Analysis and Commentary

Not nuclear, but wind and solar still cheapest – CSIRO

Analysis and Commentary

By Peter Roberts

There is a huge amount of hype around new energy sources to replace fossil fuels and none more so than the phenomenon of small modular nuclear reactors (SMR).

But the hype remains just that according to the latest GenCost 2022–23 study released today by CSIRO and Australian Energy Market Operator.

While SMRs are likely cheaper to build that traditional large nuclear power stations, renewable power from onshore wind turbines and solar PV are increasingly important as the cheapest sources of new energy generation capacity according to the report.

This holds true whether the costs of integration into the grid are taken into account, or not.

Each year the two bodies work with industry to give an updated cost estimate for large-scale electricity generation in Australia, and each year wind and solar come out on top.

The 2022-23 report found that onshore wind and solar PV are ‘the lowest cost generation technology by a significant margin’, despite cost increases averaging 20 per cent for new-build electricity generation in Australia.

Offshore wind is higher cost but competitive with other alternative low emission generation technologies.

CSIRO Chief Energy Economist Paul Graham said: “Innovation in electricity generation technology is a global effort that’s strongly linked to climate change policy ambitions.

“Technology costs are one piece of the puzzle, providing critical input to electricity sector analysis.

“To limit emissions, our energy system must evolve and become more diverse.”

GenCost said the next lowest cost flexible technology in 2023 is gas generation with carbon capture and storage, but only if it could be financed at a rate that does not include climate policy risk.

“Of the low emissions flexible technologies, gas with carbon capture and storage is the next most competitive.”

Fossil fuels were more expensive and faced hurdles such as government legislation and net zero targets, and historically high energy costs.

GenCost said that with SMRs, ‘achieving the lower end of the nuclear SMR range (of cost estimates) requires that SMR is deployed globally in large enough capacity to bring down costs available to Australia’.

As for SMRs, none of this should not be surprising as even the International Atomic Energy Agency does not claim nuclear power is cheaper.

The agency claims only that SMRs, advanced nuclear reactors that have a power capacity of up to 300 MW(e) per unit or about one-third of typical sizes, provide cheaper power than traditional large nuclear stations.

Their advantage over traditional nuclear is linked to the nature of their design – small and modular.

According to the IAEA more than 70 commercial SMR designs are being developed around the world.

The IAEA says on its website: “Though SMRs have lower upfront capital cost per unit, their economic competitiveness is still to be proven in practice once they are deployed.”

Picture: CSIRO/GenCost 2022-23

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