GenCost: Nuclear power in Australia up to 360% more expensive than renewables

The Australian Energy Market Operator and the CSIRO have released the 2023-24 GenCost report, which states running nuclear power in Australia could be up to 360% more expensive than renewables.

The independent report backs the Albanese government’s plan for “reliable renewables” and supports the government’s stance renewable energy can provide Australian homes and businesses “cheaper, cleaner energy now and into the future”.

The report compares the cost to build new coal, gas, solar, onshore wind, offshore wind, batteries, and nuclear generators. It finds firmed renewables – including transmission and storage costs – provide Australians the cheapest power at between $83/MWh and $120/MWh in 2030, when they account for 80% of variable generation.

Were small modular nuclear reactors able to be up and running in Australia by 2030, the cost of their power would reportedly be up to $382/MWh – not including what the federal government says is a “hefty ‘first of a kind’ premium”.

This means the cost of power from small modular nuclear reactors would be up to eight times more expensive than firmed large-scale wind and solar when the ‘first of a kind’ premium is included.

The latest report introduces a range of changes in response to stakeholder feedback, most significantly, the inclusion of large-scale nuclear for the first time.

This decision was prompted by increased stakeholder interest in nuclear following updated costings for small modular reactors (SMRs) in the 2023-24 consultation draft.

GenCost assessed submissions regarding the suitability of large-scale nuclear power generation in Australia’s electricity system and found that, while generation units of that scale are unprecedented in Australia, there are no known technical barriers.

It also determined that nuclear power was more expensive than renewables and would take at least 15 years to develop, including construction. The CSIRO and AEMO say this reflects the absence of a development pipeline, the additional legal, safety and security steps required, and weighing the evidence provided by stakeholders.

CSIRO’s Director of Energy Dr Dietmar Tourbier says GenCost was committed to robust stakeholder engagement, with the latest consultation attracting more than 40 written submissions and more than 200 industry webinar participants.

“The feedback provided by the energy community each year is invaluable, given that cost forecasts of future electricity generation, storage and hydrogen production can fluctuate significantly and no single technology can achieve our transition to net zero,” Tourbier says.

“Whether the input GenCost receives is highly specialised or simply advocating for a particular pathway, our considerations are policy and technology neutral.”

Minister for Climate Change and Energy Chris Bowen says the federal government’s Reliable Renewables plan is the only one supported by experts to deliver a clean, cheap, reliable, and resilient energy system.

“Our Reliable Renewables plan is backed by experts to deliver the lowest cost energy where and when we need it to power households and industries,” Bowen says.

“Peter Dutton’s half-baked plan would see Australians foot massive bills to build risky reactors that have been shown by experts to be the most expensive form of energy, and too slow to keep the lights on.”

This year’s report also analyses the cost of large-scale nuclear reactors. It calculates the cost of power from large scale nuclear would be up to three times more than reliable renewables, and construction costs would likely double due to ‘first of a kind’ cost premiums.

However, in the 2023 edition of the Nuclear Power Reactors in the World report, the International Atomic Energy Agency (IAEA) says as of 31 December 2022, more than 393.8 GW(e) of operational nuclear power capacity was available through 438 reactors across 32 countries. 

Globally, nuclear capacity is forecast to grow in the coming years. A major reason is the costs saved by many of the countries utilising it as a power source.

In a wide-ranging interview in April 2024, Terra Uranium (ASX:T92) Executive Chairman Andrew Vigar scoffs at the idea nuclear power in Australia will be cripplingly expensive.

As a source of green energy, the cost of uranium per kilowatt produced is about 2%. Vigar tells the main costs lie in the distribution – the wires, power stations, environmental controls, and the whole network involved. 

He notes it’s the same with wind or solar where a lot of the cost is actually in the transmission lines, as well as the solar power stations “and everything else”.

“The sun’s free and the wind’s free, but it’s not a large component of the cost anyway. It’s the same with nuclear – the actual nuclear fuel is a very small percentage, few percent,” Vigar explains.

However, Minister for Industry and Science Ed Husic says the independent assessment from CSIRO and AEMO is further confirmation that firmed renewables are the only realistic option.

Both ministers acknowledge that “Australia has the best solar resources in the world” but add the 2023-24 GenCost report shows large-scale solar alone is 8% cheaper to build than a year ago.

Compounding how expensive nuclear would be to Australian families, they say the report also shows that bringing nuclear online would be too slow to keep the lights on.

The GenCost report says the first full operation would be no sooner than 2040 for small modular nuclear reactors and years later for large-scale nuclear reactors.

Power will need to come from somewhere. Some 24 coal plants announced their closure dates under the previous government with 90% of Australia’s coal-fired power forecast to close by 2035.

At COP28 in late 2023, 20 of the world’s leading countries – not including Australia – took a collective undertaking to triple their nuclear power station capacity by 2050. While most of these are large reactors, small modular reactors will also come online within that timeframe.

Governments including the UK, the US, many major companies in Europe, Japan, and South Korea are among those at COP28 to agree to do help triple their nuclear power capacity by 2050.

Terra Uranium’s Vigar notes that China is already building a reactor a month at the moment, meaning Australia is lagging world leaders when it comes to low-cost power production.

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Images: CSIRO
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Written By Adam Orlando Editor-in-Chief Adam Orlando has more than 20 years’ experience in the media having held senior roles at various publications, including as Asia-Pacific Sector Head (Mining) at global newswire Acuris (formerly Mergermarket). Orlando has worked in newsrooms around the world including Hong Kong, Singapore, London, and Sydney.