What is the Cost of Lies? $600 Billion.
Maybe even higher according to actual detailed analysis.
In June last year, the solar energy and storage peak body Smart Energy Council promoted a press release containing strikingly unfavourable claims regarding the potential for nuclear energy in Australia.
The press release references “detailed analysis” supporting various figures, most importantly that “building the seven nuclear reactors [would only provide] 3.7% of Australia’s energy mix in 2050” and “could cost a staggering $600 billion”.
The “detailed analysis” is not linked, nor in a separate report. It’s not even ten dot points further down the press release page, and a screenshot of the wrong “AEMO’s Step Change analysis of generation capacity to 2050” chart.
To anyone with even a passing appreciation of the scale of nuclear energy, “3.7%” will be a confusingly small number. Justifiably so, since it’s completely wrong, as explained quite promptly by policy analysts Zoe Hilton and Alex Bainton.
However the eye-popping sum of “$600 billion” was not so concisely rebutted, and has unfortunately taken root in much of the subsequent coverage and discussion as pre-election politics approaches a rolling boil.
It turns out to be as simplistic as it is deluded.
$600 billion AUD corresponds to a rudimentary calculation of 11 gigawatts worth of nuclear capacity at the same cost as the 3.2 gigawatt Hinkley Point C twin EPR plant in Somerset, UK, at AUD$87 billion in 2024, and then doubled. That’s it.
11 ÷ 3.2 = 3.4375
87 × 3.4375 = 299
× 2 ≈ 600
Working backwards:
(1) The Smart Energy Council relies on CSIRO’s GenCost report’s unreferenced assertion that “FOAK (first of a kind) premiums of up to 100% cannot be ruled out”, i.e. double it, 2×.
EDF’s Hinkley Point C (HPC) was an actual FOAK project, without a commissioned reference plant to inform planning and construction.
Concurrent projects, such as in France, didn’t help as
the UK’s Office for Nuclear Regulation (ONR) required extensive design modifications for Hinkley Point C, despite its design being based on that of Flamanville 3… Hinkley Point C is now colloquially called the ‘UK EPR’ due to the extensive modifications required for compliance.
Recall that HPC is a twin plant, with the second unit now being built 20–30% faster thanks to big lessons learned on the first.
(2) The reactor design at HPC was launched in the UK with private investment only, directly impacting the cost of financing the project. This explainer from 2019 includes conclusions from the UK National Audit Office:
Alternative ways of the government providing support for HPC could have resulted in lower costs to consumers over the life of the project. The government contributing to the project’s financing could have reduced financing costs because the government’s cost of borrowing is lower than for private investors.
The Chief Executive of the Smart Energy Council assigns the $600 billion price tag (privately funded and highest interest) to the proposed nuclear fleet in exactly the same breath as he bills “the taxpayer” — i.e. government capital with the lowest interest.
To its credit, the Smart Energy Council’s low-end estimate is arguably better referenced, sourced from the CSIRO’s most recent GenCost report — unfailingly relied on until nuclear doesn’t look expensive enough any more.
In the months following the Smart Energy Council’s press release, detailed analysis by an actual, independent economic modelling team of the Australian Energy Market Operator’s main scenario revealed much higher real costs than they, the Smart Energy Council, have promoted.
Not including the cost of emissions in AEMO’s Step Change scenario produces $580 billion as the sum of the real costs of the electricity supply options. When you add the estimated $62 billion in transmission costs, this brings the total costs of the transition to $642 billion, excluding the cost of emissions and consumer energy resources.
Staggering.
Oscar Archer holds a PhD in chemistry and has been analysing energy issues for twenty years, focusing on nuclear technology since 2014, with a background in manufacturing and QA. He helps out at WePlanet Australia. Find him @OskaArcher on Twitter.
