At Frontier Economics, we’ve been providing the economic analysis and frameworks to key energy transition decisions in Australia for more than 25 years. As independent economic consultants, we regularly inform ourselves on, and dig deep into, the most important decisions impacting society.
This is the second independent report in this series on modelling the economics of including nuclear in Australia’s National Electricity Market (NEM).
The objective of the first report, Report 1 – Developing the base case to assess the relative costs of nuclear power in the NEM, was to establish a proper basis for comparing the cost impacts of nuclear power – based on AEMO’s Integrated Systems Plan (ISP) results.
Once again, we expect and welcome robust debate on the work we present. Our report has been funded and directed solely by Frontier Economics, and consultation with various government and private sector parties has been sought to ensure we modelled the inclusion of nuclear power in the NEM most accurately.
Report 2: Economic analysis of including nuclear power in the NEM
In this second report, we again using AEMO modelling as our basis for comparison, using their ‘Step Change’ and ‘Progressive’ scenarios to compare the costs of nuclear power in our energy ecosystem.
You can’t compare renewable energy and nuclear power generation and costs like apples to apples. We’ve done the modelling in these AEMO scenarios with a wider, and more detailed, lens on how the two options compare in real life, and the data speaks for itself. In both scenarios, including nuclear power in our energy mix is cheaper – by up to 44% - for Australians in the medium-term future. - Danny Price, Managing Director, Frontier Economics
Key considerations from the report:
- Many commentators simply and erroneously compare the cost of a renewable generator (wind or solar) plus the costs of back-up generation to the capacity and operating costs of a nuclear power station.
- Such crude assessments do not account for the fact that much more renewable capacity is required to produce the same amount of electricity compared to a nuclear power station.
- Nor does it account for the requirement to store surplus electricity from renewable sources as well as the back-up generation. An enormous amount of investment required to connect renewable generators located in areas where there is presently no or inadequate transmission network capacity.
- Many other calculations are ignoring transmission costs entirely, which we have considered in this modelling.
Our modelling in this report has concluded:
- The AEMO’s Progressive scenario including nuclear power is 44% cheaper than the Step Change model without nuclear.
- Using a Step Change model with nuclear will garner a 25% cheaper solution than using renewable and storage alone.
Highlighting that nuclear power in Australia’s energy system is cheaper in both scenarios.
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