What options do we have to combat global warming and address the energy crisis? Politically, there’s a debate between renewable energy and nuclear power. Both options offer low-carbon alternatives to fossil fuels, yet they differ significantly. Renewables, like wind and solar, promise an abundant, sustainable future but face challenges with intermittency and energy storage. Nuclear power, on the other hand, raises concerns about waste management, safety risks, and high upfront costs.
If we just look at cost, and side-bar the other issues for another time, there is unequivocal evidence that renewables provide a clear path to reduce energy poverty balanced against the cost of nuclear. Energy poverty refers to a situation where some in the community lack access to affordable and reliable energy services, and where high energy costs make it difficult to afford essentials such as food, or healthcare.
In June of 2024, the conservative journal The Economist ran a Special Issue: The Dawn of The Solar Age, arguing that an energy source which gets cheaper the more you use it marks a turning point in industrial history. The research tells us that solar enjoys more ‘social licence’ than any other form of energy generation, be it fossil-fuel or nuclear.
Adair Turner of Britain’s Climate Change Committee admitted that solar was not previously a part of their thinking. ‘We totally failed to see that solar would come down [in cost] so much,’ he said. ‘In 2008 we were thinking that capital costs would come down by 19 per cent by 2020. When we got to 2020, they were down by 95 per cent’. Ouch.
One million households in NSW now have rooftop solar, the highest penetration in the world. More than 30 per cent of Australian households now have rooftop solar. The cost of installation of solar panels has decreased by more than 80% over the past decade, making solar energy more affordable than ever. This price drop has driven rapid adoption worldwide. Rooftops are solar farms.
The CSIRO’s 2024–25 GenCost Report provided an objective annual benchmark on the cost of electricity projections. The report calculated that globally, renewables (led by wind and solar PV) are the fastest growing energy source with electricity technologies presenting some of the lowest cost abatement opportunities.
The report established that the capital cost of large-scale solar photovoltaics has dropped by eight per cent and battery costs by 20 per cent.
If you want cheap, plentiful, safe, acceptable energy at the point of generation, while reducing carbon emissions, it might seem the climate crisis is solved through renewables. Except there is a catch, two in fact.
Storage
First catch. Consumers want to draw power at night. The grid operators use a ranking system that ensures the most cost-effective power generation resources are used first, followed by more expensive ones as needed.
Without large storage, power plants with lower production costs are dispatched first, while those with higher production costs (like coal plants) are dispatched last. The merit order is an essential mechanism in grid operations that optimises the electricity generation mix based on cost, ensuring that the power system operates efficiently and cost-effectively. It prioritises the use of cheaper, cleaner sources of energy, which also supports the transition to more sustainable power systems.
So, what’s the second catch? It becomes rather inconvenient for power operators when power from solar substantially contributes to electricity supply – because the price of electricity can fall to zero.
If power is cheap the grid operators still need to make a buck to keep things running smoothly. That’s where large storage technologies allow for ‘arbitrage’ across time, not space. For example, energy generated at midday (time) when prices are low can be sold when the sun sets and prices are normally higher (sending power through space along transmission lines). To arbitrage this nicely and fairly would result in a Goldilocks price. It’s economics.
Which brings us to the hoary old nuclear question: if nuclear power is such a great solution, and measures up economically, why hasn’t private enterprise seized this opportunity?
Andrew Forrest of Fortescue says that ‘nuclear power doesn’t stack up’. Business Council of Australia’s Bran Black says, ‘Nuclear energy is not a near-term proposition’, citing the amount of taxpayer money required and how the policy will impact investment certainty. Economics again.
Due to the long lead time in nuclear deployment, the cost reductions, achieved when the original capital investment (from taxpayers) is no longer being repaid, will not be available for around 45 years from now, significantly reducing nuclear power’s value to consumers compared to other options which can be deployed immediately.
Small modular reactor
In the CSIRO’s modelling for uncommercialised small modular reactors (proposed by the federal Opposition) they calculated that nuclear would cost $400 to $663 a megawatt hour; renewables $98 to $150. These costs include what the industry calls ‘firming costs’ which include storage, transmission, system security and spilled energy.
And what is the cost of decommissioning nuclear plants? Griffith University Professor Ian Lowe estimates $6 billion and if the Coalition builds 14 nuclear reactors by the mid-2040s then that’s $82 billion to $125 billion in today’s dollars, paid for by taxpayers. Why taxpayers? Because companies can go bust but the nuclear waste is still going to be there – so it must be owned by the government, says University of NSW Professor Edward Obbard.
And what of cleaning up a nuclear disaster? University of NSW energy researcher Mark Diesendorf and Ian Lowe say that public liability rests with – you got it – the public. Hundreds of billions of dollars. The clean-up from Japan’s 2011 nuclear disaster came to $290 billion.
And what of emissions? Steven Hamilton of the Australian National University published his analysis in the Australian Financial Review (15 December, 2024) saying the Coalition’s plan would produce cumulative emissions to 2050 of 1.65 billion tonnes compared with 0.6 billion tonnes under the current government’s proposals.
And the social licence for nuclear? Polling by Resolve Political Monitor revealed that only 21 per cent of voters favoured taxpayer investment in nuclear power; whereas renewables were favoured with 45 per cent (particularly subsidies for rooftop solar) and 34 per cent (subsidies for home batteries).
Last but not least, with the introduction of nuclear, rooftop solar could be switched off for long periods of time, lest the grid be overwhelmed with excess power. According to the Smart Energy Council, ‘up to 5 million rooftop solar systems could be switched off, and the average price bill will more than double’.
Positioned squarely against the economics of the solar revolution one must surely question if Peter Dutton’s nuclear policy is good value for money or, given nuclear policy has been reviewed and assessed in Australia for decades, is it just another hoary old chestnut?
♦ Dr Anne Stuart is Chair of Zero Emissions Byron, and Adjunct Research Fellow, Griffith University.
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