Sweden’s Energy Minister took to social media last Thursday to voice her displeasure with the Germans. German demand for Scandinavian electricity had sent power prices through the roof.
“It is a result of decommissioned nuclear power,” Ebba Busch wrote on X.
“When it’s not windy, we get high electricity prices with this failed electricity system.”
In Norway last week the ruling centre-left Labour Party pledged to cut the interconnector with the EU grid after Germany’s latest wind drought sent Norwegian power prices to record highs. Norway’s Energy Minister Terje Aasland summed it up thus: “It’s an absolutely shit situation.”
The nuclear power debate runs on different lines in Europe and North America. A country can invest in its own reactors or scrounge nuclear power from its neighbours. The only exception to the rule is Norway, which invested heavily in hydro generation until the greenies put a stop to it in the mid-1980s.
The case for nuclear generation in flat and dry Australia is compelling. The case against it is embarrassingly weak, as we discovered last Friday when Climate Change and Energy Minister Chris Bowen set out to discredit Frontier Economics modelling and failed.
Accusing Frontier of pushing “dodgy figures” and labelling Peter Dutton’s endorsement of its findings as “a Christmas con job” provided copy for plodding journalists. Yet Bowen could not refute the report’s most damaging finding: the cost of decarbonising the grid under his policy.
Frontier’s headline figure of $594bn is a conservative underestimate. It does not include the cost of cleaning up the grids in Western Australia and the Northern Territory.
Costs incurred directly by the consumer to install solar panels and batteries are excluded. So is the price of trading in gas appliances for electrical appliances.
Frontier does not attempt to model externalities such as the loss of amenity in regional Australia caused by wind and solar generators and augmented transmission networks. Frontier says if these were included, the total cost of the transition in the energy sector would be well more than $1 trillion.
Bowen was wise to avoid getting trapped into a messy argument about Frontier’s claim that the new transmission lines needed to accommodate variable renewable energy would cost $66bn.
Wise because the Australian Energy Market Operator’s transmission cost estimates are all over the place.
In 2020, AEMO said transmission lines to support the New England Renewable Energy Zone would cost $1.5bn. In the 2024 Integrated System Plan, AEMO has upped that figure to $3.7bn.
The Queensland SuperGrid was supposed to cost $500m. Now they’re telling us it’s $3.3bn. The HumeLink was supposed to set us back $2.4bn. AEMO’s latest guesstimate is $4.9bn.
The integrity of Frontier’s report is hard to question. It has a solid record in climate and energy research stretching back 25 years. It can hardly be accused of skewing its findings to satisfy its client since the research was conducted at the company’s expense.
For its trouble, Frontier can kiss goodbye to any government contracts so long as Labor is in power. It can expect to be shunned by the cashed-up renewable sector.
Frontier’s Danny Price could not have been blind to the reputational risk. He would’ve known that the time-poor, economically illiterate press corp would not read the report before jumping on its imagined failings.
Frontier’s motives appear genuinely publicly spirited under the circumstances.
“We have decided to do the work because of the large amount of ill-informed and misleading cost comparisons being publicly made about nuclear power,” Frontier explains in the introduction to its first report.
“We feel Australia deserves better quality analysis and commentary on this important issue.”
If Bowen were sure of his ground, he would test the report’s findings by asking AEMO to replicate its work. AEMO describes its ISP reports as “least-cost modelling”, implying they point the way to the least expensive method of meeting consumer demand for electricity. In practice, however, it self-censors its work to conform with the government’s emissions target and insistence on the use of renewables. By adding nuclear to the mix, Frontier has merely done what AEMO should have done in the first place.
AEMO’s road map is based on shaky assumptions that Frontier has been fearless in challenging.
Chief among these is the prediction that electricity demand will almost double in the next 26 years from 180,000 gigawatt hours to 340,000GWh, the so-called step change scenario. AEMO and its processor NEMMCO have a woeful record of forecasting demand.
Frontier says the step change demand forecast is so far from the historic trend that it looks incredible. It assumes that 98 per cent of new vehicles by 2050 will be fully electric and that green hydrogen technology will mature.
Frontier’s assumption that the nuclear option is $260bn cheaper than the government’s current policy is based on a more modest expectation of a rise in demand to 250,000GWh by 2050.
It also assumes the increasing power demand from AI computing largely will be met behind the meter. Data storage and processing centres will generate their own electricity to reduce outage risk. Should demand exceed expectations, nuclear technology is relatively easy to scale up.
Additional reactors can be added in sequence on the large tracts of land vacated by retiring coal-fired generators.
Scaling up renewable energy is a nightmare proposition. The scarcity of suitable land, the fragility of supply chains, the challenge of gaining community consent and the demand for yet more transmission will only increase.
Global interest in nuclear is gaining momentum. At COP29 in Azerbaijan, six more countries joined the pledge to triple the world’s nuclear energy capacity by 2050, bringing the number of nations on board with the agreement to 31. Microsoft is reopening a mothballed reactor at Three Mile Island. Some of the world’s largest banks, including Bank of America, Barclays and BNP Paribas have agreed to bankroll nuclear.
Six new reactors have gone online this year, three of them in China, where the average build time is five years. Another 65 are under construction.
Meanwhile, Australia muddles along, legally shackled to a 34 per cent reduction in carbon emissions by 2030 that it cannot possibly meet under a Luddite government fighting a rearguard action against nuclear energy that defies rational explanation.
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