the North Anna plant. If those are built the cost is projected to be $0.19/kWh.

          And, remember, nuclear gets subsidies. Those are not full cost numbers.
          Now let’s bring in wind and solar at their unsubsidized prices. In 2014 US onshore wind averaged under $ 0.04/kWh. PV solar averaged $ 0.065/kWh. Both will be lower in 2015 and lower still as time goes on. It is expected that both wind and solar will end up about $ 0.03/KWh.

          Now, here’s nuclear’s problem. If current cost is $ 0.15/kWh or more (Hinkley Point is around $0.15 and escalates over time) what does one cut to bring the price down to compete with electricity priced ~5x lower? This isn’t taking 10% off the top, it’s taking 80% off the top.

          • Chris Fraser

            It’s not economic … unless it has a special application, like remote location (ie cheaper than diesel). Or the community considers there is merit in consuming nuclear waste.

  • Mike Ives

    So how
    does the conclusion sit with Ian McLeod’s (CEO Ergon Energy
    Queensland) comment to Renew Energy as part of your newsletter 26th
    Nov re:

    Do you
    agree with the notion that we can completely decarbonise the grid?

    In short It’s technically possible for some grids with nuclear,
    geothermal and significant water resources but it would be very
    difficult to do it economically for Australia due to our dry and flat
    continent? We don’t have a lot of enhanced geothermal resources or

  • Andrew Thaler

    I dont agree with the thrust of the article. As usual, all of the conversation about ‘low carbon energy’ always revolves around electricity. Our energy needs for liquid transport fuels are just enormous and I feel that Nuclear energy located in remote outback Australia could be viable in the appropriate context.. huge flat algae ponds etc. Liquid Fuel synthesis plants upgrading Co2 or methane will require large amounts of stationary energy.. perfect for a nuclear plant. I wouldn’t write the idea of nuclear energy off just yet.. all it will take is oil above $200 per barrel.

    • philofthefuture

      It doesn’t matter, at least in the US solar generated power is about one sixth the cost of nuclear. It doesn’t matter where the nuke plant is located, there are cheaper forms of electricity in renewables. It’s likely that after a decade of construction a nuke would take, even solar + storage would be way cheaper than nuclear. At least that’s the thinking in the US.
      Because of the way the US spot market is configured, solar is by far the cheapest energy with wind and natural gas in the same ballpark. Virtually all new power in the US is solar, wind, and natural gas. Because of fracking natural gas was already replacing coal before Obama’s initiative and will continue to do so regardless of regulations, purely on and economic basis.
      Eventually wind, solar, and by proxy EV’s will win out. Wind and sun are free, coal, natural gas, and uranium are not. Free beats everything else. As an example the comparison would be a 1 MW coal plant plus forty years of coal procurement vs. the cost of a 1MW equivalent solar plant with free sun. As wind and solar continue to decrease in cost, the transition is inevitable, it’s just a matter of timing.

  • Ken Fabian

    If nuclear is being supported by existing coal generators it’s almost certainly strategic misdirection and not actual support for nuclear. “Nuclear would be better, greenies are stopping it so, oh, too bad, we’ll have to keep burning coal until they agree with us”. If that lot really wanted to transition to low emissions they would be fighting for that goal, with and without nuclear – and given the relative costs and difficulties, that would be without. I merely note that their efforts to fight for nuclear – which, if they were sincere in their “only nuclear will do” rhetoric, represents a grave threat to their business model – look decidedly half hearted at best and their willingness to throw in the towel to the “all powerful” anti-nuclear lobby in the first round just proves they don’t really want a low emissions transition.

    Their business is dirty in every sense and Australian commerce and industry, by throwing their lot behind climate science denial in the cause of obstruction of a transition to low emissions, because that looks cheaper than committing to it, sucked the backbone out of the political Right when it comes to nuclear.

    • Bob_Wallace

      Or coal realizes that it would take a decade or decades to bring nuclear online and that would delay coal’s death by many, many years.

      Screw ’em both. Let’s ramp up wind and solar and get this problem behind us.

  • Martin Nicholson

    The problem I have with the AUSTRALIAN POWER
    GENERATION TECHNOLOGY REPORT is they are not comparing
    like with like. Comparing LCOEs of wind or solar with nuclear is nonsense. Both
    solar and wind rely on some supporting technology to deliver the same outcome
    as nuclear – be it batteries, PHS or quick start gas. The lifetime cost of these
    supporting structures need to be included. I suspect the picture would look
    very different if these were included.

    • Bob_Wallace

      Martin, do you realize that since nuclear plants can and do go offline without notice it is necessary to keep spinning reserve in place at all times so that the grid does not go down if a nuclear plant goes down? And that costs money.

      Furthermore, do you realize that the onset and offset of both wind and solar are very predictable hours in advance so there is no need for spinning reserve for either? We get to save that fuel cost.

      Do you realize that if the amount of nuclear exceeds the annual minimum demand then storage is needed to shift power from the times it isn’t needed to the times it is needed? Storage, as you pointed out, costs money.

      Unlike nuclear, if we don’t need the output from wind or solar we can simply curtail them.

      Now we do need to fill in around wind and solar for the times they aren’t producing. But the total installed cost of wind + solar + CCNG plants for fill-in is about half the price of new nuclear. And storage is starting to replace the gas plants.

      Oh, don’t forget. It’s nuclear + CCNG as well. Got to add in that cost.
      Adding it all up. Nuclear is simply too expensive to be considered. It’s the 21st Century. Let’s move on….

    • Giles

      Still banging the same drum Martin. Do you remember that the National Grid in UK said that the back-up required for Hinkley Point (7% UK demand) would amount to around $12 billion. How much additional back-up needed for S.A. with 40 per cent renewables? Zero.

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