The Times Australia
Business and Money
Times Media

.

How would a switch to nuclear affect electricity prices for households and industry?

  • Written by Roger Dargaville, Director Monash Energy Institute, Monash University

Peter Dutton has announced that under a Coalition government, seven nuclear power stations would be built around the country over the next 15 years.

Experts have declared nuclear power would be expensive[1] and slow to build[2].

But what might happen to energy prices if the Coalition were to win government and implement this plan?

How might we estimate the cost of nuclear?

By 2035, 50–60% of the existing coal-fired fleet will very likely have been retired[3], including Vales Point B, Gladstone, Yallourn, Bayswater and Eraring – all of which will have passed 50 years old.

These five generators contribute just over 10 gigawatts of capacity. It’s probably not a coincidence that the seven nuclear plants proposed by Dutton would also contribute roughly 10 gigawatts in total if built.

Neither my team at Monash University nor the Australian Energy Market Operator has run modelling scenarios to delve into the details of what might happen to electricity prices under a high-uptake nuclear scenario such as the one proposed by the Coalition. That said, we can make some broad assumptions based on a metric known as the “levelised cost of electricity”.

This value takes into account:

  • how much it costs to build a particular technology

  • how long it takes to build

  • the cost to operate the plant

  • its lifetime

  • and very importantly, its capacity factor.

Capacity factor is how much electricity a technology produces in real life, compared with its theoretical maximum output.

For example, a nuclear power station would likely run at 90–95% of its full capacity. A solar farm, on the other hand, will run at just 20–25% of its maximum, primarily because it’s night for half of the time, and cloudy some of the time.

CSIRO recently published its GenCost[4] report, which outlines the current and projected build and operational costs for a range of energy technologies.

It reports that large-scale nuclear generated electricity would cost between A$155 and $252 per megawatt-hour, falling to between $136 and $226 per megawatt-hour by 2040.

The report bases these costs on recent projects in South Korea, but doesn’t consider some other cases where costs have blown out dramatically.

The most obvious case is that of Hinkley Point C nuclear plant[5] in the United Kingdom. This 3.2GW[6] plant, which is being built by French company EDF, was recently reported[7] to be now costing around £34 billion (about A$65 billion). That’s about A$20,000 per kilowatt.

CSIRO’s GenCost report assumed a value of $8,655 per kilowatt for nuclear, so the true levelised cost of electricity of nuclear power in Australia may end up being twice as expensive as CSIRO has calculated.

Peter Dutton speaks to the media about nuclear power.
Peter Dutton has announced that under a Coalition government, seven nuclear power stations would be built around the country over 15 years. AAP Image/Bianca De Marchi[8]

Other factors play a role, too

Another factor not accounted for in the GenCost assumptions is that Australia does not have a nuclear industry. Virtually all the niche expertise would need to be imported.

And very large infrastructure projects have a nasty habit of blowing out in cost[9] – think of Snowy 2.0, Sydney’s light rail project, and the West Gate Tunnel in Victoria.

Reasons include higher local wages, regulations and standards plus aversion from lenders to risk that increases cost of capital. These factors would not bode well for nuclear.

In CSIRO’s GenCost report, the levelised cost of electricity produced from coal is $100–200 per megawatt-hour, and for gas it’s $120–160 per megawatt-hour. Solar and wind energy work out to be approximately $60 and $90 per megawatt-hour, respectively. But it’s not a fair comparison, as wind and solar are not “dispatchable” but are dependent on the availability of the resource.

When you combine the cost of a mix of wind and solar energy and storage, along with the cost of getting the renewable energy into the grid, renewables end up costing $100–120 per megawatt-hour, similar to coal.

If we were to have a nuclear-based system (supplemented by gas to meet the higher demands in the mornings and evenings), the costs would likely be much higher – potentially as much as three to four times if cost blowouts similar to Hinkley Point C were to occur (assuming costs were passed on to electricity consumers. Otherwise, taxpayers in general would bear the burden. Either way, it’s more or less the same people).

But what about the impact on your household energy bill?

Well, here the news is marginally better.

Typical retail tariffs are 25-30 cents per kilowatt-hour, which is $250–300 per megawatt-hour. The largest component of your energy bill is not the cost of generation of the electricity; rather, it’s the cost of getting the power from the power stations to your home or business.

In very approximate terms, this is made up of the market average costs of generation, transmission and distribution, as well as retailer margin and other minor costs.

The transmission and distribution costs will not be significantly different under the nuclear scenario compared with the current system. And the additional transmission costs associated with the more distributed nature of renewables (meaning these renewable projects are all over the country) is included in the estimate.

According to my back-of-the-envelope calculations, your retail tariff under the nuclear scenario could be 40–50c per kilowatt-hour.

An electricity bill sits on a table. In a free market, it is very unlikely nuclear could be competitive. AAP Image/Jono Searle[10]

But if you are a large energy consumer such as an aluminium smelter, you pay considerably less per kilowatt-hour as you don’t incur the same network or retailer costs (but the cost of generating electricity in the first place makes up a much bigger proportion of the total cost).

So if the cost of electricity generation soars, this hypothetical aluminium smelter’s energy costs will soar too.

This would be a severe cost burden on Australian industry that has traditionally relied on cheap electricity (although it’s been a while since electricity could be described as cheap).

A likely increase in energy costs

In summary, in a free market, it is very unlikely nuclear could be competitive.

But if a future Coalition government were to bring nuclear into the mix, energy costs for residential and especially industrial customers would very likely increase.

References

  1. ^ expensive (www.abc.net.au)
  2. ^ slow to build (www.afr.com)
  3. ^ have been retired (aemo.com.au)
  4. ^ GenCost (www.csiro.au)
  5. ^ Hinkley Point C nuclear plant (www.edf.fr)
  6. ^ 3.2GW (www.reuters.com)
  7. ^ reported (www.edf.fr)
  8. ^ AAP Image/Bianca De Marchi (photos.aap.com.au)
  9. ^ blowing out in cost (www.cis.org.au)
  10. ^ AAP Image/Jono Searle (photos.aap.com.au)

Authors: Roger Dargaville, Director Monash Energy Institute, Monash University

Read more https://theconversation.com/how-would-a-switch-to-nuclear-affect-electricity-prices-for-households-and-industry-232913

SME Business News

Australian Companies Boost Design Investments by 63%

Australia is undergoing a significant transformation in how businesses approach design, with increasing recognition of its critical role in driving operations and innovation. According to tw...

Will the Wage Price Index growth ease financial pressure for households?

The Wage Price Index’s quarterly increase of 0.8% has been met with mixed reactions. While Australian wages continue to increase, it was the smallest increase in two and a half years, providi...

Protecting Your Business from Cyber Threats: The Critical Role of Legal Support in Data Breach Response

In today’s digital world, cybersecurity threats pose a significant risk to businesses of all sizes. A data breach can lead to severe consequences, such as financial losses, damage to a company’...

Kyndryl ANZ appoints new Head of Strategic Partnerships and Alliances

Former Head of Marketing to lead and grow Kyndryl’s local channel ecosystem and bolster technological capabilities Kyndryl has strengthened its local leadership team with the appointment of ...

The Times Features

Group Adventures Made Easy: How to Coordinate Shuttle Services from DCA to IAD

Traveling as a large group can be both exciting and challenging, especially when navigating busy airports like DCA (Ronald Reagan Washington National Airport) and IAD (Washington...

From Anxiety to Assurance: Proven Strategies to Support Your Child's Emotional Health

Navigating the intricate landscape of childhood emotions can be a daunting task for any parent, especially when faced with common fears and anxieties. However, transforming anxie...

The Rise of Meal Replacement Shakes in Australia: Why The Lady Shake Is Leading the Pack

Source Meal replacement shakes are having a moment in Australia, and it’s not hard to see why. They’re quick, convenient, and packed with nutrition, making them the perfect solu...

HCF’s Healthy Hearts Roadshow Wraps Up 2024 with a Final Regional Sprint

Next week marks the final leg of the HCF Healthy Hearts Roadshow for 2024, bringing free heart health checks to some of NSW’s most vibrant regional communities. As Australia’s ...

The Budget-Friendly Traveler: How Off-Airport Car Hire Can Save You Money

When planning a trip, transportation is one of the most crucial considerations. For many, the go-to option is renting a car at the airport for convenience. But what if we told ...

Air is an overlooked source of nutrients – evidence shows we can inhale some vitamins

You know that feeling you get when you take a breath of fresh air in nature? There may be more to it than a simple lack of pollution. When we think of nutrients, we think of t...

Business Times

Australian Companies Boost Design Investments by 63%

Australia is undergoing a significant transformation in how businesses approach design, with increasing recognition of it...

Will the Wage Price Index growth ease financial pressure for hous…

The Wage Price Index’s quarterly increase of 0.8% has been met with mixed reactions. While Australian wages continue to i...

Protecting Your Business from Cyber Threats: The Critical Role of…

In today’s digital world, cybersecurity threats pose a significant risk to businesses of all sizes. A data breach can lead ...