CSIRO says wind and solar much cheaper than nuclear, even with added integration costs

The CSIRO has published the latest edition of its important GenCost report, and responded to critics by dialling in near term integration costs for wind, solar and storage. But the result is just the same – renewables are clearly Australia’s cheapest energy option, and the story for nuclear just got a whole ot worse.

The annual GenCost report, prepared in collaboration with the Australian Energy Market Operator since 2018, is an important guide to where Australia’s energy transition is at and where it should be heading, but over the past has become the target of attack from conservative naysayers and the pro-nuclear lobby.

CSIRO has defended its methodology, but to satisfy the critics has added in pre-2030 integration costs – including the new transmission lines being built to connect new generation – and finds that the story is much the same.

“While this change leads to higher cost estimates, variable renewables (wind and solar) were still found to have the lowest cost range of any new-build technology,” the CSIRO says, noting that this includes all integration costs up to and including 90 per cent renewables.

In the past year, cost of solar and offshore wind has fallen, the cost of battery storage has remained steady, but the cost of other technologies such as onshore wind and pumped hydro has increased.

The big mover – and one that is significant in the context of the Australian debate on the energy transition, and the federal Coalition’s insistence that nuclear is the answer to most questions – is the cost of nuclear and small modular reactors.

The CSIRO has been attacked by the pro-nuclear lobby, including conservative media and right wing think tanks,  for what the lobby claims are inflated cost estimates, but the CSIRO says recent events have backed its numbers. In fact, they make clear that nuclear SMR costs are worse than thought.

CSIRO economist Paul Graham points to the collapse of a major deal this year involving the most advanced SMR projects in the US, the NucScale projects in Utah, which were withdrawn because of soaring costs.

Graham says it is significant because, as NuScale was listed and had to abide by strict regulatory disclosure rules, it had to be “honest” about the anticipated costs of SMRs.

And these were nearly double what was previously thought. In fact they ended up at the equivalent of $A31,000/MW, according to NuScale filings, and much higher than the $A19,000/MW estimated by the CSIRO in its previous report, and for which it was accused of inflating.

The reality, however, is that talk of nuclear SMRs as a solution for Australia’s energy transition and near term emissions targets are a distraction, given that the SMR technology is simply not available, and unlikely to be so for two decades.

The CSIRO report says some interesting things about the costs of wind and solar, technologies which are available and which do work. It says the costs of these technologies will continue to fall in coming years after the various price shocks that have affected the technologies over the last couple of years.