‘Cheaper with nuclear’: What will Dutton’s nuclear plan really cost

Opposition Leader Peter Dutton is refusing to release the costings of his nuclear energy policy, despite claiming a national fleet of reactors would slash power bills.

But enough work has been done by independent agencies to give us some idea of the potential price tag.

Opposition Leader Peter Dutton has pledged a government he leads would build seven nuclear plants. Credit: Marija Ercegovac

What Dutton said

“We can have cheaper, cleaner and consistent energy if we adopt nuclear power,” Dutton said last week, adding that nuclear plants did not require the thousands of kilometres of transmission lines that link renewables to the grid, and took up less space than wind and solar farms.

A Coalition government would build seven nuclear plants on the sites of existing coal plants, including two small modular reactors and five large-scale plants, and plans to have the first operating by 2037.

Dutton says residents of Ontario, Canada enjoy cheaper power prices – 18¢ a kilowatt-hour (kWh) – courtesy of the province’s eight nuclear reactors generating about 60 per cent of the electricity supply.

He told Nine’s Today program on September 20 that Ontarians were “paying one-third the cost of electricity that we are here”. In July, he said they were “paying about a quarter of the price for electricity that we are here in Australia”.

These claims are overstated.

Power prices

Victoria pays about 28¢ a kWh, NSW 33¢ and Queensland 30¢. So rather than prices being three to four times higher, they are a bit less than twice the 18¢ figure. South Australians pay more than the other states at 45¢, but still less than Dutton’s claim.

However, this comparison is questionable because Australian prices include a range of costs that Ontarians must pay on top of their kWh charge. Network charges – the cost of building, running and maintaining power poles and wires across the grid – are listed separately on Ontario’s bills and can run into hundreds of dollars a year.

Construction costs

The CSIRO’s latest energy cost report card estimated a large-scale nuclear reactor in Australia would cost $16 billion, based on the low-cost construction of plants in South Korea, and take nearly two decades to build. It calculated that cost could fall to about $8 billion per reactor as efficiencies of scale were achieved after at least five and possibly 10 reactors were built.

Britain’s Hinkley Point C plant, which was announced in 2007 with an estimated $18 billion price tag, is set to be completed 13 years late at a cost of $90 billion.

If a Dutton government built reactors in Australia, that cost would have to be repaid, which could come via consumers’ electricity bills.

Ontarian consumers and energy companies paid down debts from the construction and maintenance of nuclear plants that had ballooned to $C38 billion by 1999, so that cost no longer appears on their power bills.

Cost to consumers

Using the construction costs of nuclear plants recently completed or under way in countries such as the United States and France, an international think tank called the Institute for Energy Economics and Financial Analysis calculated how much customers would have to pay for nuclear power.

The institute said household energy bills for a medium-sized household could rise between $450 and $1154 a year in NSW and Victoria, based on current energy bills in those states. Bigger families would pay more.

The CSIRO has said a grid drawing 90 per cent of its power from renewables would deliver the cheapest electricity at between $89 and $128 per megawatt hour by 2030. It included $40 billion of transmission lines, batteries and pumped hydro in the renewables calculation.

A large-scale nuclear reactor would supply power for $136 to $226 per megawatt hour by 2040, and small modular reactors for between $171 and $366, it estimated.

Powering the grid

Dutton says the first nuclear reactor could be up and running by at least 2037. Experts question if this timeline is achievable, but assuming it can be done, there is still a significant unanswered question over how the opposition plans to power the grid in the coming decade.

The Australian Electricity Market Operator says the capacity of the electricity grid – which is the sum of all solar and wind farms, coal-fired power stations and gas plants – must double by 2035 to 150 gigawatts due to population growth and increasing electrification of cars, industry and homes.

Many new energy projects will be needed to meet growing demand and make up for the expected closure of 95 per cent of coal plants by 2035.

Analysis by the Energy Department, commissioned by Energy Minister Chris Bowen, found that if no more wind and solar farms were built, and coal plants were somehow funded to stay open beyond 2035, there would be an 18 per cent gap between electricity demand and supply. This gap would be 49 per cent if the coal plants were shut.

Renewables

Even if Australia goes nuclear, the Smart Energy Council, a renewables lobby group, has forecast a vast amount of renewable power will be needed before reactors come online around 2040.

When the opposition’s nuclear fleet was switched on – assuming it generates enough power to replace old coal-fired power stations – it would displace the electricity supply from about 3 million rooftop systems, the council said, given an average rooftop solar system of 6.6-kilowatt capacity generates 25 kWh of power a day.

Cut through the noise of federal politics with news, views and expert analysis. Subscribers can sign up to our weekly Inside Politics newsletter.