Nuclear Confusion

In recent times, many Liberal party members have been pushing for the party to adopt policies that promote the use of nuclear power in Australia. At face value, nuclear power appears to be an attractive alternative energy source that has been excluded from the debate for no good reason.

The proponents of nuclear power usually list the following benefits:

• It’s a zero-carbon solution for achieving a reliable baseload power supply (which is essential for a reliable and stable energy grid).

• Australia is a major producer of uranium, which will make the inputs to nuclear generation cheaper for us.

• The introduction of small modular reactors has greatly reduced the capital cost of nuclear plants and eliminated the risk of Chernobyl/Fukushima style meltdowns.

• Many other developed countries use nuclear power extensively.

• With our procurement of nuclear submarines, we will need to develop nuclear capabilities anyway. By adopting nuclear power we are effectively hitting two birds with one stone.

We’d be crazy not to go nuclear, right? Well, unfortunately no, but not for the reasons the opponents of nuclear usually give.

The risks associated with nuclear power are well known. Although some of these have been mitigated by the advent of small modular reactors (SMRs) (for example, they don’t rely on an external power supply to maintain cooling and prevent a meltdown), many of the risks remain. They are still a dangerous target for military or terrorist attack. They still produce as a by-product some of the most toxic material known to man, which must be handled by humans who are susceptible to human error (as we saw recently with the cancer-causing radioactive capsule that went missing in outback WA).

But at the end of the day, these risks can and should be weighed against the potential benefits nuclear might have over the alternatives.

The problem is, aforementioned risks aside, when it comes down to cost nuclear power just does not stack up against the alternatives.

GenCost is a comprehensive assessment of the costs of various power generation alternatives for Australia, undertaken annually by CSIRO, publicly available at this link. It is based on capital cost estimates produced by Aurecon, a leading international engineering firm, and considers all aspects of power generation, including the capital and operating costs of the plants, the cost of transmission infrastructure, and in the case of intermittent sources such as solar and wind, the cost of storing and integrating the power to provide a reliable supply (accounting for a range of potential weather conditions). Unlike research produced by activists and think tanks with clear biases and agendas, these estimates are produced by the closest thing we have to a reputable, independent and unbiased scientific organisation in CSIRO.

The below chart from GenCost appears complex, but it simply shows upper and lower estimates for the cost of new generation from various sources.

The right-hand side shows the cost of combined wind and solar, based on the percentage of total energy supplied by these sources (which is not likely to ever exceed 90% for various reasons). This includes the cost of building sufficient storage to ensure a reliable supply, and integration with the grid. Increasing reliance on wind and solar leads to higher storage costs, hence 90% share is more expensive than 60% share.

Various other options are shown, such as the cost of fossil fuel sources with Carbon Capture and Storage (CCS), and variable gas generation.

Although this chart clearly demonstrates the superiority of renewables (based purely on cost), the important bar for this debate is the one highlighted in yellow: nuclear SMR.

The nuclear option has by far the largest range between upper and lower estimates. This is because the cost of the technology will be highly dependent on future economies of scale that come from broad adoption of the technology worldwide. The problem is, there is no guarantee that there will be broad adoption of the technology, given the known risks of nuclear, and the availability of lower cost alternatives. No private investor would ever consider building a SMR plant right now, given the cost is so much higher than the alternatives.

The only situation where an SMR would make sense as an investment is a situation, close to 2050, when we are homing in on net zero emissions and need a source for the 10-20% not supplied by wind and solar. Even then, there is no guarantee that it won’t be cheaper just to run a fossil fuel plant with CCS.

So even if nuclear was legal in Australia, no private company would even invest in it. It would therefore need to be paid for by the government, in the hope that the cost will come down far enough to possibly compete with CCS. This goes against core liberal tenets that a free market will deliver the most efficient outcome, and that governments should not gamble with taxpayer dollars by attempting to pick winners (especially when the odds are as bad as they are with nuclear SMR).

Based purely on cost, nuclear simply does not stack up, and that should be the end of the argument. However, there is one persistent misconception embedded in the pro-nuclear argument that is worth addressing, because in some ways, pro-nuclear is just the latest manifestation of an anti-renewables dogma that has no regard for the facts.

The key misconception is that a cheap and stable baseload supply (such as coal or nuclear) is essential for reliable power, and without that there will inevitably be blackouts. In fact, there is only one requirement for reliable power: that there is enough capacity in the system to meet the demand at any given moment. It makes no difference at all where the power comes from, as long as it is available. When the wind doesn’t blow and the sun doesn’t shine, you just need a big enough battery (or equivalent). When CSIRO calculate the amount of storage required to provide reliable energy from renewables, they account for power demand and supply for 9 different years of varying weather. They simulate the wind and sun and work out exactly how big the battery needs to be to maintain reliable supply. They then include that in the overall cost estimate of renewable generation.

There’s nothing magical or essential about a stable baseload supply, and when this is clear, the strongest argument for nuclear: that it’s a zero-carbon source of stable baseload power, suddenly holds no water.

Of course, all options should be on the table given the energy challenge we are facing. The fact that nuclear is illegal and not even considered is a problem, and that ought to change.

However, nuclear power is also a highly specious option for supplying Australia’s low emissions future, and campaigning hard for nuclear would be a big mistake for the Liberal party. Doing so would reinforce a perception amongst voters that we are anti-renewables at a time when voters overwhelmingly support more renewables (e.g. 83% of voters in NSW). We would also alienate those voters who hold traditional concerns about the risks associated with nuclear power.

We must be careful to resist the urge to offer an alternative to voters for the sake of differentiation, when that alternative is inferior by almost every measure.