Future energy mix must be shaped by cost benefits
Climate Change and Energy Minister Chris Bowen might not realise it but he has done Peter Dutton and Australians a favour by drawing attention to the cost of the opposition’s plan to convert coal-fired power stations to nuclear small modular reactors. On Sunday, Mr Bowen released figures from his department showing it would cost $387bn to replace retiring coal-fired plants with 21.3GW of nuclear generation. The data said at least 71 300MW small modular reactors would be needed to offset the end of coal generation. Costly as it would be, it represents excellent value alongside other options.
Research by teams from the University of Melbourne, the University of Queensland, Princeton University’s Andlinger Centre for Energy and Environment and the Nous Group reported in July that Australia would need to find $1.5 trillion by the end of the decade to meet its net-zero emissions target by 2050. A drastic acceleration of onshore and offshore wind developments would be needed to provide future power, the Net Zero Australia group found. Nous Group principal Richard Bolt said the capital requirement for the transition would be $1.2 trillion to $1.5 trillion by 2030, and $7 trillion to $9 trillion by 2060. On that basis, SMRs would cost a fraction of that of continuing with the current approach. The government’s analysis of SMRs was based on taxpayers footing the entire bill. In reality, they should attract private investment.
By quantifying the cost of 71 SMRs, Mr Bowen has triggered, perhaps inadvertently, what should be a rational economic discussion comparing SMRs to renewables for generating reliable baseload power and containing costs, or the advisability of using both. When the Net Zero report was released, Robin Batterham – emeritus professor of engineering at Melbourne University and Australia’s former chief scientist – who chaired the group’s steering committee, compared Australia’s energy transition to the US-led Marshall Plan to rebuild Europe after World War II. Professor Batterham urged decision-makers not to take anything, including coal, off the table now. “You don’t close coal down if you haven’t got the reliable supply there ready to take over when you turn it off,” he told The Australian. He also cautioned against waiting for “silver-bullet” technology, such as SMRs. “Nuclear might get there, but it ain’t there yet.”
Mr Bowen’s pre-emptive strike on the Coalition’s policy comes as Mr Dutton prepares to attack Labor over higher energy bills and the threat of summer blackouts. As reported in The Australian on Monday, the government is also being challenged over the capacity of the system to back up the grid during unfavourable weather, when the sun does not shine and the wind does not blow. The capacity investment scheme, agreed to last year by national and federal energy ministers, sees the government underwrite revenue for a mix of zero-emissions dispatchable generation and storage projects. Power retailers welcome the plan’s objective but warn that its effectiveness will be blunted by excluding gas.
Insufficient attention is also being paid to value, for taxpayers and consumers, as the cost and timetable for the transition to net zero gets bigger and longer. Ted O’Brien, the opposition’s climate change and energy spokesman, argues that an electricity grid built almost entirely on wind and solar defies economics and engineering, To meet the 2030 target would require 22,000 solar panels installed every day, 40 wind turbines every month and tens of thousands of kilometres of transmission lines. For every day that progress falls short, the challenge becomes costlier and more difficult, he said.
In July, Mr Dutton said Mr Bowen saw nuclear and renewables as competitors but “we see them as companions’’. The new technologies were factory-built, portable, scalable and could be relocated. “We could convert or repurpose coal-fired plants and use the transmission connections which already exist on those sites,’’ he said. “It’s no wonder more than 50 countries are exploring or investing in new SMRs and nuclear batteries.” In June, Sweden, which is highly advanced in using renewables to generate electricity, changed the wording of its target from “100 per cent renewable” to “100 per cent fossil-free” to invest more in nuclear energy. France, Finland, Britain, Canada, South Korea and the US are also ramping up investment in nuclear energy, Judith Sloan wrote recently. “We really run the risk of being left at the starting gate unless we make this shift.’’ In a uranium-rich nation, SMRs, like all energy technologies, need to be assessed.
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