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Nuclear has left its run too late: a response to Ian Hore-Lacy

Tuesday, 14 August 2018  | Robert Farago

I think Ian Hore-Lacy (‘Australia’s energy insanity’, 20th July 2018) and I can agree on many things. The threat of climate change is real and directly due to our burning of fossil fuels, leading to greenhouse gas emissions. We need to dramatically reduce those emissions to keep the average global temperature in the optimal range for food agriculture and the flourishing of human life and society.

Christians do have a strong responsibility towards the poor, to help them raise themselves out of poverty, so they can live with dignity and provide for their families. Access to affordable energy is a big piece of that help and critical to the education and business opportunities of the poor, like it was to our development. It is estimated for example that 240 million people in India alone don’t yet have electricity. Further, climate change will disproportionally impact the poor.

In 2018 we still find the global energy mix dominated by fossil fuels, namely coal, gas and oil. Nuclear provides 11% of world electricity today, and electricity is a subset of our total energy needs. Most of the remainder of our energy is provided by burning natural gas, mainly for heating and industrial processes, and oil-derived fuels for transport.

However, we are going through a dramatic transformation of our energy system. Manufacturing at scale and deploying renewable energy generators in large volumes have brought down the price of electricity generated from wind and solar dramatically. PV solar panels have dropped from over US$101.05/Watt in 1975 to around US$0.37/Watt in 2017, leading to a comparable drop in the cost of the electricity they generate. Battery improvements will see 143 models of electric cars by 2022 from all major manufacturers. This has the potential to dramatically reduce our use of oil-based transportation fuels and replace them with more efficient and much less polluting electricity.

The big question is: how will we decarbonise our electricity, transport, agriculture and industry to meet the 26-28% commitment Australia has made so far, with the ability to grow that commitment towards 50% and eventually towards 100% as we head towards mid-century?

The answer is to electrify everything we can (thus phasing out gas and oil wherever possible), and then use the lowest emission forms of electricity possible. This is why the current National Energy Guarantee (NEG) policy is problematic: it locks in 26-28% emissions reductions, and just in the electricity sector, which now has the cheapest ways to reduce emissions. The CSIRO suggests that electricity should reduce its emissions by 52-70% (see here and here) - this would decrease the burden on transport, agriculture and industry, which would find it both harder and more expensive to reduce emissions.

All forms of energy use have pros and cons and it is up to engineers, scientists, economists and policymakers to weigh them up and carefully choose the best mix to meet the needs of our society.

Ian Hore-Lacy and I differ in how we see the future unfold, and the technologies that will get us there. I found his article quite emotive, describing Australia’s energy policies as based on ‘fantasies’, ‘ideological’, ‘virtue signallers’, ‘nonsensical’ and delivering ‘third world infrastructure’. However, I think his arguments can broadly be summarised as:

  • Incentives for and deployment of renewables have led to high electricity prices.
  • Renewables are unreliable so major costs are incurred if the grid is required to support too many.
  • The only solution for reliable, low cost and low emissions energy must involve nuclear.

I will try briefly to address each of these in turn.

Incentives and electricity prices

I agree that our energy policy to reduce carbon is a mess and that electricity prices are high. The reasons for our electricity prices being high are many and varied, according to the recent July 2018 ACCC report. Factors contributing to the increases in residential bills over the last decade are:

  • Network costs – 35% (regulatory incentives leading to so called gold-plating).
  • Retailer costs and profits – 23% (due to market power, confusing energy plans and expiring discounts).
  • Wholesale costs - 22% (due to less generator competition and the higher price of gas generation of electricity, due to Australia exporting gas).
  • Environmental costs – 20% (which include state based solar feed in tariffs and the renewable energy target).

Renewables are not free, but they are not the main villain leading to high electricity prices.

On the policy front, we have wasted a decade dealing with the climate problem by regularly changing direction. The current coalition government came to power by promising to repeal the CPRS, which was an Emissions Trading Scheme (ETS, which initially had a fixed price permit and was incorrectly labelled a Carbon Tax). The government then rejected the main recommendation of their own Finkel review, the Clean Energy Target (CET), after also rejecting an Energy Intensity Scheme (EIS) proposed by the opposition and business. The NEG is therefore about the 4th or 5th best option, depending on how you count.

The only energy policy that remains standing is the Renewable Energy Target (RET) introduced by the Howard government, which was increased with bipartisan support by the ALP and then decreased by the coalition, with begrudging bipartisan support, to give industry certainty. It will finish in 2020 when it meets its target, leaving us with no other policies in place to further reduce our carbon emissions.

Renewables and reliability

Ian Hore-Lacy suggests that only nuclear can give us the ‘The three criteria of reliability, low cost and much reduced CO2 emissions [which] are not otherwise attainable in Australia’. He argues that coal has been reliable and cheap in meeting base-load demand, and that nuclear can play the same role, albeit at a higher but still affordable cost.

The use of the term ‘base-load’ can be unhelpful because non-technical readers often confuse it with the term ‘reliability’.[1] The reliability of our electrical system is not about meeting base-load demand but about whether, like in our existing generation system, our future generation system can reliably match supply and demand.

AEMO, our grid operator, recently published their Integrated System Plan (ISP) in July 2018. This document is their electricity system planning document taking us to 2040. A large percentage of our existing base-load coal generators will reach the end of their design life of 50 years by 2040 and they are planning for what will take their place. In their ‘neutral’ scenario:

the lowest cost replacement (based on forecasted costs) for this retiring capacity and energy will be a portfolio of resources, including solar (28GW), wind (10.5 GW) and storage (17 GW and 90 GWh), complemented by 500 MW of flexible gas plant and transmission investment. This portfolio in total can produce 90 TWh (net) of energy per annum, more than offsetting the energy lost from retiring coal fired generation. (Australian Energy Market Operator, Integrated System Plan, 2018)

There is no new coal generation forecast and there is no nuclear generation forecast. Reliability of the system, with a massive increase in renewable generation, is manageable according to the engineers running our grid, and is the cheapest option.

Nuclear as the solution?

There are a number of unresolved problems around nuclear power and questions of whether nuclear energy can grow quickly enough to solve our climate change problem. I will just list some of these problems with a sentence each:

  • Weapons proliferation – enriching Uranium for civilian nuclear energy programs can lead to fuel being diverted and further enriched for nuclear weapons programs.
  • Safety – although less deaths have been recorded from nuclear power than from coal mining, nuclear accidents such as Three Mile Island, Chernobyl and Fukushima have shaken the confidence of citizens to have nuclear reactors near their homes and food sources.
  • Waste – although we have generated nuclear waste for 70+ years we still don’t have a solution. Nuclear waste needs to be stored safely for hundreds of thousands of years, longer than settled agricultural society has existed.
  • Decommissioning – cost estimates vary wildly and it’s particularly technically challenging and expensive after nuclear accidents.
  • Water use – like thermal coal generators, nuclear needs large quantities of water for cooling, making droughts and heatwaves a problem.
  • Capacity – if we moved to a large portion of our global electricity generation to nuclear power, will there be enough Uranium to fuel them?
  • Timeliness – can we move quickly enough to a majority nuclear electricity future and meet our global emission reductions?

Assuming the above problems can be quickly resolved, despite decades of not resolving them, and we can somehow scale nuclear by an order of magnitude from today, will it be cheap enough?

When I was a child in primary school (in the late 1970s), I read that in the future nuclear energy had the potential to generate electricity that would be ‘too cheap to meter’. That future never came and sadly never will.

Overseas examples are not encouraging. Recent nuclear reactor constructions in Finland, USA and UK are taking much longer than expected, costing much more than expected and in some cases being abandoned.

Australian governments have on several occasions investigated the feasibility of nuclear energy being adopted in this country. Two recent reports were the Switkowski Report in 2006 and the South Australian Nuclear Fuel Cycle Royal Commission’s Report in 2016.

The Switkowski Report had the cost of nuclear higher than new coal at the time. The more recent South Australian (SA) Royal Commission report looked at Uranium mining, nuclear fuel enrichment, electricity generation as well as nuclear waste disposal opportunities for SA. The SA government’s response to the royal commission concluded:

The government considers that nuclear power in the short to medium term is not a cost-effective source of low-carbon electricity for South Australia.

Even Ziggy Switkowski, a nuclear physicist and strong nuclear proponent, has recently said that ‘the window for GW scale nuclear has closed’ and:

With requirements for baseload capacity reducing, adding nuclear capacity one gigawatt at a time is hard to justify, especially as costs are now very high (in the range of $5 billion to $10 billion), development timelines are 15+ years, and solar with battery storage are winning the race.

Meanwhile many GW of wind farms, solar farms (a 35GW pipeline) and rooftop solar continue to be planned and built. Battery storage and pumped hydro projects to help balance the system are also being planned before our old coal power stations reach their end of life. Electricity prices are also stabilising and coming down slightly at the retail level, and more dramatically at the wholesale level, according the ASX electricity futures market.

Nuclear energy in Australia may have had a role to play if we had adopted the technology in the 1970s, when other countries were rapidly adopting the technology, and renewables like solar cost 100 times as much as today. While cheaper, safer and better nuclear designs have been proposed and been under development for some time overseas, their promise has not yet been proven. Nuclear energy also takes a very long time to adopt in countries like Australia that don’t have the required nuclear engineering and regulatory expertise, i.e. at least 15 years to build the first power station. Nuclear has simply left its run too late in Australia. The economics of renewable energy, being cheaper than all other forms of generation in Australia in 2018, has been the final straw in halting the possibility of nuclear energy being adopted here before it has even begun, except for that one fusion reactor in the sky, 150 million km away.

Robert Farago is an Engineer with 30 years’ experience. He has worked on writing software, building the internet and installing renewable energy, sometimes simultaneously.

[1] What is ‘base-load’ and do we need it?

                  Our demand for electricity is not constant as the term base-load demand suggests. In fact our ever-fluctuating demand varies greatly across the 24-hour cycle, between weekdays and weekends, and between extremely hot and cold days and the much more common milder temperature days. 

                  Our existing generation system has always been a mix of base-load (constant and relatively inflexible) generation and other forms of dispatchable (flexible) generation which, together, reliably match supply and demand.

                  We could replace the base-load generation of coal with another form of base-load generation like nuclear, but we would of course still need dispatchable generation to match supply and demand. 

                  On the other hand, in our future generation system, without a base-load replacement for coal, we could combine very cheap but intermittent renewable generation with a combination of dispatchable generation, storage (pumped hydro, thermal storage and batteries) and demand response to just as reliably match supply and demand.

                  The features of these tools to help match supply and demand are:

  • Dispatchable generation – flexibly provides electricity supply, turning it up and down quickly as needed.
  • Storage - provides both supply (e.g. when water is running downhill in a pumped hydro generator or a battery is discharging) and demand (e.g. when water is being pumped uphill in a pumped hydro generator or a battery is charging).
  • Demand response – can reduce demand.

                  Demand response is a little understood but increasingly important technique to help match supply and demand. It works by paying electricity users to voluntarily move their demand from when there is scarce generation and/or higher demand, to times of surplus generation and/or lower demand. We have been doing this with heating residential hot water systems in the middle of the night (off-peak) for decades in Australia because our coal generation is inflexible, and are now offering this option to industrial and commercial customers who have flexibility in when they use electricity.

                  In our future generation system, the real question is not about meeting base-load demand but whether we can reliably match supply and demand.


Ian Hore-Lacy
August 17, 2018, 10:12AM
While there is much to agree with here, my main point was that the dysfunctional relationship between state and federal responsibilities for electricity negated our natural advantage conferred by abundant cheap primary energy sources. This is exacerbated by a few major companies gaming the market. Failure to resolve all this is insanity.

The insanity is grievously compounded by blanket bans on fracking for gas and on considering nuclear power.

However, Robert Farago’s comment that, 'In our future generation system, the real question is not about meeting base-load demand but whether we can reliably match supply and demand' is disingenuous. Of course we must do the latter, but most demand is base-load so it’s hardly 'unhelpful' to focus on it.

AEMO’s Integrated System Plan (ISP) of July 2018 makes a number of assumptions for their ‘neutral’ scenario, which are proper for them as grid operator but in fact highly questionable in the broader policy context, notably the assumed investment in new plant and the actual system cost of increased wind and solar.

Robert Farago’s list of 'unresolved problems' regarding nuclear is simply wrong – all are very well resolved as can be seen from looking at the real world situation. The uranium shortage point is risible. Generally on all those see: http://www.world-nuclear.org/information-library.aspx, which is the main result of my last 23 years of work.

I agree it would have been better to get into nuclear power decades ago, but if UAE can go from a standing start (behind where we are now) to having the first of four large modern reactors ready to go online in ten years, so should we be able to.

Quite obviously in the public mind and confirmed by political pressures and responses over the last ten years, cheap and reliable electricity needs to be the highest priority - for homes (as closest to voter sentiment), but more importantly for commerce and industry. Think jobs.

The focus on ever-increasing amounts of wind and solar capacity (beyond meeting perhaps 20% of demand, but better with less) backed by policies paid for by consumers is simply virtue signalling with costs that are evident to every business and household. As is also very obvious, and confirmed by Alan Finkel, if we shut down the whole country it would not make one iota of difference to climate change. Furthermore most parties to the Paris Agreement are not doing anything that costs them. Nor will they. So we shoot ourselves in the foot with no real benefit to anyone except the immediate wind and solar vested interests. Think futility.

India and China are proceeding to increase CO2 emissions for the next decade. China’s annual increase is almost our annual total. The only countries achieving low CO2 emissions relative to GDP are those with massive amounts of hydro and/or substantial nuclear power capacity. Germany is a wonderful case study in the ideological pursuit of high dependence on wind and solar, but not meeting its CO2 emission reduction targets and at the same time building substantial new coal-fired generation capacity to keep going. The USA’s progress in emission reduction is due to cheap gas from fracking replacing coal, nothing else, and its reduction by 700 Mt/yr since 2007 approaches Germany’s annual total of 900 Mt.

Nowhere in the world is a high proportion of electricity from wind and solar correlated with low costs to the consumer. Nor will it be, even if kWh generation costs fall to zero. That is the fantasy. The dilemma is that as the proportion of variable renewables rises, so does the cost of ensuring reliability. There are several reasons for this, but the most pressing one for us is that as these sources are prioritised in the supply mix, the operational costs of fossil fuelled sources required to meet demand increases markedly. Another reason is the cost of transmission lines which have low utilisation.

At the political level we must clearly prioritise affordable and reliable electricity over the next decade. If in addition we want to seriously reduce CO2 emissions beyond that time frame (as I do) we have no alternative but to start replacing coal-fired capacity with nuclear. Building vast numbers of wind turbines and hectares of solar PV is a waste of money and raises so far avoided questions about the environmental impact of manufacture and disposal of these after relatively short operational lives. Not to mention the (reliable) energy input to their manufacture – the energy return on energy invested (EROI), which for nuclear power is around 75, for coal and gas about half that, and for wind and solar half that again or even less.

I confess to being a bit simplistic in the rhetoric of my initial article – my main exposition of the general subject is chapter 2 of my book Nuclear Energy in 21st Century, 4th edition published earlier this year, though it addresses the world picture in 8,000 words, not Australia’s idiosyncrasies. And if Mr Farago feels my language was ‘emotive’, try the respected Terry McCrann (11/8/18) on the 'shared criminal vandalism' of the COAG Energy Council meeting on 10 August with the 'madness and sheer stupidity' of pushing for more renewables, and the 'criminal irresponsibility' of the Paris Accord.

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