Energy experts have warned that the cost of building nuclear power plants in Australia could be more than double the figure the CSIRO has suggested, based on international experience.
A draft GenCost report – the national science agency’s annual assessment of electricity costs – this week again found nuclear electricity would be far more expensive than solar and wind energy backed by “firming” technology.
It also rejected opposition claims that nuclear power plants could be developed in Australia in less than 15 years.
The Coalition has said it would remove bans on nuclear power and eventually use taxpayer funds to build reactors at seven existing coal plant sites. Until then, it would slow the rollout of renewable energy and use more fossil fuel electricity.
The opposition leader, Peter Dutton, has said the estimated cost of its proposal would be released this week.
The CSIRO found a 1 gigawatt large-scale nuclear plant would cost about $9bn if it were possible to start building in Australia today and a nuclear industry was already well established. It said initial large-scale generators could cost twice as much – about $18bn – due to a “first-of-a-kind” premium.
Small modular nuclear reactors, which do not yet exist commercially, were estimated to cost about $29.6bn for 1GW of capacity, again assuming a nuclear industry was established.
The opposition’s climate change and energy spokesperson, Ted O’Brien, has said he accepted the agency’s estimate of capital costs for nuclear. Dutton has suggested, without evidence, that the Albanese government had interfered in the report.
CSIRO’s estimate is benchmarked to costs in South Korea, a democratic country with a long-running nuclear program. Several energy experts said this was likely to substantially underestimate the ultimate costs of building reactors in Australia.
Simon Holmes à Court, an energy analyst and convener of the Climate 200 fundraising body, says only five large-scale nuclear projects have reached construction stage in North America and western Europe this century.
Four have taken more than twice as long to be built as initially forecast and are expected to cost between double and six times initial estimates. The fifth, the Virgil C Summer plant in South Carolina, was cancelled after A$13bn had been spent.
Dr Dylan McConnell, an energy systems expert at the University of New South Wales, said the GenCost estimates for nuclear plants were “not the costs for Australia any time soon, or perhaps ever”.
He pointed to a US Department of Energy report in September that found that country’s latest 1GW nuclear plants cost A$23.5bn, and that subsequent plants could cost A$13bn – still 50% more than CSIRO’s baseline estimate for plants in Australia.
McConnell said while it was generally assumed the cost of electricity generation technology would come down over time, there was debate over whether this applied to nuclear plants. Research in the US has suggested newer designs are increasing costs.
“We would incur a significant first-of-a-kind premium to establish a new industry [and] there is a question if we could ever get to the levels achieved in South Korea,” he said.
Tristan Edis, the director of analysis and advisory at Green Energy Markets, said the CSIRO’s analysis did not include the risk of construction costs increasing significantly during development. He said a database compiled by Bent Flyvbjerg, an Oxford University professor and economist, showed nuclear budgets typically blow out by about 120%, while solar and windfarms have much lower risk of cost increases.
Edis estimated the cost of building a 1GW plant in Australia would be between $14.9bn and $27.5bn. “We’re likely to pay more than double what CSIRO has said, and that’s if things go well,” he said.
He said CSIRO had accepted nuclear industry claims that plant costs could be more than halved as an industry developed – a change that is described as “Nth of a kind” benefits – but the international experience was that nuclear costs had increased due to modifications needed to ensure safety.
He said this had been demonstrated by the experience in South Korea. Korean Hydro and Nuclear Power tendered to build two reactors in Czechia at a cost of A$14.9bn for 1GW capacity.
Tennant Reed, the climate and energy director at the Australian Industry Group and an energy systems expert, said CSIRO choosing South Korea as a benchmark was the agency “doing its best to be fair” to nuclear power.
But he said the costs of nuclear generators in western democracies including France, Finland, the UK and US ranged from $12bn to $28bn for 1GW.
“The actual costs in these western countries are a great deal higher [than GenCost’s estimate],” he said.
“We should have that in mind when looking at what the costs might turn out to be here.”
The Coalition’s plan will rely on analysis by the economist Danny Price from the consultancy firm Frontier Economics, who has advised the federal Coalition under Tony Abbott and Malcolm Turnbull and the South Australian Labor government.
The first stage of Price’s analysis argued the Australian Energy Market Operator had substantially underestimated the cost of running the grid predominantly on renewable energy and storage, largely because the operator had adjusted for inflation, a standard accounting practice.
The Coalition and News Corp claimed this disagreement over accounting methods was evidence of a “$500bn green hole” in Labor’s plan.
