Normative Bases

1. Value-Neutral / Epistemic Objection

Both sides to this argument notionally agree on the same high-level objective — namely, achieving a transition to a Net Zero future in Australia by the middle of the century while minimising costs and disruptions to energy users. The hypothetical, best-case scenario of a renewables-based transition could be more rapid than the best-case scenario of a nuclear rollout, and in that sense, advocating for a nuclear plan may create the impression of nonchalance about climate change. However, the “For” case holds that a scenario of a very rapid transition to 100% renewables within a couple of decades is unlikely, and that the only possible way to achieve it would be through great expense, relative to a plan involving nuclear energy. In that sense, we seek to dispel the link between caring about climate change and preferring a renewables-based energy plan. This case also assumes that we can exclude from consideration concerns about the environmental impact of nuclear waste or of the risk of nuclear disasters.^[1] We will focus primarily on the issues of economics and energy stability.

Our argument is primarily derived from the Frontier Economics Report 2 (accessible here), which contains the results of the economic modelling on the cost of the nuclear plan versus AEMO's Step Change scenario that involves a rapid transition to renewable energy. We posit that the assumptions made in this modelling are sufficiently reasonable that we should take the following claims seriously:

For AEMO’s Step Change scenario, using nuclear power, the total NEM system costs can be reduced by about $150 billion from $594 billion to $446 billion, or about $5.5 billion per annum. The inclusion of nuclear power in the NEM in the Step Change scenario is 25% cheaper than AEMO’s renewables and storage approach. For AEMO’s Progressive scenario, using nuclear power, the total NEM system costs can be reduced by $106 billion from $437 billion to $331 billion, or about $4 billion per annum. The inclusion of nuclear power in the NEM in the Progressive scenario is also 25% cheaper than AEMO’s renewables and storage approach. As explained above in Section 1.3.4, the Federal Coalition’s view about the energy transition is more consistent with the Progressive scenario including nuclear power, which is 44% cheaper at $331 billion compared to the Federal Labor Government’s AEMO’s Step Change scenario, which is estimated to cost $594 billion in the report modelling.

In short, our position is that these claims of significantly reduced costs are plausible and that, supplemented with other concerns about the renewables transition, they weigh in favour of adopting the nuclear plan.

So how do Frontier get their results? The basis of the economic modelling undertaken by Frontier is the same kind of “least-cost” approach that AEMO uses for the “Capacity Outlook” model in its Integrated System Plan, i.e. a set of simulations that predict the build-out of transmission and energy by optimising for the lowest-cost energy schedule over the long-term outlook, subject to a large set of constraints (social, political and economic). The main point of the first report Frontier released was to develop a modelling “base case” that uses a very similar methodology to AEMO's modelling, and reproduces very similar results in the absence of nuclear.

In the second report, they then show the results of this same modelling approach modified to allow nuclear into the mix (with correspondingly different predictions of capacity and transmission build-out). And viola, Frontier gets the results documented above.

Of course, this sort of predictive modelling is only made possible against a background of assumptions and forecasts, some of which critics have called into question (see below). In order to bring nuclear into the mix, these assumptions ultimately deviate substantially from AEMO's own. Nevertheless, there are good reasons why one would expect a system involving nuclear to result in a smaller total set of costs. Quoting from the report:

nuclear power can reduce the need to:

• build large numbers of wind and solar farms to generate sufficient electricity to meet demand, and
• storages for surplus electricity to cover the, roughly two thirds of the time, intermittent renewable generators don’t produce electricity, and
• the backup generation when stored energy is depleted, and
• the costs of a vast expansion of the electricity transmission and distribution network across rural and regional Australia

So, in short, the thought is that if Australia can implement a system plan that keeps a “baseload” paradigm in play for a large proportion of the required capacity (by keeping coal stations around for longer, then replacing some of them with nuclear), then we will need to build much less “excess” capacity of variable energy resources and considerably less transmission infrastructure.

1. ^{^}

   For an argument that these concerns should not be taken seriously, there are lots of other resources online, e.g. here.

Normative Bases

1. Value-Neutral / Epistemic Objection
2. Environmentalism

Let us grant the initial framing of the “Argument For”: both sides to this argument notionally agree on the high-level objective of achieving a transition to a Net Zero future in Australia by the middle of the century while minimising costs and disruptions to energy users. With that said, the Coalition's plan is more tolerant of intensive CO₂ emissions continuing for decades via the maintenance of coal stations, so arguably there is less of a concern with the impacts of climate change. The case against does not depend on being highly concerned about climate change, though it is stronger with that basis. The case against also does not depend on any concerns about the environmental impacts of nuclear waste, or the risk of nuclear disasters. We will focus primarily on the issues of economics and energy stability, and secondarily on the climate concerns.

The best source on the Coalition plan is the Frontier Economics Report 2 (accessible here), which contains the economic modelling on the cost of the nuclear plan versus AEMO's Step Change scenario that involves a rapid transition to renewable energy. The headline claims of the Frontier Economics report are as follows:

For AEMO’s Step Change scenario, using nuclear power, the total NEM system costs can be reduced by about $150 billion from $594 billion to $446 billion, or about $5.5 billion per annum. The inclusion of nuclear power in the NEM in the Step Change scenario is 25% cheaper than AEMO’s renewables and storage approach. For AEMO’s Progressive scenario, using nuclear power, the total NEM system costs can be reduced by $106 billion from $437 billion to $331 billion, or about $4 billion per annum. The inclusion of nuclear power in the NEM in the Progressive scenario is also 25% cheaper than AEMO’s renewables and storage approach. As explained above in Section 1.3.4, the Federal Coalition’s view about the energy transition is more consistent with the Progressive scenario including nuclear power, which is 44% cheaper at $331 billion compared to the Federal Labor Government’s AEMO’s Step Change scenario, which is estimated to cost $594 billion in the report modelling.

Our first objective is to cast doubt on these claims about the cheaper costs of the nuclear plan, as well as the feasibility of the plan itself. Our position is this: the Frontier Economics modelling scenario relies on enough spurious assumptions that these claims about lesser cost should not be given much credence. A critique by the Clean Energy Council lays out the dodgier assumptions relied upon by the modelling, as follows:

Infeasible timeframes for nuclear power plants

The first of seven nuclear power plants is assumed to come online in 2036. This means 11 years to get:

• legalisation (requiring parliamentary majorities in federal and state parliaments);
• a regulatory framework (which for wind projects took six years in Australia);
• a fully operational plant.

This timeline would be completely unprecedented in a global context, even from mature nuclear economies (which Australia, assuredly, is not). Quoting the report: “from the Clean Energy Council’s analysis of the seven nuclear projects delivered or due for delivery after 2015 across OECD countries, the average construction time for projects is approximately 14 years, whereas the average time from scoping to the connection of the plant is 21 years”

Majority of total system cost of nuclear plants falls beyond the life of the modelling

The presumed life of a nuclear plant is 50 years and, given that the plants start to come online in the 2030s and 2040s, much of the capex cost is outside the timeframe of the modelling exercise. On the other hand, Frontier's analysis of AEMO's Step Change scenario includes the full capex cost of renewable energy buildout. So while not dishonest, this creates a misleading impression of the capex costs associated with the two technologies. 

Underestimation of nuclear construction, and operations & maintenance costs

The modelling assumes a $10,000/kW for large-scale nuclear reactor construction, whereas the “most recent international experience indicates construction costs of between $15,000-$28,000/kWh”. In addition, the Frontier report includes a combined fuel and O&M cost of $30/ MWh, whereas “CSIRO’s latest GenCost report indicates that fuel and O&M costs would be in the order of $40-$60/MWh in 2030, and $36-$56/MWh in 2050”. According to the Clean Energy Council, it is also “unclear whether and how Frontier has accounted for nuclear waste management and insurance costs, which could be very high.”

Coal extension assumed to be possible within existing operations and maintenance budgets

Quoting the report again:

The Frontier analysis does not provide any discussion of the potential risks and costs of extending the life of ageing coal-fired power generators beyond their intended or forecast retirement dates. The lead author of the report, Danny Price, has since asserted in a radio interview that coal generators’ lives could be extended within the operations and maintenance cost assumptions included within the model. Unfortunately, there is little evidence provided within the report to evaluate the realism of this claim. Given the technical challenges and minimal historical experience involved in extending coal power plants beyond 50 years of life and the fact that banks and other financiers are increasingly applying restrictive lending criteria to coal-fired power plants, we consider that the costings for the nuclear scenarios are also underestimated in this regard.

In summary, these considerations weigh against the claim that the nuclear plan would be cheaper in any scenario, let alone all scenarios.^[1]

The second line of attack on the Coalition's nuclear plan focusses on the outright harms it will make to the existing renewable-based energy transition, from both an economic and energy perspective. In bullet-point form:

• Delayed exit of coal fired power generation will dampen the investment case for large-scale renewable energy infrastructure.
• The 13GW of baseload power added to the grid by the nuclear plan will considerably undermine the utility of the existing renewable generation capacity on the grid, leading to a high frequency of solar curtailment.

To put it simply: in Australia, we are heading rapidly down the path of an energy paradigm that centres on variable, rather than baseload, power generation — i.e. solar, wind, gas, hydro and batteries, rather than coal. This comes with a host of challenges, many still unresolved, but our market operator has been planning around it for years, and given Australia's unique advantages from a renewable energy perspective, it has opened up immense economic opportunities.^[2] As the variable power paradigm reaches maturity, the addition of baseload power becomes an active hindrance, forcing renewable energy assets to be curtailed, and raising costs as a result.

Finally, for those who are concerned about climate change, and keen to see rapid de-carbonisation of the grid, there is no question that the nuclear plan would be a major brake. The “Progressive Scenario”, viewed as more realistic and desirable by Frontier Economics, represents a significantly greater emissions intensity through the 2030s and 2040s. This is clearly acknowledged in Report 2 under “Section 4.4 - Emissions”. A post on LinkedIn by an AER Director crunches the numbers and finds that “By 2051, the Frontier Economics modelling implies that there would be an estimated increase of about one billion tonnes in GHG emissions for the nuclear alternative to Progressive Change in comparison to the base case Step Change scenario”. An article in The Guardian points out that this would itself come “at a cost of $240bn to the economy, society and environment, based on Infrastructure Australia’s cost of carbon methodology”. This is putting to one side the concern that, under such a plan, Australia would likely be shirking its obligations under the Paris Accords. Therefore, this plan is utterly at odds with those who view climate change as an emergency, and arguably at odds with anyone who thinks climate change is a serious issue. 

1. ^{^}

   [Note from author] I have not found an estimate of the relative cost of plans using weaker assumptions. Future editors should amend this section to cite such an estimate if one appears.

2. ^{^}

   See, e.g., Ross Garnaut's writing on the subject

3. ^{^}

   [Note from author] I believe this emissions intensity would violate Australia's commitments under the Paris Accords. This would be relevant to add if the claim can be supported.