Australia's Energy Debate: Nuclear Power or Renewables?

Introduction

Australia is facing an important moment in its energy policy. As the country moves away from coal and gas, the debate over whether to incorporate nuclear power into its energy mix has surfaced. While the debate often appears framed as a relatively simple choice between renewables and nuclear, the reality is far more nuanced. The implications of this decision, to be made at the upcoming Federal election, depend heavily on how policymakers, experts, and the media present their analysis to the public.

Arguably, timing is the most critical factor in this debate. Meeting Australia’s commitments under the Paris Agreement requires rapid reductions in greenhouse gas emissions. On this hurdle alone, nuclear power should be excluded, as its deployment timelines stretch beyond the critical period for achieving the nation's climate commitments.

Another retail political issue is that mandating nuclear power in Australia could shift private capital away from renewable energy projects. This would be damaging, as it risks locking in higher electricity prices over the longer term. The Coalition has also indicated that it will underwrite the costs of nuclear power plants, which means taxpayers would ultimately bear the financial burden (as well as the opportunity cost).

This article does not attempt to unpick every issue raised in public discussions. Instead, it offers an analysis that should help readers consider the underlying issues in both the Coalition's nuclear proposal and the current government's trajectory for energy policy.

"Retail Political" Issues Have Been Raised

Over the recent months in Australia, there has been considerable discussion and speculation on the costs of the energy transition that is facing the nation. The debate raises a variety of issues that extend beyond energy technology choices:

• Energy Security: Proponents of nuclear energy argue it can provide stable, low-emission baseload power, complementing intermittent renewable energy sources like wind and solar.
• Capital and Operating Costs: Critics point to nuclear’s high capital costs compared to the lower costs of renewables. Transmission upgrades for both technologies are also critical considerations.
• Community Concerns: Nuclear power faces significant public opposition and would require substantial compensation for communities hosting facilities. Removing legislative bans on nuclear energy across Australia would involve legal, regulatory, and consultation costs. Current opposition to nuclear is untested, so it is speculative at best to suggest that there will be comparable pushback to that faced by renewables.
• Waste Management: Nuclear power generates high-level radioactive waste that requires costly, long-term management infrastructure, while renewables face lower decommissioning costs for solar panels and wind turbines. However, decommissioning costs for renewables are more complex than they first appear, particularly for large-scale projects in remote areas where waste transportation and disposal costs can be substantial.
• Transmission Systems: Proponents of renewable energy claim much of the existing grid transmission capacity is already allocated for renewable energy offtake. Nuclear power stations, however, would require dedicated transmission systems, potentially adding further costs.
• Timing and Climate Commitments: Nuclear power’s long deployment timelines mean it cannot contribute meaningfully to Australia’s near-term emissions reduction targets, while renewables can be deployed much faster.
• Economic Context: This debate unfolds against a broader backdrop of economic pressures, including Australia’s cost-of-living crisis, where energy affordability is a critical concern for policymakers and the public. Nuclear energy has been touted as solving the short term energy price crisis.
• Renewables + Storage and Gas Firming: The combination of renewables with energy storage (batteries or pumped hydro) and gas firming solutions allows for greater reliability. These technologies work together to overcome intermittency issues associated with wind and solar, providing a reliable and flexible grid.
• Safety Risks: While this one hasn't been raised in any serious way (as yet), nuclear accidents are rare, public perception remains shaped by incidents like Fukushima and Chernobyl. Renewables pose fewer operational safety risks, but risks do exist during the construction phase, including environmental disruption and supply chain emissions, as well as harm to contractors as in any infrastructure project.

Real Issues that Should be Considered in the Debate

The following is a high level comparison of nuclear power and renewables combined with gas firming (pumped hydro) and storage, analysing their costs, benefits, and challenges (factors) to determine the most pragmatic path forward for Australia's energy future. I have attempted to identify these and work through each in turn.

1. Timing

Nuclear power has lengthy deployment timelines, with the first reactors unlikely to be operational before 2036. Regulatory, planning, and construction phases require 15–17 years. By contrast, solar PV and wind can be deployed in 1–3 years, while firming solutions such as batteries and gas plants take 2–5 years. These technologies are already being implemented, ensuring quicker contributions to the energy grid.

Nuclear power could have been a sensible decision 15 years ago (or earlier) when initial discussions about Australia's energy transition began. At that time, nuclear could have been integrated into the planning and policy process, allowing for the lengthy lead times associated with its deployment. However, with the now urgent need to meet Australia’s Paris Agreement targets and rapidly reduce emissions, the decision to pursue nuclear power now is significantly constrained if Australia is committed to meeting its Paris commitments.

In contrast, renewables - solar, wind, and battery storage - are already being deployed at scale, providing immediate emissions reductions and faster contributions to the energy grid, with relative certainty around the deployment risk profile. This is important for addressing the short-term climate targets that are critical for limiting global greenhouse gas emissions.

Implications: Renewables dominate in the short to mid-term, with nuclear providing only long-term solutions. Timing is especially critical for meeting Australia’s Paris Agreement targets, and nuclear therefore does not align with the required timeframes. An important implication of introducing nuclear is that coal plants would likely need to be propped up long after their planned decommissioning dates (which will require tax payer support given they are becoming uncommercial), further delaying a shift to net zero electricity. Delayed decisions (by previous successive governments) mean it is now too late to rely on nuclear to address immediate energy and emissions reduction needs.

2. Capital and Operating Costs

Nuclear power has high capital costs of AUD $10–12 million per MW, with operating costs of AUD $30–40/MWh, excluding water usage. First-of-a-kind (FOAK) costs for nuclear reactors add further financial risks, as these projects often experience delays and budget overruns. In comparison, solar PV costs AUD $1.8–2.5 million per MW (utility scale), wind costs AUD $2.5–3.6 million per MW, and battery storage for 2–4 hours costs AUD $1.2–1.4 million per MW. Combined operating costs for renewables with firming solutions are AUD $60–85/MWh.

Implications: Nuclear’s high upfront costs (as well as the propensity for cost overruns as observed internationally), compounded by FOAK cost risks, and moderate operating costs contrast with renewables’ lower capital costs but higher combined costs when firming is included.

3. Waste Disposal Costs

Nuclear power generates high-level radioactive waste that requires long-term management, estimated at AUD $1–3 million per MW for geological repositories. Australia currently lacks the infrastructure to manage this waste, so the costs will lean toward the higher end of this range. By contrast, solar PV decommissioning and construction waste costs are relatively low (<$50-100k per MW), while wind turbine blade recycling and decommissioning costs at AUD $200,000 per MW. However, renewable energy waste management can involve additional costs, especially for large-scale projects located far from urban centres.

Implications: Nuclear waste costs far exceed those of renewables, though renewables’ decommissioning (and construction costs for utility scale solar PV) costs are more complex than they first appear.

4. Safety

Modern nuclear reactor designs have significantly reduced the risk of catastrophic failures; however, the perception of nuclear power remains heavily influenced by past incidents such as Fukushima and Chernobyl. Concerns persist regarding accidents, natural disasters, or potential human errors that could lead to severe consequences. Long-term radioactive waste management further compounds these safety concerns, as the risks of environmental contamination remain unresolved.

By comparison, renewables such as solar and wind pose far fewer operational safety and environment risks. While construction-phase risks—such as environmental disruption or supply chain emissions—exist, they are short-term and manageable. Battery storage, though generally safe, has risks like thermal runaway, which can be mitigated with modern designs and safety protocols.

Implications: Renewables offer significantly greater safety assurances during both construction, operation and decommissioning compared to nuclear power, which retains unique and unresolved safety risks.

5. Community Concerns and Public Opposition

Community concerns surrounding nuclear power are multifaceted, stemming from safety fears, waste disposal issues (and NIMBY), and a lack of familiarity with the technology in Australia, including the absence of a trained workforce. Public acceptance remains low, and significant compensation for hosting nuclear plants—estimated at AUD $2–5 million per MW—would likely be required. Additionally, removing existing legislative bans on nuclear power would necessitate comprehensive legal, regulatory, and community consultation processes, incurring further costs and delays.

By contrast, renewables face moderate community resistance primarily related to competing land use, visual impacts, lack of compensation equity (to hosts and neighbours), and the installation of transmission/distribution lines. Compensation for renewables, to communities (excluding payments to landowners for hosting wind turbines or solar farms), is considerably lower at AUD $0.5–1 million per MW which could be available for local community support e.g. infrastructure for recreation, health, community facilities, etc.

Implications: Public resistance to nuclear power, combined with the political and regulatory hurdles for lifting current bans, makes it far less socially and politically feasible compared to renewables.

6. Lifecycle Costs

The levelised cost of energy (LCOE) is a critical measure of lifecycle costs for energy technologies. For nuclear power, the LCOE is estimated to be AUD $80–120/MWh over a 40–80 year lifespan, excluding first-of-a-kind (FOAK) costs. While nuclear reactors provide stable, long-term baseload power, high upfront capital costs and extended timelines for return on investment impact overall affordability.

For renewables, the LCOE is more competitive, ranging from AUD $50–150/MWh, depending on technology and location. Solar PV and wind have a shorter lifecycle of 25–30 years but remain cost-effective, especially when paired with energy storage and firming solutions like gas plants or pumped hydro.

Implications: Renewables remain more cost-competitive across their shorter lifecycle compared to nuclear power, which requires higher investment for a longer operational horizon.

7. Transmission Costs

Transmission infrastructure is a critical consideration for both nuclear and renewable energy. Nuclear power plants would require dedicated high-capacity transmission systems due to their centralised nature and reliance on specific locations (e.g., near water sources). This would add to overall project costs, though the existing grid could be leveraged to some extent.

Renewable energy, by contrast, benefits from decentralised generation but requires significant investment in grid upgrades to connect geographically dispersed solar farms, wind turbines, and storage systems. While proponents argue much of the grid is already planned to accommodate new renewable energy zones, further upgrades may still be necessary. Transmission costs for renewables range from AUD $15–30/MWh, compared to AUD $10–20/MWh for nuclear.

Implications: Both nuclear and renewables incur transmission costs, but nuclear requires dedicated systems, whereas renewables depend on grid expansions to accommodate widespread energy sources.

8. Water Usage

Nuclear power has substantial water cooling requirements, particularly in inland or arid regions where water resources are scarce. Recirculating systems consume between 2,500–3,500 litres of water per MWh. In rural and regional areas, water scarcity increases operational costs and raises concerns about sustainability and equity in water allocation.

By comparison, renewables have minimal water requirements. Solar PV, wind, and battery systems require water primarily for cleaning and cooling purposes, but these needs are negligible compared to nuclear plants.

Implications: Nuclear power’s reliance on water for cooling represents an overlooked but significant operational cost, particularly in water-scarce regions, where renewable technologies offer a distinct advantage. In Australia, clearly water availability will always be a limiting factor given the difficulty in predicting where it will be available, especially as climate variability continues to increase.

9. Private Capital Risks

Mandating nuclear power would almost certainly reduce the flow of private capital to renewable energy projects. Australia has been a global leader in attracting private investment in renewables, driven by falling costs, shorter timelines, and growing public and corporate support. If nuclear power were to be prioritised, investors are likely to redirect funds away from solar, wind, and storage projects due to policy uncertainty and a perceived shift in government priorities.

This redirection of capital risks stalling renewable energy development, locking Australia into higher long-term electricity prices as the economy misses opportunities for faster, cheaper energy solutions.

Implications: A nuclear mandate would disrupt private investment in renewables, jeopardising progress toward affordable and clean energy while increasing long-term costs for consumers, and having a jolting effect on new renewable energy and storage installs.

10. Public Costs

The Coalition has indicated that the government would underwrite the costs of nuclear power plants. This means that taxpayers would bear the financial burden of nuclear energy projects, including planning, regulatory approval, and construction. Given nuclear power’s significant upfront costs, compounded by First-of-a-Kind (FOAK) risks, public expenditure would be substantial and extend over decades before a return on investment is realised. Ironically, in times of high electricity production, home solar PV systems exporting power to the grid would be curtailed in a nuclear powered scenario given the latter can't be switched off at short notice (when there is too much electricity in the network).

By comparison, renewables continue to benefit from declining costs. Additionally, government support for renewables has enabled private-sector co-investment, reducing the overall burden on taxpayers.

Implications: Underwriting nuclear power would result in significant additional public costs, which are not required for the continued expansion of renewables, storage, and firming solutions.

Mandating nuclear power would almost certainly reduce the flow of private capital to renewable energy projects.

Summary of Implications

Though not addressed in this note, an important factor is the opportunity costs of incorporating nuclear in the Australian energy mix. That means that the investments proposed to be made by a new government in nuclear could be used on other areas across society that yield outcomes and impacts that are arguably more needful e.g. health, education, housing, and will yield a better return on investment.

Here is a summary of the key points:

1. Timing: Renewables are far better suited to meet short to mid-term climate targets (and energy needs), while nuclear’s long deployment timelines fail to align with the urgency of the Paris Agreement commitments.
2. Capital and Operating Costs: Renewables have lower upfront costs; nuclear’s high capital costs, compounded by FOAK risks, remain prohibitive.
3. Waste Disposal Costs: Nuclear waste management is significantly more expensive than renewables' decommissioning costs, though renewable costs in this domain can escalate in remote regions.
4. Safety: Renewables pose fewer safety risks compared to nuclear, though newer generation nuclear is claimed to be more safe than previous generations.
5. Community Concerns: Public opposition to nuclear is likely to be high (though largely untested in an Australian context), compounded by costs (and time) associated with removing legislative bans.
6. Lifecycle Costs: Renewables remain more cost-competitive over their 25–30 year lifecycles, based on LCOE.
7. Transmission Costs: Both nuclear and renewables incur transmission costs, with nuclear re-using some but also requiring some new, dedicated systems.
8. Water Usage: Nuclear water cooling costs, particularly in rural areas, remain overlooked but I suggest will be significant.
9. Decision Timing: Nuclear could have been a sensible decision 15 years ago, but its feasibility today is significantly limited by timing (as per item 1).
10. Private Capital Risks: Mandating nuclear would almost certainly reduce the flow of private capital to investments renewables, locking in higher electricity prices over the long term.
11. Public Costs: The Coalition’s commitment to underwrite nuclear projects means these costs will ultimately be borne by taxpayers.

Conclusion

While nuclear power can offer long-term, stable baseload energy, its high capital costs, extended deployment timelines, waste management challenges, and poor fit to an Australian energy generation context, make it substantially less attractive compared to renewables. Renewables, bolstered by gas firming and battery storage, provide faster, more cost-effective solutions to Australia’s immediate and mid term energy needs. Continued strategic investments in renewables, energy storage, and grid upgrades are more likely to accelerate Australia’s transition to a cleaner, more resilient energy system without the uncertainty and risks associated with nuclear power. The decision (or not) to incorporate nuclear ultimately hinges on balancing long-term reliability with the urgency of decarbonisation, economic feasibility, and public acceptance. In this context, renewables paired with storage and gas firming, present a more pragmatic and adaptable path forward.

References

Frontier Economics, Base Case Report: Nuclear Power Analysis (2024).

Frontier Economics, Final Report on Nuclear Feasibility (2024).

CSIRO, GenCost 2024-25 Consultation Draft (2024).

Liberal Party of Australia, A Cheaper, Cleaner and More Consistent Energy Plan for Australia (2024).

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