SPECIAL REPORT | AUSTRALIA’S NUCLEAR OPTION
Nuclear as a cost saving choice
Contrasting with the CSIRO GenCost report is a new analysis from independent economic consultants Frontier Economics. In their second report modelling the economics of including nuclear in Australia’s National Electricity Market (NEM) they conclude that including nuclear power in the energy mix is up to 44% cheaper in the medium-term compared with excluding it. Using Australian Energy Market Operator (AEMO) modelling and using the ‘Step Change’ and ‘Progressive’ scenarios to compare the costs of nuclear power in the Australian energy system, they conclude that including nuclear power is cheaper. According to ‘Economic analysis of including nuclear power in the NEM’, this is on the basis of a wider and more detailed approach on how the two options compare in real life. They note that many commentators simply and erroneously compare the cost of renewable generation plus the costs of back-up generation to the capacity and operating costs of a nuclear power station. The Frontier Economics report states: “Such crude assessments do not account for the fact that much more renewable capacity is required to produce the same amount of electricity compared to a nuclear power station. Nor does it account for the requirement to store surplus electricity from renewable sources as well as the back-up generation. An enormous amount of investment is required to connect renewable generators located in areas where there is presently no or inadequate transmission network capacity. Many other calculations are ignoring transmission costs entirely, which we have considered in this modelling.” They note that a more appropriate basis of comparison is the total cost of a power system – generators, storage, and transmission – to reliably and securely meet demand. AEMO prepares an Integrated System Plan (ISP)
every two years that provides this information. The first Frontier Economics report, ‘Developing the base case to address the relative costs of nuclear power in the NEM’ was produced to establish a proper basis for comparing the cost impacts of nuclear power in relation to ISP modelling. AEMO produces several energy sector development scenarios. The consider the so-called Step Change the most likely outcome. It considers a world where there is rapid growth in electricity demand accelerated by the electrification of many services currently provided by fossil fuels and rapid development of wind, solar and energy storage to meet the associated demand growth. AEMO’s Progressive scenario, which it says is just slightly less likely than the Step Change scenario, also reflects growth in electricity demand due to electrification, albeit not as rapid as in the Step Change scenario. Using both these scenarios as a basis, the Frontier Economics report concludes that, under the Progressive scenario including nuclear power is 44% cheaper than the Step Change model without nuclear. Meanwhile, using a Step Change model with nuclear is a 25% cheaper solution than using renewable and storage alone. The report thus concludes that including nuclear power in Australia’s energy system is cheaper for consumers in both scenarios. ■
time. However, the witnesses all suggested that in
Australia a new nuclear unit was likely to move more slowly rather than more quickly in comparison with those countries.
Among the work that would have to be done would be signing international nuclear treaties, setting up industry governance and regulation, finding and qualifying sites, and developing a nuclear workforce. That was despite the fact that in all these areas Australia’s current nuclear activities meant that the country had some ability to meet the needs of a nuclear power programme. For example, Claire Savage, chair of the Australian Energy Regulator, said: “I don’t know
about building nuclear power stations, but I do know about developing regulatory frameworks.” She explained, “By the time you do licensing, safety, environmental, technical, commercial, and you do legislation, rules, guidelines and consultation – for us just to do guidelines takes 12 to 18 months because you have to do an issues paper, a draft decision and a final decision, and there are two rounds of consultation that we’re required to do under the rules.” She concluded: “I would have thought you would be looking at eight to 10 years for a regulatory framework.” Others were particularly concerned about the time required to gain a ‘social licence’ (ie favourable views locally), to select a nuclear site and to consult with local people. The Select Committee will continue to hear further
evidence before it issues its final report. Nuclear advocates are arguing hard that nuclear could have a role in the long term, even if it is not deliverable before 2035. Whatever their other objections to nuclear, its Australian opponents can point to the long-term nature of any ‘build’ programme – which could not even begin until ‘no nuclear’ legislation is repealed. For electricity consumers in Australia, what is most
Above: Northern power station near Adelaide in South Australia has been identified as a potential site for nuclear new build Source: Flinders Power
28 | January 2025 |
www.neimagazine.com
important is to have a clear view ahead, so the country can attract the right investors for whichever suite of low-carbon generation technologies are appropriate. That suggests it is the right time to debate the nuclear issue, either to move decisively to sweep away restrictions, or to put the question to bed for a generation. But the debate has to have a quick resolution to ensure there is not a gap in the pipeline of investment in new generation. ■
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