Could nuclear power really lead to cheaper bills?
Sam Hawley: Peter Dutton is going nuclear and he says it will reduce our energy bills. That’s a claim that would be music to most Australians’ ears given the cost of gas and electricity has surged. But how likely is it? Today, energy reporter Daniel Mercer on what building nuclear reactors means for the household bottom line. I’m Sam Hawley on Gadigal land in Sydney. This is ABC News Daily. Dan, the coalition wants to go nuclear. It wants to build seven reactors in Australia and there’s so much, I think, to discuss around this, like when they’re going to be built, where the nuclear waste is going to go. But one of the big things is about power bills, about how much we pay for energy. Peter Dutton says his plan will make energy cheaper, doesn’t he?
Dan Mercer: Yeah, he does and he was very clear on this, Sam, when he unveiled that policy.
Peter Dutton: I want to make sure that the Australian public understands today that we have a vision for our country to deliver cleaner electricity, cheaper electricity and consistent electricity.
Dan Mercer: What’s probably important to query though is whether he’s saying it will cut electricity bills compared with what they are now or whether he just means his plans will be cheaper than Labor’s. But certainly the coalition is bandying the word cheaper around with gusto.
Peter Dutton: This is about modernising our energy system. It’s about making sure that we have cheaper electricity. It’s about making sure that we underpin economic growth and jobs growth for generations to come.
Sam Hawley: Yeah, absolutely, because we do want cheaper power bills, that’s for sure, because I think most Australians at this point would agree that we are paying way too much.
Dan Mercer: Yeah, and I think Peter Dutton has tapped into something. You’re right, power prices are high and they’ve rocketed about 40 per cent or more in the past two years and there’s little relief in sight.
Sam Hawley: Absolutely. Alright, so Peter Dutton thinks the government’s renewables policy is not fit for purpose and nuclear is a much better option and the assertion is that that will be great for our power bills. So let’s just unpack this a bit more then, Dan. What exactly is the opposition arguing? How is this going to be cheaper?
Dan Mercer: I’m not sure it’s exactly clear yet, Sam. Okay. I mean, I think the central tenet of the argument seems to be that nuclear is a like for like with coal in many ways. That’s kind of my read on it. Coal was the bedrock, and still largely is, of our electricity system and certainly prices were cheap when coal predominated. Ipso facto nuclear power would lead to cheaper electricity. And it’s on this ground that Peter Dutton has a point, is that nuclear plants would avoid the need for huge and costly additions to the high voltage transmission network, you know, those big, high steel lattice towers that march across the landscape, because these nuclear plants could be built on the sites of old coal plants and those old coal plants are the traditional hub in the hub and spoke electricity system that really characterised our electricity supply for so long. That’s obviously not the case with large scale renewable energy though, which more often than not needs to be built in far flung places with lots of wind and lots of sunshine. And underlying all of this, I think, is a view by the Coalition, which is shared by some others, it has to be said, that it’s just too difficult to run a power system on green energy alone. But there’s still so much detail we’re yet to hear about the costs and the practicalities of their plan.
Sam Hawley: So let’s then, I think, Dan, have a look at what experts are saying about this, what they think, because there is a fair bit of scepticism, isn’t there?
Dan Mercer: There is, definitely, and a lot of people who watch the industry closely, including people who are, you know, senior participants in the industry, are sceptical. I spoke to Dylan McConnell. He’s an energy analyst at the University of New South Wales and I think a fairly well respected one. He was of the view that the Coalition’s timeframes are simply not realistic. They’re just not plausible. Peter Dutton says the first plant, which will be a so-called small modular reactor, would be built probably in South Australia by 2035, but small modular reactors don’t exist in a commercial sense in the developed world. Mr Dutton also says the first large-scale reactor will be up and running by 2037, but we don’t have a nuclear energy industry in Australia and we have legislative bans in place on the technology. So we would have to overturn those bans, establish an industry with all of the monumental difficulties and costs that entails. And as Dr McConnell noted, there is nowhere in the developed world that has built a nuclear reactor since the start of the century without incurring significant costs and time blowouts on the construction.
Dylan McConnell: 2035 is not credible. We can look at the CSIRO as well that points to 2040, but the idea that we could have something even faster than 2040 I don’t think stands up to scrutiny.
Sam Hawley: But Dan, Ted O’Brien, he of course is the opposition’s energy spokesman, he points actually to a Canadian province to show that it is true that nuclear energy does deliver relatively cheap electricity to households in that province. It really works to bring bills down. It’s a case in point for him.
Dan Mercer: Indeed, he did make that point, as has Peter Dutton.
Ted O’Brien: Now, when you talk to the Canadians, indeed when you sit down with the energy minister from that province, he makes it crystal clear that in fact it’s nuclear as part of the mix that drives prices down. There is no reason why as you scan the rest of the world, nuclear drives prices down, that it wouldn’t be the same here in Australia.
Dan Mercer: I think the point that gets made about this Canadian province of Ontario is that consumers pay about 14 cents a kilowatt hour for their electricity. I don’t know if you’ve looked at your electricity bill closely lately, Sam, but 14 cents a kilowatt hour is certainly a good price. You’d take it. Right. And Ontario has a lot of nuclear power in its energy mix. So the coalition has drawn a link between nuclear power and cheap prices. But what Dr McConnell points out is that the wholesale cost of nuclear in Ontario is not actually that cheap at all. It’s about $110 a megawatt hour, and that’s more expensive than the wholesale cost of energy across much of Australia right now. So Dr McConnell reckons that if consumers aren’t paying much for their power in Ontario, then nuclear doesn’t necessarily have much to do with it. There are probably other reasons that better explain it, such as maybe much lower poles and wires costs than we bear in Australia, which are very high. We’re a large, dispersed population. We have lots of poles and wires that need to be paid for by consumers. And we need to remember that nuclear power in Ontario has been operating for decades, 50 years in some cases. I think the newest one is almost, if not in fact, 30 years older or more. And that’s very important because it means the mountain of debt that those plants racked up when they were first built has been largely, if not totally, paid back by now. And so the cost of those plants is much lower than would be the case for a new plant.
Sam Hawley: Yeah, okay. Just on a side, because I just checked. I do pay about 37 cents a kilowatt hour for my electricity. So 14 cents sounds good in Canada, but as you say, they’ve had this plant up and running for a really, really long time. So Dan, what happens when a plant hasn’t actually paid off its costs, it hasn’t been there for long, because these cost so much to build, don’t they, a nuclear reactor?
Dan Mercer: Yeah, they are. They’re monumentally expensive, and that’s where so much of the risk lies. I mean Hinkley Point C in the UK is almost a poster child for all that can go wrong with these large-scale nuclear power projects. It’s now expected to cost almost $100 billion Australian. I think it’s about $88 billion Australian, and it was a fraction of that when it was first proposed. That’ll be a cost borne for consumers for decades. No doubt they’ll appreciate the reliability it provides and the amount of power it can generate, but it’s not cheap.
Sam Hawley: All right, so Dan, there is another argument though from the Coalition that nuclear will be cheaper to get up and running than this transition to renewables, the transition to wind and solar. What about that?
Dan Mercer: Yeah, I think this really cuts to the heart of what the Coalition is arguing, Sam, that their plan, well, we’ll release the details later, but look at Labor’s plan, it’s costing a bomb anyway, and would cost more. The thing about what we’re moving to compared with what we’ve come from is there is so much more electricity generation in different assets, and they are everywhere, and they do need a lot of backup, they do need a lot of kit that has to sit in behind it to step in when the wind isn’t blowing or the sun isn’t shining. Look, it gets a bit messy because obviously, even if we were to power our economy with nuclear energy, if we electrify, those pressures are still going to be there, and they will still need to be paid for. And so this argument between what the Coalition says around nuclear and what Labor says around renewable energy can just become an utter maze. But, you know, the notion that a renewable electricity system will slash our bills is similarly coming under scrutiny and coming under pressure, and it’s why Peter Dutton is mounting this attack. He doesn’t think that it’s either going to happen, or he thinks that there’s ground for prosecuting against it because people are sceptical. Right now, consumers aren’t really seeing the benefits in lower bills, unless you’re lucky enough to have your own solar or your own batteries, and you’re really smart and you can deal with a lot of these pressures in your own ways.
Sam Hawley: It’s so complicated for voters to get across this, isn’t it? It’s really, really complex.
Dan Mercer: Horribly so. I think it’s why it’s been such a battleground, Sam, because it’s so easy to, you know, confuse people and to muddy the waters.
Sam Hawley: Yeah, absolutely. All right, well, from what you’ve been saying, though, it’s clear at this point, without more detail from the opposition, that there really is no evidence that nuclear will be cheaper and then that will mean the consumer pays less, that we all pay less in our power bills. Is that fair to say?
Dan Mercer: I think – I mean, I’m going to defer to Dylan McConnell from the University of New South Wales here. He is of the view that on the timescales that matter, nuclear power will not and cannot reduce our electricity bills. On a best-case, most generous assumption scenario, the coalition would have nuclear in some form up and running in Australia by 2035, large-scale by 2037, but that’s a pretty heroic assumption. And so nothing is necessarily going to happen in the meantime to bring those bills down. And in the meantime, we face this pressing need to replace our ageing fleet of coal-fired power stations. Arguably, the government is really struggling to do that as it is. We are not building enough capacity, arguably, to replace those coal plants that we’ve relied on for so long. And so the coalition’s plan wouldn’t even really kick in for another 15 years at best. For the average punter sitting at home looking for the benefit of cheaper electricity, I mean, it’s all kind of a moot point, really. Whether it could reduce prices, I mean, for the reasons that we’ve discussed, it’s questionable. It’s highly questionable. So it’s Herculean in its assumptions and it’s just not something that the average person could probably see any tangible benefits or otherwise from for a very long time.
Sam Hawley: All right, and we still don’t have the finer details, but, you know, this is a huge big policy, so, Dan, I’m sure we’ll be speaking with you rather a lot in the months ahead. Thanks, Dan.
Dan Mercer: Does make it interesting. Thanks, Sam.
Sam Hawley: Dan Mercer is the ABC’s energy reporter. This episode was produced by Bridget Fitzgerald with audio production by Sam Dunn. Our supervising producer is David Coady. Over the weekend, catch Notorious, a new series from the ABC’s Background Briefing podcast with inside accounts from alleged traitors, criminals, scammers and shock jocks. That’s on the ABC Listen app. I’m Sam Hawley. ABC News Daily will be back again on Monday. Thanks for listening. .
