2024-07-04
A cost analysis shows that electricity from home solar-battery systems is much cheaper than from nuclear reactors. In addition, investing in home solar and batteries would do more to ease cost-of-living pressures on households than investing in large scale solar, which involves large and expensive transmission lines.
By Mark McDonald, a member of the Fremantle-Tangney Greens Regional Group
I am lucky enough in my stage of life and my circumstances to have been able to afford to put a battery and solar panels in my home. The cost of that was roughly $20,000, and I’ll likely never see that return on investment, but a major effect for me is that I have not paid a cent in power bills for the last 5 years. That’s because the state and federal governments keep giving cost of living relief to households to offset power bills, and with the solar panels and battery, we are a net producer of electricity (we get hardly any money for the electricity we put into the grid), where the production income nearly offsets the connection cost. What it means for us is that on average our power bill for a family of four is about $50 dollars every 2 months, and these cost-of-living relief payments more than cover that. For us, the power bill credits really mean something.
I have friends who do not have solar panels and they say that their power bills are on average $400-$600 every 2 months, though I have heard of some much more! That suggests to me that the household rebates being provided do not provide great relief to the average householder, and nothing to the average renter. It seems a poor decision by the government, and one that might not buy the votes they hoped for.
Recently the LNP launched its nuclear policy. It’s really light on detail, and living in a very right-wing community, I’ve had to look deeper into what few facts I can find in order to try to help (help they don’t want!) my friends and family to avoid buying into this new policy as a panacea to the climate crisis. It does not do to dismiss it without exploring it.
Let me share with you my calculations, and then tie it back to the cost-of-living problem …
The Australian Energy Market Operator data I could find showed that Australia’s energy needs have actually fallen recently. They put that down to increased solar on roofs, and a shift away from energy intensive manufacturing. They predict our needs in 2030 could be anywhere between 6% and 14% higher, which is a large range, yet not a great change. It’s very hard to get accurate forecasting, so I am going to use the current use which is about 220,000 gigawatt hours per year according to AEMO in my calculations, which should if anything improve the case for nuclear.
The most common types of nuclear reactors built in the world are 1 gigawatt reactors. The production of such a reactor assuming 24/7 100% activity would equal:
1 Gigawatt x 24 (hours) x 365 (days) = 8,760 gigawatt hours (GWh) per year.
The cost of building such a reactor (just the reactor, not the land and associated cleanup costs etc.) is around $8,500 per KW of energy capacity. I’ll use the number published by the Australian Financial Review, which is $8,655 per KW of energy capacity. This cost is going up with time. Using that number, the cost of building a 1 GW reactor would be 8.65 billion dollars. Getting data on the small modular reactors the LNP spruiks is harder because there are so few in existence, but as you’ll see from my next calculations, largely irrelevant because we need a lot of nuclear power to fulfil the LNP dream!
There are 7 sites that are identified in the LNP policy. If you want to solve clean energy production with nuclear at the expense of renewables (as the Nationals seem to suggest is possible even as more moderate Liberals say something different) you need to build 25 nuclear reactors if they work at 100% capacity. Most do not. Japan’s largest nuclear plant, the Kashiwazaki-Kariwa Nuclear Power Plant in its best year of production ran at 85% of capacity, which would mean one would more likely need 32 reactors, and that’s going to cost in the order of 276.8 billion dollars. That Japanese plant has 7 reactors, but they rarely all worked, and none of them work now because of the 2007 Tsunami which we are all familiar with. In America the largest plant by output (The Palo Verde Generating Station) has 3 reactors, though there are others with 4. If we have 7 plants, they’ll therefore have to be among the largest in the world to meet our energy needs. That will be quite a feat starting from scratch, even ignoring the current bans, jurisdictional issues, land purchasing issues and remediation costs.
I suspect when this policy is fully formed, the aspiration won’t be to build such large plants; probably the ambition would reach a more standard 2 reactor plant, which at best is going to produce about 45% of Australia’s energy needs, which means you still need about 55% renewables. The nuclear component then would be in the order of 121.1 billion dollars. The problem with that solution is that nuclear, like coal plants are not compatible with a market dominated by renewables. The cost of electricity goes up and down during the day based upon production and demand. The coal plants in NSW and Queensland are often running at a loss because they cannot turn off their production, so end up paying to produce electricity when renewables are producing loads of electricity, and they cannot recoup the costs when renewables production is low. Electricity prices are going up most in NSW and Queensland because these costs are shifted to the customer, and I wonder if any power producer would invest in a coal plant let alone a nuclear plant given the risk of losses on top of the construction cost.
Gas plants can work with renewables, being able to produce only when demand is high, production from renewables is low, and the energy price is peaking. Batteries can also do this, but for whatever reason it seems that they are not part of the political discussion which I find odd. Perhaps there is an element of state capture here?
Is the LNP policy a distraction? Yes probably, though you can make the numbers work in theory, especially if you ignore reality and just focus on the best-case all-in scenario. I’m not averse to nuclear, and perhaps if we’d built those plants 20 years ago we’d seem a little more ahead of the curve, but I can’t see it adding up now. And now I can explain it to my friends and family in a way that prevents the cries of “woke!”
How does this all relate to cost of living then?
Imagine if you were prepared to spend 276 billion dollars on installing rooftop and household batteries? If you used my retail figure of roughly $20,000 per household, you could build 13.8 million household solar plants. That’s more than there are households in Australia (9.275 million the 2021 census). My solar plant is a 6KW plant, and my inverter is a 5 KW inverter, and my battery stores 13.2 KW hours. We are an efficient family of 4, so we rarely empty the battery, and only draw from the grid about 10 days a year when the sun doesn’t shine for several days in a row. However, if we were allowed to have a bigger inverter (Western Power prevents that), and if we had 10KW of solar on the roof, I think we’d basically be self-sufficient because the battery would fill completely even on cloudy days. These days $20,000 would buy a 10kw plant.
For reference the combined output of that kind of solar investment would roughly cover half of Australia’s current energy needs without having to significantly upgrade the current grid.
To go right back to the start of this conversation, Australia’s energy needs have not grown significantly over the recent decade, and a large part of that is because of solar uptake. The problem with solar from the perspective of the energy producers is its variable production, and this is becoming a problem for grid stability. Companies like Synergy are building large scale batteries to solve this problem, but perhaps Governments could solve much of this by leaning into a distributed power system, and investing in putting solar and batteries into houses rather than investing in large scale production? This would greatly decrease the cost of energy to the consumer, not once, but every year afterwards too. It requires much less investment in poles and wires, and is far cheaper than building nuclear power plants. Additionally, it would decrease the need to damage the environment and the amenity in rural areas.
You could even fund this by diverting some of the 368 billion earmarked for nuclear submarines which would have very little value in our defence!
The cost-of-living crisis is being unequally felt, and people like me are largely insulated from it when it comes to power. A policy like this would not benefit me, but would greatly help others. Would it not be nice if we could create a win-win by rethinking the way we invest in power generation?
Header photo: Traditional nuclear reactor facilities, in Slovakia. Credit: https://www.news.com.au/technology/environment/nuclear-power-at-least-15-years-away-says-regulator/news-story/6b8c4ec9c94cd4d05471783678abdb59
[Opinions expressed are those of the author and not official policy of Greens WA]