Dutton’s energy plan to cost $97 billion as we wait for nukes to lumber into action
Australia facing a $97 billion bill for Peter Dutton’s energy policy — on generous assumptions, that is.
BERNARD KEANE, Crikey.com JUN 17, 2024
Peter Dutton’s nuclear-plus-coal energy plan will require nearly $100 billion in investment across new nuclear power plants, propping up existing coal-fired power plants and building ultra-efficient new ones, a conservative costing shows, with taxpayers set to bear a substantial amount, if not all, of the cost.
Crikey’s costing of the Coalition policy — which Dutton has steadfastly refused to release the details of — relies on the construction from scratch of six new nuclear power plants by 2040, to which Dutton has committed, the maintenance of a number of existing coal-fired power plants beyond their closure dates to 2040, and the construction of three new 1,000 MW coal-fired power plants to meet additional power demand and security of supply in the absence of further investment in renewables.
Based on either CSIRO costings from its most recent GenCost report or the cost of the NSW Labor government’s recent handout to Origin Energy to keep the Eraring coal-fired power plant operating beyond next year, the total cost to deliver Dutton’s vision would be $97 billion by 2040.
Nuclear power
The CSIRO concluded in its GenCost report that the construction of nuclear power stations in Australia would cost around $8.25 billion for a 1,000 MW plant built as a series of at least five new plants. However, it noted that construction of the first one — dubbed “First of a Kind (FOAK)” — would attract a large premium, noting “FOAK premiums of up to 100% cannot be ruled out.” Crikey has conservatively estimated only a 50% premium for the first nuclear power plant, bringing the total for six plants to $56.3 billion in current dollars.
However, we have also inflated the cost by an additional 26% to take account of persistent cost overruns that plague all of Australia’s major infrastructure projects. According to the Grattan Institute 2020 report on large project cost overruns, the average cost overrun for projects costing between $350 million and $1 billion between 2001 and 2020 was 26%. The average cost overrun of projects above $1 billion was even higher, at 30%, reflecting that “bigger projects tend to be more complex, so it’s not surprising that they are more prone to cost overruns. They also tend to overrun by more, in dollar terms, and often in percentage terms as well.” Crikey has conservatively chosen the lower overrun figure, for a total cost of $70.8 billion.
Moreover, we have not assumed that nuclear power stations suffer from the same delays as all other new nuclear power stations have suffered from, but assume they will all be operating by 2040 — an assumption bordering on the implausible but made to allay any doubt about the veracity of the costing.
Where will this money come from? There may be companies willing to undertake such a large-scale project stretching across one-and-a-half decades, despite the immense risk of a reversal of political fortunes for a Coalition government at any point in that 15-year construction process. Such private investment will require loan guarantees from the Commonwealth at best, and as the experience from the last nuclear reactor to be built in the United States shows, it will be very costly for consumers. At worst, taxpayers will have to foot the entire $70.8 billion.
Dutton’s energy plan to cost $97 billion as we wait for nukes to lumber into action
Australia facing a $97 billion bill for Peter Dutton’s energy policy — on generous assumptions, that is.
JUN 17, 2024
Share
Peter Dutton’s nuclear-plus-coal energy plan will require nearly $100 billion in investment across new nuclear power plants, propping up existing coal-fired power plants and building ultra-efficient new ones, a conservative costing shows, with taxpayers set to bear a substantial amount, if not all, of the cost.
Crikey’s costing of the Coalition policy — which Dutton has steadfastly refused to release the details of — relies on the construction from scratch of six new nuclear power plants by 2040, to which Dutton has committed, the maintenance of a number of existing coal-fired power plants beyond their closure dates to 2040, and the construction of three new 1,000 MW coal-fired power plants to meet additional power demand and security of supply in the absence of further investment in renewables.
Based on either CSIRO costings from its most recent GenCost report or the cost of the NSW Labor government’s recent handout to Origin Energy to keep the Eraring coal-fired power plant operating beyond next year, the total cost to deliver Dutton’s vision would be $97 billion by 2040.
Nuclear power
The CSIRO concluded in its GenCost report that the construction of nuclear power stations in Australia would cost around $8.25 billion for a 1,000 MW plant built as a series of at least five new plants. However, it noted that construction of the first one — dubbed “First of a Kind (FOAK)” — would attract a large premium, noting “FOAK premiums of up to 100% cannot be ruled out.” Crikey has conservatively estimated only a 50% premium for the first nuclear power plant, bringing the total for six plants to $56.3 billion in current dollars.Dutton’s nuclear nonsense catches up with him — while Labor keeps runningRead More
However, we have also inflated the cost by an additional 26% to take account of persistent cost overruns that plague all of Australia’s major infrastructure projects. According to the Grattan Institute 2020 report on large project cost overruns, the average cost overrun for projects costing between $350 million and $1 billion between 2001 and 2020 was 26%. The average cost overrun of projects above $1 billion was even higher, at 30%, reflecting that “bigger projects tend to be more complex, so it’s not surprising that they are more prone to cost overruns. They also tend to overrun by more, in dollar terms, and often in percentage terms as well.” Crikey has conservatively chosen the lower overrun figure, for a total cost of $70.8 billion.
Moreover, we have not assumed that nuclear power stations suffer from the same delays as all other new nuclear power stations have suffered from, but assume they will all be operating by 2040 — an assumption bordering on the implausible but made to allay any doubt about the veracity of the costing.
Where will this money come from? There may be companies willing to undertake such a large-scale project stretching across one-and-a-half decades, despite the immense risk of a reversal of political fortunes for a Coalition government at any point in that 15-year construction process. Such private investment will require loan guarantees from the Commonwealth at best, and as the experience from the last nuclear reactor to be built in the United States shows, it will be very costly for consumers. At worst, taxpayers will have to foot the entire $70.8 billion.
Keeping coal going
The Coalition has now admitted — as its abandonment even of Scott Morrison’s 26-28% emissions cut by 2030 shows (actually 26-28% was Tony Abbott’s target, so Dutton is proposing to be even worse than Abbott on emissions) — nuclear power plants won’t be ready until the 2040s, necessitating extending the lives of existing coal-fired power stations.
Crikey has used the Minns government’s handout to Origin Energy to keep the Eraring coal-fired power station operating for two extra years at $225 million a year as a template and estimated the cost, per megawatt, of keeping those coal-fired plants scheduled to close before 2040 going until that year. However, we have capped that spending at 10 years, assuming that coal-fired plants already at the end of their lives could not be extended beyond that date without massive extra investment. This “Coalkeeper” process would cost a comparatively modest $5.98 billion over 2025-40 in current dollars. Where will this money come from? It will be a direct subsidy from governments — presumably the Commonwealth — to fossil fuel companies.
Dutton’s energy plan to cost $97 billion as we wait for nukes to lumber into action
Australia facing a $97 billion bill for Peter Dutton’s energy policy — on generous assumptions, that is.
JUN 17, 2024
Share
Peter Dutton’s nuclear-plus-coal energy plan will require nearly $100 billion in investment across new nuclear power plants, propping up existing coal-fired power plants and building ultra-efficient new ones, a conservative costing shows, with taxpayers set to bear a substantial amount, if not all, of the cost.
Crikey’s costing of the Coalition policy — which Dutton has steadfastly refused to release the details of — relies on the construction from scratch of six new nuclear power plants by 2040, to which Dutton has committed, the maintenance of a number of existing coal-fired power plants beyond their closure dates to 2040, and the construction of three new 1,000 MW coal-fired power plants to meet additional power demand and security of supply in the absence of further investment in renewables.
Based on either CSIRO costings from its most recent GenCost report or the cost of the NSW Labor government’s recent handout to Origin Energy to keep the Eraring coal-fired power plant operating beyond next year, the total cost to deliver Dutton’s vision would be $97 billion by 2040.
Nuclear power
The CSIRO concluded in its GenCost report that the construction of nuclear power stations in Australia would cost around $8.25 billion for a 1,000 MW plant built as a series of at least five new plants. However, it noted that construction of the first one — dubbed “First of a Kind (FOAK)” — would attract a large premium, noting “FOAK premiums of up to 100% cannot be ruled out.” Crikey has conservatively estimated only a 50% premium for the first nuclear power plant, bringing the total for six plants to $56.3 billion in current dollars.Dutton’s nuclear nonsense catches up with him — while Labor keeps runningRead More
However, we have also inflated the cost by an additional 26% to take account of persistent cost overruns that plague all of Australia’s major infrastructure projects. According to the Grattan Institute 2020 report on large project cost overruns, the average cost overrun for projects costing between $350 million and $1 billion between 2001 and 2020 was 26%. The average cost overrun of projects above $1 billion was even higher, at 30%, reflecting that “bigger projects tend to be more complex, so it’s not surprising that they are more prone to cost overruns. They also tend to overrun by more, in dollar terms, and often in percentage terms as well.” Crikey has conservatively chosen the lower overrun figure, for a total cost of $70.8 billion.
Moreover, we have not assumed that nuclear power stations suffer from the same delays as all other new nuclear power stations have suffered from, but assume they will all be operating by 2040 — an assumption bordering on the implausible but made to allay any doubt about the veracity of the costing.
Where will this money come from? There may be companies willing to undertake such a large-scale project stretching across one-and-a-half decades, despite the immense risk of a reversal of political fortunes for a Coalition government at any point in that 15-year construction process. Such private investment will require loan guarantees from the Commonwealth at best, and as the experience from the last nuclear reactor to be built in the United States shows, it will be very costly for consumers. At worst, taxpayers will have to foot the entire $70.8 billion.
Keeping coal going…………….. https://www.crikey.com.au/2024/06/17/peter-dutton-energy-policy-nuclear-coal-renewables/
No comments yet.
1 This month
of the week – Disrupting War & Militarism in Oceania. Active solidarity. Radical practice.
Antinuclear 
Leave a comment