Powering Australia with nuclear energy would cost about twice as much as renewables, CSIRO report shows

Building a large-scale nuclear power plant in Australia would cost at least $8.5 billion, take 15 years to deliver and produce electricity at about twice the cost of renewable sources, the country’s leading scientific institution has found.

In a report comparing conventional nuclear power with other options in Australia for the first time, the CSIRO concluded that the technology’s costs were broadly similar to those of gas-fired and black coal-fired generation with carbon capture and storage.

But CSIRO’s GenCost report noted that nuclear power is likely to remain at least 50 per cent more expensive than large-scale wind and solar power backed by “firm” technologies such as batteries.

And he warned the true costs of large-scale nuclear power would likely be much higher, given the big risks of cost and timeline explosions for a technology that has never before been built in Australia.

He said a nuclear power plant in Australia would be “the first of its kind” and as such “premiums of up to 100 per cent cannot be ruled out”.

Nuclear power plant chimneys

The CSIRO predicts that the actual costs of nuclear capability in Australia are likely to be much higher than estimated.(Pexels: Rob; license)

“We did a lot of work to determine how much nuclear power would cost in Australia,” said Paul Graham, chief economist at CSIRO’s energy business unit.

“We have previously reported on small modular reactors.

“But this time, we did an update and looked at the cost of large-scale nuclear reactors, and they are cheaper, on the order of $150 to $250 per megawatt hour.

“This is still between one and a half and two times the cost of renewable energy.

“Therefore, they continue to cost more than solar and wind deployment.”

As part of its process, the CSIRO analyzes technologies using a measure called “levelised cost of energy”, which calculates how much money a generator would need for its power to break even.

The GenCost report is produced each year by the CSIRO and the Australian Energy Market Operator (AEMO). Provides an updated estimate of construction costs for new electricity generation and storage projects.

Debate on the nuclear role in Australia

The report comes amid a debate in Australia over what role (if any) nuclear power should play in Australia’s energy transition.

Unlike other conventional energy sources, such as coal and gas, nuclear energy can operate 24 hours a day with virtually no greenhouse gas emissions.

The Federal Coalition has harnessed technology as a solution to help Australia transition away from fossil fuels and decarbonise by mid-century.

Australian opposition leader Peter Dutton speaks during a press conference.

Australian opposition leader Peter Dutton has not yet released his nuclear plan.(ABC News: Ian Cutmore)

While the opposition initially touted the prospect of so-called small modular reactors that had only a few hundred megawatts of capacity, it has since pivoted toward large-scale plants.

Opposition leader Peter Dutton has not yet published his official policy but has floated the idea of ​​building a fleet of large-scale nuclear reactors across the country to replace disused coal plants.

The CSIRO said there was no technical reason why Australia could not build nuclear plants, but also suggested the risks were considerable.

The main ones were the costs involved and the time it would take to deliver the plants.

He said the “best representation” of a nuclear program was in South Korea, a rich, developed country that had been building reactors continuously for years.

By contrast, the agency noted that other Western countries such as the United States and the United Kingdom were only building nuclear plants “sporadically.”

As a result, they had suffered significant reductions in the costs and time required to complete projects.

The CSIRO said that even if Australia could emulate South Korea, it would likely face higher costs given the price of labour, a lack of existing skills and differences in governance and standards.

Nuclear will miss coal’s deadline

What’s more, Graham said a nuclear power plant is unlikely to be built until 2040 or later, long after much of Australia’s coal-fired generating capacity needs to be replaced.

And he said that regardless of whether Australia could opt for small-scale or large-scale nuclear power, the country’s outright ban on the underlying technology would have to be repealed in a process that could take many years.

To that end: “The inclusion of large-scale nuclear power and SMR in the 2030 cost comparison is just a point of interest rather than a practical one.”

“The second problem we found with large-scale nuclear reactors, or small modular reactors, is that it will be about 15 years before we can have the first operational plant,” Graham said.

“When we implement any technology in Australia, there is a lead time where you have to plan, get (permission), organize some financing and maybe who you are going to sell the electricity to.

“All of that takes time before construction can even begin. “What we found with large-scale nuclear power was that they have a longer development time than other technologies in Australia.

“The first is the legal obstacle: we would have to legalize the deployment of nuclear energy.

“The second is that they have additional safety measures that other technologies don’t have because of the nuclear material.

“And finally, they have the longest construction time of any technology: four to six years. That’s why it takes so long to deploy nuclear power.”

According to the CSIRO, reliably estimating any “first-of-its-kind premium” for nuclear power was too complicated to attempt because the technology had never been built locally.

But he noted this was not unique to nuclear power, and said similar caveats applied to cost estimates for coal- and gas-fired power with carbon capture and storage, as well as offshore wind.

The agency said onshore wind and solar power remained the cheapest forms of new electricity, even taking into account the cost of the capacity (such as batteries, pumped hydroelectric plants and high-voltage power lines) needed to support them.

It said the average cost of new “variable renewable energy projects” was $119/MWh in 2023 and would fall to $99/MWh in 2030.

This despite the fact that wind power suffered a significant increase in costs and was the “slowest” to recover from the “global inflationary pressures associated with the pandemic.”

Artist's impression of eight large white wind turbines placed in a row in the ocean.

Wind technology has been the slowest to recover from cost increases during the pandemic.(Supplied: Oceanex Energy)

Graham noted that offshore wind is probably about twice as expensive as onshore wind.

Solar thermal plants, which are different from the photovoltaic cells that now dominate the solar industry, were more competitive but still relatively expensive, he added.

With a complete review of Australia’s electricity system already underway, Graham said it was critical to strike the right balance between low costs and timely new supply.

“We also have to manage the balance between supply and demand as we move forward,” he said.

“If we remove things too quickly without replacing them with capacity, new capacity, then we risk creating an imbalance between supply and demand, which can then lead to higher prices.

“We have to make sure we replace retiring capacity with a similar level of new capacity.”