Experts disagree on whether the cost of nuclear energy is going up or down

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Experts disagree on whether the cost of nuclear energy is going up or down

By Paddy Manning

Two papers released over the past fortnight come to opposite conclusions.

WE ARE being softened up on the virtues of nuclear power, and the hand - no, the fist - of Energy Minister Martin Ferguson is evident.

On Wednesday he released an Australian Academy of Technological Sciences and Engineering study that found that by 2040 nuclear reactors will be cheaper than solar thermal, or coal-fired power plants with carbon capture and storage - assuming a carbon price rising to $US90 a tonne and Australian electricity prices almost tripling to $112 a megawatt hour.

The study was not meant to promote any given technology but coincided with Ferguson's push to debate nuclear energy policy at the ALP's national conference next year - a push welcomed by the sceptics at the chamber of commerce, whose motives are questionable: they seem to want Australia to be the last country to do anything about climate change.

Plenty of people see nuclear energy as the answer to climate change, but there are doubts about its expense, and the 10 to 20 years it would take to site and commission a reactor here.

Prime Minister Julia Gillard says the economic case for nuclear ''doesn't stack up'' and Greens leader Bob Brown sounded similar this week, saying the nuclear industry relied on massive subsidies.

The academy's research used electricity generation cost data from the industry-backed Electric Power Research Institute in the US, adapted to an Australian setting. The Australian Research Council funded the research but there is separate funding (across a Chinese wall) to promote the paper, from Victoria's energy department, the Energy Supply Association and utility Truenergy, a subsidiary of China Light and Power, which has its own nuclear reactors.

Suffice to say the academy paper is a decent piece of analysis in a contentious and uncertain field. The findings are now open to debate - critics say it is overly optimistic about nuclear, overly pessimistic about solar thermal (EPRI provides little evidence, but many predict solar thermal will halve in cost by 2020), and dubious in calculating present costs for non-existent technologies like carbon capture and storage (CCS) and hot dry rocks geothermal.

EPRI's starting point is not especially controversial. Coal and gas are the cheapest energy sources. Conventional geothermal from underground streams and wind are the cheapest renewables. Costs go up from there - through combinations of coal and gas with CCS, nuclear, and (last) the various solar technologies.

The big question is, what will happen to the cost of these various technologies over the next 10-30 years? That requires a set of challengeable assumptions, which are especially contentious with nuclear energy. Stepping back from the figures, it boils down to this: is the cost of nuclear going up or down?

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Two papers released over the past fortnight come to opposite conclusions.

Nuclear energy will be more expensive than most forms of renewable energy by 2020, according to a paper given at this week's solar industry conference in Canberra by Mark Diesendorf, deputy director of the Institute of Environmental Studies at the University of NSW, which found that by 2020, offshore wind farms, solar thermal and solar photovoltaics (both residential and power stations) will be less expensive than nuclear energy.

Diesendorf found the cost of building a nuclear power plant had risen rapidly since 2002, from more than $US2000 per kilowatt of generation capacity installed, to about $US7400 per in 2010 (these are real, not nominal figures) and he expects the trend will continue.

(The figures do not count subsidies for nuclear energy such as loan guarantees, land acquired for buffer zones around reactors or decommissioning costs, which would push the cost up).

The cost of nuclear energy is rising, he says, because the industry is ''not expanding''. A lull in reactor orders during the '80s and '90s led to manufacturing bottlenecks and skill shortages as nuclear engineers and technicians age and retire.

The two third-generation reactors being built in the West - Finland and France - are over-time and over-budget. In the US, while the Obama administration gave $US8.2 billion in loan guarantees to two proposed reactors in Florida, but they are not being built yet.

On the other hand, a paper in the latest Energy journal by University of Adelaide Professor Barry Brook, who holds the Sir Hubert Wilkins chair of climate change, finds nuclear energy is the cheapest baseload power option (rather unfairly, solar thermal with energy storage and gas back-up is the only renewable technology) at all carbon prices.

Brook argues that construction costs for third-generation reactors are effectively first-of-a-kind, and will fall.

paddy.manning@fairfaxmedia.com.au

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