More coal, more gas, higher prices, higher emissions: What Coalition’s nuclear plan will do to the grid

Yet another highly respected firm of energy analysts has produced an independent assessment of the Coalition’s plan to build more than 7 GW of nuclear power capacity – saying it would result in more coal, more gas, higher wholesale prices, and higher emissions.

The analysis by Baringa Partners also echoes concerns by Green Energy Markets analyst Tristan Edis that the real cost may be twice that assumed by the country’s premier scientific body, the CSIRO, in its draft GenCost report released on Monday.

The Coalition is yet to reveal its own costings of its nuclear plans, although it has promised to do so before Christmas, using analysis it has commissioned from Frontier Economics. (The latest suggestion is that it might be released on Friday).

What it has said is that it plans nuclear power plants at seven sites, mostly large scale nuclear such as the 1.4 GW AP1000s, and two small modular reactors in Port Augusta and Collie, although it can’t specify which technology because no one has built one yet.

The Coalition has also made no secret of its intention, should it be elected early next year as the latest polls indicate is a possibility, that it will extend the life of coal fired power stations, and build more gas.

Its intentions on renewables are less clear, although it has promised to repeal some offshore wind zones, “rip up” contracts, and generally make it difficult to get approvals for new wind and solar projects.

Baringa, in a report first sent to its subscribers in October, has assessed the impact of what is known about the plan on prices, on emissions, on transmission, and on the rollout of wind, solar and storage.

And it’s not good.

On prices, Baringa keeps its detailed forecasts private, for the eyes of its subscribers only. But it notes that the experience of nuclear builds in western democracies is not good.

The CSIRO estimates capital costs for large scale nuclear declining to around $8,700/kW, with the first reactors costing more. Edis on Wednesday noted the costs could be double that, and Baringa’s analysis suggests here is a significant potential that costs could exceed the CSIRO’s estimates.

It notes that Europe’s two most recent reactors, Olkiluoto 3 in Finland and Flamanville 3 in France, cost $11A,000-$A13,000/kW excluding financing, with the French Court of Audit concluding total costs including financing, taxes and levies were 50% higher.

It says that in the UK, EDF’s latest Hinkley Point C estimates are around $A24,000-$A28,000/kW in today’s money, more than twice original estimates, and its contracted strike price is $A250/MWh in today’s money.

The estimated costs for Dukovany, in final contracting in the Czech Republic, are just over $A12,000/kW.

“We see higher wholesale prices under this scenario,” Baringa’s Peter Sherry tells Renew Economy. And it’s not just because of the delays of nuclear power, it’s because of the delays in transmission, the extension to coal, and the construction of less renewable capacity.

“We have to read between the lines (because of the lack of policy detail) but the direction of travel seems clear,” Sherry says. ‘There is nothing wrong with the technology, it’s just very late in the day. It should have been discussed 20 years ago and it could have genuinely helped with the transition from coal assets.”

The upshot of Baringa’s modelling is that – like other analysis – it finds that based on international experience it is highly unlikely nuclear can be delivered before 2045, and when its proposed seven power plants are delivered, it will amount to less than 10 per cent of Australia’s total generation.

That means that renewables will still need to be built, and they will still need new transmission lines – despite the claims of the Coalition.

These next two graphs explain how. Nuclear doesn’t enter the system until 2045, and out to 2055 remains a small amount of the generation mix. Coal retirements are delayed, and there is lower demand for green hydrogen, meaning less renewables are built.

The real impact on renewables capacity is fell from around 2035 on, when about 20 GW less capacity is built (compared to Baringa’s reference case on current policies, and nearly 40 GW less by 2055.

An additional 10 gigawatts of coal and gas capacity (mostly coal) will still remain open in 2040. That equates to 51 per cent more coal generation than in the reference scenario.

The impact of Coalition government policies would likely be felt on transmission lines, with yet more delays, and so lower wind and solar builds and increased costs.

“With five 1.45GW reactors, nuclear in Headwinds remains a small part of the electricity mix compared to coal today,” the Baringa report says. “While costs remain uncertain, this level of nuclear would likely require significant public funding on top of market prices.

Baringa also notes that nuclear nuclear power is touted as an always on “baseload” power source, but that is not what Australia needs in a still renewable-heavy power system. It needs flexibility, particularly around the rooftop solar that has been installed by millions of households and businesses.

It says while some nuclear reactors are technically flexible, safety issues, fuel life cycle and business models often prevent that. It puts the flexibility at around the same level as current coal fired generators, which are already struggling with the level of solar in the middle of the day.

“Headwinds explores the impact of five x 1.45GW reactors. They would reduce output to accommodate solar generation in the middle of the day, in a similar way to how current coal plants operate today.”

Finally, and most importantly, the introduction of nuclear under the Coalition policy results in a 10-year delay in the decarbonisation of the country’s electricity grids. And total emissions are 46 per cent higher than Baringa’s current central scenario.