The Australian Coalition government is at it again – raising nuclear power as a potential replacement for coal fired generation without mentioning the one thing that should kill the idea in its tracks, its stratospheric costs.
Julie Bishop, in an interview with Fairfax Media, raised nuclear as an option before heading off to the Lima climate change talks. “It’s an obvious conclusion that if you want to bring down your greenhouse gas emissions dramatically you have to embrace a form of low or zero-emissions energy and that’s nuclear, the only known 24/7 baseload power supply with zero emissions,” she said.
It is not the first time the government of Tony Abbott has raised nuclear. Industry Minister Ian Macfarlane is a big fan, and intends to look at it in the energy white paper. As we wrote in August in our article “It’s time for Abbott to dump secret nuclear ambitions,” Abbott is surrounded by pro-nuclear advisers who seem ignorant of the opportunity in renewable energy. Hence the government’s position on the RET.
Bishop says she wants Australia to have a “sensible debate” about nuclear, but what they – and the pro-nuclear advocates – never mention is cost. In developed economies, with liberalised markets, it is astronomical.
The UK, which has nuclear and where the issue is not controversial, the proposed 3.2GW Hinkley C reactor – the first new reactor in 20 years – is proving just how expensive it is. It is suffering huge delays, and may still not be built, and the cost is blowing out all the time – so far it is five times the estimate cost in 2008.
As the EU noted in its investigation into the massive government subsidies needed to support the project, the total total will come to some $45 billion. The construction risk, the insurance risk, the production risk and the financing risk all have to be assumed by the government, because no private company will risk their own balance sheet.
Even the International Energy Agency, in its recent world outlook, lamented the problem facing nuclear – economic uncompetitiveness, lack of public confidence, massive subsidy reliance, changing government policy, and “financing in liberalised markets,” not to mention the approaching closure of old facilities, which have yet to be costed. That’s why it paints scenarios that do not include nuclear, or the even more expensive carbon carbon and storage.
In western economies, such as Australia, financing is the key for nuclear. But it is a point that is repeatedly ignored. In a recent presentation to the Peabody Coal-sponsored energy seminar in the lead up to the G20 meeting in Brisbane, for instance, nuclear cheerleader Ben Heard blamed everyone from lefties to greenies for the current state of the nuclear industry.
But it is the other end of town that won’t support it and is crippling its deployment. Bankers, insurers and project developers simply don’t want to bear the risk of something going wrong, however remote the possibility. When the India government last year toyed with the idea of not accepting construction risk at nuclear plants, General Electric, the biggest industrial company in the world, said it would pack up and leave. It wasn’t about to accept construction risk for the plants it builds either. GE recently pulled the plug on laser nuclear enrichment technology research which badly impacted Australia’s Silex Systems.
India’s energy minister Piyush Goyal said last month the government was growing cautious about nuclear, noting that the US and many European nations have stopped setting up nuclear plants. “This government would like to be cautious so that we are not saddled with something only under the garb of clean energy or alternate energy; something which the West has discarded and is sought to be brought to India,” he said.
As the influential paper, the Hindu, later noted.
The key fact about nuclear power is that it is the world’s most subsidy-fattened energy industry, even as it generates the most dangerous wastes whose safe disposal saddles future generations. Commercial reactors have been in operation for more than half-a-century, yet the industry still cannot stand on its own feet without major state support. Instead of the cost of nuclear power declining with the technology’s maturation — as is the case with other sources of energy — the costs have escalated multiple times.
Heard, meanwhile, did the usual pro-nuclear thing of attacking renewables – criticising their “intermittency” a disingenuous meme we hear often in the government and conservative commentariat. Heard, for instance, argued that wind farms take up too much space – omitting to note that the land can and is used for grazing, crops and other farming activities.
Heard then declared himself to be a “supporter “of solar, and then took a pot-shot at the new Ivanpah solar tower plant, a first of its kind technology – quoting stories that it had failed to meet its production targets. But the target quoted is the production goal for 2018. Ivanpah has only been running for nine months, and it has spent the first year calibrating the technology which is being at this scale for the first time. It is actually running ahead of its targets, as we reported here.
And then Heard tried to dismiss claims that solar and wind have cheaper levellised cost of energy (LCOEs) than other “base load” fuel sources, by claiming that these costs do not include cost of grids and grid integration.
But neither do the other technologies. And in Heard’s own state, the South Australian grid is now powered 40 per cent by wind and solar without the need for any new back-up or grid integration at all.
Contrast that with Hinkley C, where National Grid says the need for new back-up will cost £160m a year ($A300 million), or more than $A12 billion over the 40 year life of the plant. That is over and above the $45 billion upfront cost, and doesn’t take into account the decommissioning costs, or the waste disposal. Indeed, since 2008, the projected cost of the plant has risen five-fold, and its builders – who said they would be powering electric ovens to cook Christmas turkeys in 2018, now don’t mention a start up date.
The costs of Hinkley, even heavily subsidised in a country with a well established industry, will lock in a price of £92.50/MWh, or $A170/MWh, indexed to inflation. Thankfully, this has caused the Australian government forecaster, BREE, to include a more sober assessment of nuclear’s costs – even without decommissions and waste disposal, or a real grip on cost of capital – that the government pro-nuclear advocates choose to ignore in their rush to demonise renewables.
As for France, well that nuclear bubble is well and truly punctured. France pays a lower rate per kilowatt hour than other countries, because the capital cost of the nuclear plants was written off by the government decades ago. But French consumers face similar electricity bills to those in Germany because the nuclear plants have to run all the time, so there has been no investment in energy efficiency.
Now, though, the French have got a major problem. They are not economically as strong as they were in the 1970s, and they simply cannot afford the capital cost of building new nuclear plants. Even the capital cost of maintaining the current fleet will be higher than the capital cost of building them in the first place.
This prompted energy minister Segolene Royal to point out that it would be cheaper to build wind and solar than to maintain the nuclear fleet. Which is what they are doing, and why they are seeking to wind back the share of nuclear to 50 per cent from 75 per cent, because all the new capacity will come from renewables.
In France, at least, costs and practicality are finally winning over ideology. Australia needs to realise that too. The need for base load power is something of a myth. With the plunging cost of solar and other renewables and now storage, flexibility is the key.