Coalition’s nuclear utopia could put renewables on ice

When Peter Dutton went full throttle on the Coalition’s plans to actually take the nuclear option on nuclear energy, it conjured up the satirical ABC comedy Utopia, a show based on a fictional government body, the Nation Building Authority, charged with building infrastructure projects.

The TV series showcases the lunacy of politically or electorally driven policy on building massive uncosted, economically irrational projects, which the boffins at the NBA are pressured to support as the press release has already been written and no number of objections can derail the government’s objective.

Opposition Leader Peter Dutton has challenged Prime Minister Anthony Albanese on nuclear energy.Credit: Rhett Wyman, Alex Ellinghausen, Getty Images

Dutton’s announcement of a plan to build seven nuclear power plants has quickly been branded “crazy brave” by the Canberra press gallery, reflecting how it might play out with voters at the next election.

It’s a go-big-or-go-home piece of policy by the Coalition that ignores the country’s natural advantage: an abundance of sun, wind and land, and our drawback, which is a lack of technical expertise in building nuclear power stations.

Let’s park, for the moment, the fact that the overwhelming majority of experts say nuclear energy is by far the most expensive way to meet the country’s future needs. A more pressing issue is how the Coalition’s plan plays into the transition to renewables that is in full flight.

The big investors have already got behind the Albanese government’s legislated target for 2030 to have 82 per cent of the grid powered by renewables and made long-term investment decisions on that basis.

It is like being halfway through designing and building a house and then deciding you want to build a block of apartments.

Indeed, Australia has been a popular spot for investment by large foreign funds in renewables because of the certainty of the 2030 target.

When Dutton spoke this week about his plan to give nuclear power primacy in the renewable mix, that investment certainty vaporised.

For investors that have poured tens of billions of dollars into the wind, solar and battery assets supposed to provide the framework for decarbonisation, the left-field nuclear announcement creates confusion and uncertainty around the billions more that they have already earmarked to invest.

Golding’s view.Credit: Matt Golding

The trouble is that introducing nuclear power into the mix now also undermines the business case and the returns on investments in wind, solar and batteries that have already been made.

The pressure on the Coalition to walk back its nuclear policy if it wins government will be nothing short of overwhelming.

It is easy and simplistic for Dutton to suggest that Australia’s transition to date has been funded by overseas money. This greatly underestimates the vast store of capital that has come from Australia’s superannuation funds, wealthy individuals, family offices and our own sovereign Future Fund.

Even if one were to successfully argue that nuclear power is a good option, trying to introduce it now, rather than 10 years ago, is financially reckless.

It is like being halfway through designing and building a house and then deciding you want to build a block of apartments. This was the analogy made by one large international energy investor I spoke with on Thursday.

Curiously, most investors in renewable assets, all of whom are gobsmacked by the Coalition’s position on nuclear, don’t want to talk about it publicly.

At this stage, they believe the nuclear notion is fanciful and don’t want to give it any credibility or oxygen, and they strongly believe changing the renewable goalposts would mean serious sovereign risk damage for Australia.

However, the Clean Energy Investor Group, the peak body representing large renewable investors including Macquarie, Blackrock and Tilt Renewables – with a portfolio of $38 billion in 76 clean energy assets – has come out punching.

“This shift [in approach to energy policy] raises unprecedented sovereign risks for both domestic and international investors, signalling instability in Australia’s commitment to a renewable energy future essential for funding long-term projects,” it said in a statement.

“The potential withdrawal from renewable energy targets exacerbates this uncertainty, deterring future investments and prompting current investors to reassess their positions, Such decisions risk Australia’s progress toward meeting its commitment to the Paris Climate Agreement’s target of limiting global warming to 1.5°C.”

Lastly, the Coalition’s policy will require Australia to continue to use coal in the production of energy for far longer than currently anticipated. How these ageing coal-fired power plants will fare operating for 10 or 20 years longer won’t be an easy issue to solve.

Read more:

• Mike Foley: ‘Cheaper, cleaner, more consistent’: Do Dutton’s claims on nuclear stack up?
• David Crowe: Seven nuclear sites and two big black holes: Why voters deserve better than this

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