Of all the debates unleashed by the Coalition's nuclear energy announcement this week, energy prices is among the hottest. As Australians struggle with the skyrocketing cost of living, Opposition Leader Peter Dutton's plan gives little assurance he can bring power bills down - neither soon nor into the future.
Author
Tony Wood
Program Director, Energy, Grattan Institute
Dutton's plan, for seven Commonwealth-owned nuclear plants across Australia, came with no costings or modelling attached. We don't know the price tag to build and operate the reactors. More importantly, we don't what the total system, with nuclear included, will look like or cost.
But we do know the first nuclear plant, if it ever gets built, would not be operational for at least a decade - and even that is a very optimistic timeframe. There are not many Australians worrying about their energy bills in 2035 - but even if they were, nuclear energy is unlikely to bring costs down then.
And what of the hip-pocket pain facing consumers right now? The Coalition's nuclear plan, if it replaces coal with gas in the medium-term, is only likely to mean higher energy bills - not to mention higher greenhouse gas emissions.
Gas is not the answer
Making his announcement on Wednesday, Dutton said the seven sites chosen for nuclear reactors "will be part of an energy mix - obviously with renewables and significant amounts of gas into the system, particularly in the interim period". He went on:
Our plan is to deliver cheaper, cleaner and consistent 24/7 electricity as part of a balanced energy mix.
Dutton concedes coal plants are reaching the end of their lives. Almost all will be gone by 2035, so new generation sources are needed. But his plan does nothing to explain how the Coalition would do this, and bring down energy prices, in the next five to ten years.
In fact, there is every indication the Coalition's policy will have the opposite effect. Gas is expensive compared to coal. Its real value is in balancing a high-renewables system - that is, to meet weather-related shortfalls until other solutions are commercially viable.
If a Coalition government slows the renewables' roll-out, and use gas to fill the supply gap until nuclear plants are operational, energy prices will only go up.
However, Dutton also needs to explain how he intends to slow down renewables and speed up gas, when such decisions are driven as much by state as federal policies, through measures such as renewable energy targets and state policy roadmaps.
What about future energy prices?
Moving on from energy prices over the next decade, what happens in the mid 2030s when the Coalition's nuclear energy capability is purportedly up and running?
Let's say the Coalition builds seven small and large nuclear reactors which together add about ten gigawatts of capacity to the grid. This is a feasible figure, taking into account the current capacity of nuclear reactors around the world. However, it is a very small proportion of the generation capacity that will be needed in the later 2030s.
Would electricity from this grid be cheaper than if that ten gigawatts was supplied by renewable energy? So far, the Coalition has provided no evidence to support this argument.
CSIRO research recently found that electricity produced by a large-scale nuclear plant in Australia would be at least 50% more expensive than firmed renewable energy.
There's another point to consider. Australia's total electricity generation must increase enormously to meet the electrification needs of other parts of the economy. Homes and much of industry will move away from gas to electricity, light vehicles will be electric, and our "energy superpower" ambitions, such as exporting green hydrogen, will need many gigawatts of new, zero-emissions electricity.
According to the Australian Energy Market Operator, annual electricity consumption from Australia's grid will need to double by 2050, to about 300 gigawatts.
It's the total system costs that matter when it comes to electricity prices, and ten gigawatts of nuclear would be a very small part of the mix.
Show us the numbers
The Coalition has made much of the need to have a "balanced" energy system to bring energy prices down. This is a strange argument. When coal was seen as the cheapest and best source of energy, we had an electricity system which ran on coal. No-one was talking about "balance" back then.
New technologies were only introduced once we realised coal was no longer fit for the job. The idea that we should have a mix of technologies in the system, simply as a matter of principle, doesn't make sense. the Opposition has not explained what the balanced system would look like and what roles each technology would play in that system.
Opposition energy spokesman Ted O'Brien says the Coalition will provide costings for its nuclear energy policy before the federal election. This detail will be welcomed, and heavily scrutinised.
Based on what we have seen so far, it's hard to see how Coalition's policy will do anything to address cost of living challenges now, or in the 2030s and beyond.
Through his superannuation fund, Tony Wood owns shares in a range of companies, some of whom could be impacted by this article.
