Nuclear electricity 1.5 to 3.8 times more expensive – study

A just released study from the Institute for Energy Economics and Financial Analysis (IEEFA) found that the cost of electricity generated from nuclear plants as proposed by the federal opposition would likely be 1.5 to 3.8 times the current cost of electricity generation in eastern Australia.

The independent think tank estimated typical Australian households could see electricity bills rise by $665/year on average under the coalition’s plans to introduce nuclear to the country’s energy mix.

For a four-person household the bill impact would be $972/year on average across nuclear scenarios and states, and for a five-person household $1,182/year.

The Institute, a US based body that examines issues related to energy markets, trends, and policies, did not analyse the cost to business of nuclear power.

According to the Institute: “We found that electricity bills would need to rise in order for nuclear costs to be recovered.”

IEEFA analysed six scenarios based on relevant international examples of nuclear power construction projects; in every scenario, bills increased by hundreds of dollars.

The costings were based on the actual cost of plants in France, Czech Republic, the UK and the US, or in the case of small modular reactors, a binding contract let in the US for the NuScale SMR.

Electricity market economist Professor Paul Joskow said: “The best estimates are drawn from actual experience rather than engineering cost models.”

The Institute said that retail electricity price data had been misinterpreted as it can also include the costs of powerlines and taxes, not just generators. This can show some cases of nations that use nuclear who have lower retail prices than Australia.

“However, in almost all cases around the world, the cost of nuclear power plant construction and financing is not fully reflected in market prices for power.

“This is because either nuclear power plants are very old and their costs are largely depreciated, or governments have acted to recover the costs either through taxpayers, or via levies which are independent of electricity markets.”

The coalition has ruled out out taxpayer subsidies and said that any government investments in nuclear plants would receive a commercial return.

“The Coalition has also outlined that these nuclear power plants would operate at full capacity almost all of the time.

“Therefore, power prices would need to average out at the level a nuclear plant needs to be commercially viable – to recover their costs – almost all of the time.

“…The reason bills increased in this study is because recent large-scale nuclear projects across Europe and North America involved very high costs.”

If plants with similar costs and characteristics were built in Australia, they would require a levelised cost of electricity (LCOE) between $250 per megawatt-hour (MWh) and $346/MWh to recover their costs.

The Minister for Climate Change and Energy Chris Bowen said the institute had done the work that Dutton had failed to do.

Boweb said: “(It) calculated the impact of his energy scheme on energy prices in Australia, an average of $665 across the country, an increase in every single jurisdiction, with families that use more energy paying more under Mr Dutton’s plan.

“And this institute’s analysis has been conservative, has been, if anything, optimistic about nuclear costs. It’s been rigorously done based on the actual lived experience of nuclear costs in other countries.”

Picture: Chris Bowen