Whichever way you slice it, two major parties are taking a big gamble on the future.
In one corner, you have a Labor Party plan for a grid that by 2050, will be powered almost entirely by renewables and backed by gas. In the other corner, the Coalition has gone nuclear.
Both insist their plan is the best way of achieving the holy trinity: cheaper, cleaner and reliable power.
There are too many unknowns to say, confidently, whether either will achieve it.
What we do know is that power prices have risen sharply in recent years, driven largely by Russia’s invasion of Ukraine which sent coal and gas prices soaring.
Politically, this is problematic for a Labor government which was elected on a promise to cut power bills by $275 — on 2021 levels — by 2025.
At least one energy boss has warned power prices are unlikely to fall any time soon because building the wind and solar farms at the scale required to replace coal, together with the batteries needed to store the power, and the new network of transmission lines to distribute that power to consumers will involve tens of billions of dollars’ worth of investment.
Opposition leader Peter Dutton has sought to directly link power price rises with the rollout of renewables, but building a fleet of nuclear power plants, from scratch, certainly won’t come cheap either.
So how much will it cost?
The CSIRO has crunched the numbers and estimates building a large-scale nuclear power plant in Australia would cost at least $8.5 billion and produce electricity at roughly twice the cost of renewable sources.
It noted this cost could only be achieved by building reactors one after the other and warned the first power plant would likely be subject to what’s called a “first of its kind” premium, which could double the price from $8.5 billion to $17 billion.
This is not unique to nuclear power plants, though. It’s applied to any technology a country hasn’t built before, and we only have to look at the NBN or Snowy 2.0 (which has blown out to $12 billion) to see what could happen.
But even in the world of big projects, nuclear power stations have among the worst track records for running over time and over cost.
The Coalition is looking to build five large-scale reactors and two small modular reactors (SMRs), which according to the CSIRO would be even more expensive (mainly because it’s new technology that’s still being developed).
But because they’ll be located on the site of end-of-life coal-fired power stations, there’d be no need for the new network of transmission lines that’s central to Labor’s plan.
Dutton has said a Coalition government would own these nuclear power stations “but form partnerships with experienced nuclear companies to build and operate them”.
When asked how much that would cost, he was less forthcoming.
“It will be a fraction of the government’s cost but it will be a big bill, there is no question,” he said.
Not only for the capital costs, but for the anticipated subsidies too.
Dutton is promising “integrated economic development zones” and “regional deals” for the seven communities and suggested a “bucket of money” might help sway some state leaders too. How much? We don’t know.
What’s been the experience overseas?
More than 30 countries are relying on nuclear power to decarbonise their electricity grids but most of these power plants were built before the 1990s and more recent projects have blown out in cost.
The United Arab Emirates is often put forward of an example Australia could follow. It took just 13 years to connect its first nuclear power plant, and is the only country in the world that has managed to successfully build nuclear from scratch in the last 30 years.
But from a cost perspective, there are more questions than answers. The cost, in 2018, was stated to be $US24 billion ($36 billion).
Professor John Quiggin, an economist at UQ, says there’s no clarity around what the final project costs are.
“Everything’s kind of opaque. But the high number I’ve seen – and the high number is usually the right one – is $US30 billion. That’s $50 billion Australian,” he said.
“But of course, they had low-paid workers, there’s been a fair bit of inflation since they started … and they have a lot of advantages in siting because they can just plonk the thing in the desert, on the coast somewhere they didn’t have to worry about, for example, emergency planning zones, and so forth.
“So, I think it’s highly unlikely we could get much below $100 billion for a four-reactor program.”
Korea’s state-owned power company, which built the first reactor in the UAE, has never released final costings of the project.
How much is Labor’s plan costing?
Labor is seeking to exploit one of Australia’s greatest resources — endless sunshine and wind.
By 2030, Labor wants 82 per cent of Australia’s power to come from renewables, up from 39 per cent now — requiring more than doubling of clean energy generation in just six years.
More than 90 per cent of coal power – the backbone of the power grid that’s producing about 60 per cent of our electricity today – is set to be phased out in the next 10 years.
Dutton points to modelling by Net Zero — a partnership between the University of Melbourne, the University of Queensland, Princeton University, and management consultancy Nous Group — which estimates Australia will need $1.5 trillion in capital investment by 2030 to get there.
Labor’s never put a dollar figure on the total cost of the clean energy transition. It has put $20 billion on the table to help fund a new network of transmission lines and it’s using taxpayer funds to underwrite new renewable energy projects under its Capacity Investment Scheme.
Which plan will deliver cheaper power?
According to the CSIRO, renewables are the lowest cost, new form of electricity generation — in part because once the projects have been built, they require zero fuel costs.
Nuclear proponents argue it’s not comparing apples with apples because reactors can last up to 80 years, compared to the 30-year life of a wind farm, and produce reliable power, regardless of the weather.
Again we have to look overseas.
Dutton uses France as an example because 70 per cent of the country’s power comes from nuclear and its residents pay far less for energy than neighbouring Germany which relies on a mix of coal and renewables.
“[France] has got about 70 per cent nuclear in its system, it’s the cheapest electricity in western Europe, it’s the most stable electricity,” Dutton said.
That is largely correct but according to the CSIRO, it’s not the full story.
“While the technology can be identical, electricity generation costs vary widely between countries due to differences in installation, maintenance and fuel costs in each country. Other differences include unknown or known subsidies and different levels of state versus private ownership,” it states in the latest GenCost report.
No one can say when, or if, our power bills are going to come down.
We’re in the midst of a complex, once-in-a-century transition to wean ourselves off coal, and decarbonise our economy.
But given the build time required, if Dutton is trying to convince Australians to back his plan on the basis of affordability, he’s asking voters to take a big bet on the future.