According to Foreign Affairs Minister Julie Bishop, “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”.
Well, it’s an obvious conclusion if you can’t count, or you’re a raving socialist who wants governments to take control of the power industry again. Which one is Bishop? Given she was dumped as shadow treasurer after a series of gaffes, including not knowing the official interest rate in 2009, the answer isn’t that difficult.
In 2009, Crikey looked at the cost of establishing a nuclear power industry in Australia, given the huge capital costs involved, the well-established history of extensive delays in construction of nuclear plants and their tendency to go wildly over-budget. Building nuclear power plants is expensive enough in countries such as the United States and France, where there is a well-established nuclear power industry, let alone in Australia.
One of the country’s chief nuclear spruikers, Ziggy Switkowski, recognised this in 2007 when he undertook a review for the Howard government, which was flirting with nuclear power. His review found that nuclear only became viable compared to coal and gas if there was a carbon price of between $20-$50 a tonne — which is between $25-$65 in current money. And, as he acknowledged, with that level of a carbon price, renewable energy was also viable.
Given the government has just dumped a much lower carbon price than $65 a tonne, that route to nuclear power appears closed. The only alternative is massive subsidies (ruled out by Abbott this morning) and loan guarantees for whoever is building Bishop’s nuclear power station. How much help would the builder need? To give you some idea, note that the new Flamanville nuclear plant in France — Bishop specifically mentioned buying nuclear power from France in her Twitter comments on the subject — was originally budgeted to cost 3.3 billion euros, but by December 2012 the cost had increased to 8.5 billion euros. The completion date has also blown out by five years.
But it’s not just the Flamanville budget that has changed since 2009: the cost of renewables, and especially solar photovoltaic, has dramatically decreased. “Let’s ask the unbiased experts,” Bishop urged. Well, we did: in 2009, we looked at data from financial advisory giant Lazard on energy costs in the United States — a country with a well-established nuclear power industry already — that showed nuclear as far more expensive than fossil fuel energy generation and wind, and about as expensive as solar photovoltaic. What’s changed since then? Lazard’s September 2014 report shows that for capital costs, nuclear costs per kW are around the same levels as five years ago, while rooftop solar PV and utility-scale solar PV — neither of which even made it into the comparison five years ago — are now both cheaper than nuclear and, in the case of utility-scale solar PV, significantly cheaper than coal. Wind, too, has dropped notably in cost.
For operational costs nuclear is still slightly more expensive than coal, but utility-level solar PV is now cheaper than nuclear and only slightly more expensive than coal, while wind is cheapest of all (solar rooftop is more expensive at the commercial and industrial level, and far more expensive at household level). Anti-renewables advocates insist renewables can’t provide baseload power, but that’s a repeatedly discredited myth rejected even by investment analysts.
So according to the “unbiased experts”, in the United States, where a nuclear power industry has existed for decades, nuclear is no longer competitive with renewables and remains far more expensive than coal or gas — or even relatively unproven renewables technology like geothermal.
The economic case against nuclear is open and shut. The question is: why does the Coalition keep returning to it? Why is the party that rails against the “age of entitlement” and has made a virtue of slashing business welfare keen to back a sector that would make the car industry look like rugged individualists? Possibly because conservatives see energy policy through a political prism: the Left loves renewable energy, so the Right is hostile to solar and wind, while the Left hates nuclear power, so the Right is keen to embrace it. There’s no economic sense to it; it’s simply the energy policy equivalent of the culture wars.
Crikey is committed to hosting lively discussions. Help us keep the conversation useful, interesting and welcoming. We aim to publish comments quickly in the interest of promoting robust conversation, but we’re a small team and we deploy filters to protect against legal risk. Occasionally your comment may be held up while we review, but we’re working as fast as we can to keep the conversation rolling.
The Crikey comment section is members-only content. Please subscribe to leave a comment.
The Crikey comment section is members-only content. Please login to leave a comment.