Electricity generated by solar and on-shore wind is the cheapest in Australia, even after the significant expense of integrating them into the power grid is factored in, according to new analysis from the CSIRO.
Estimates of costs to build small modular nuclear reactors – a technology supported by the Coalition but not expected to be commercially available until at least 2030 – have risen dramatically and would provide the most expensive power, according to the draft GenCost report.
Australia’s electricity networks were designed for large coal-fired power stations but these ageing plants are being closed down because renewable power is cheaper and Australia cannot meet its climate targets by continuing to rely on coal.
Replacing coal with renewables will see more sources of generation spread across the country – creating a distributed energy system – requiring expensive transmission lines and other technologies, including storage, to keep the grid reliable while keeping costs down.
CSIRO’s previous GenCost report was attacked by some critics this year for not including these integration costs until the year 2030, by which time billions of dollars would have been spent on storage and transmission projects to integrate renewables that were not costed in the report.
While experts said renewables remained the lowest-cost technology that would allow Australia to meet its climate goals, the lead author of the new GenCost report, CSIRO chief energy economist Paul Graham, said the agency had listened to its critics.
“We took on board that feedback and included those pre-2030 costs but we found the story doesn’t change that much. Variable renewables still have the lowest cost range.”
The latest GenCost report, which has gone out to industry for consultation today, shows that in 2030 a theoretical nuclear small modular reactor had the second highest cost range of all available technologies. The most expensive would be power from a peaking plant run on hydrogen.
The Albanese government has a target to have 82% of electricity generated from renewables by 2030 and last month expanded a taxpayer scheme to underwrite projects after concerns that progress was too slow.
Costs to build the largely theoretical small modular nuclear reactors have risen since the last GenCost report, after new figures from the most advanced US project.
That Utah-based project, which was scheduled to start generating electricity in 2029, was cancelled earlier this year because of a lack of customers for the power it would generate.
Graham said despite the cancellation the Utah-based project, run by NuScale, had provided some of the first real-world data of actual costs from a nuclear SMR.
“That is better quality data because it’s from a real project but, for the time being, we can only conclude it is the highest cost option for reducing emissions.”
The GenCost report also updates the capital costs of different technologies due to inflation.
Graham said the report showed that inflationary pressures were easing from the previous year but that pressure remained on gas, wind and nuclear SMR costs.
