Australia’s green energy industry hits back against opposition’s push for nuclear
Political divisions in Australia are increasing the investment risk for renewable energy
"Nuclear energy for Australia is an idea whose time has come” proclaimed Peter Dutton, Australia’s leader of opposition on 19th June. Mr. Dutton’s plan is to revive nuclear energy down under if his government is elected to office in the 2025 federal election.
The divisive debate over nuclear energy’s role in Australia’s energy mix is heating up following Mr. Dutton’s remarks and the stakes are high. The future of renewable energy investments that extend well beyond 2030 hangs in the balance. Set against this backdrop, the Australian Clean Energy Summit 2024 gave the renewable energy industry a platform to address the issue and present its case.
Policy uncertainty and investment risk
Participants at the conference reiterated that the investment case for renewable energy assets relies on policy certainty. Investment horizons for the industry extend beyond political ones, which exacerbates the risk posed by political winds blowing in uncertain directions.
“We are making multi-billion dollar investments. Policy certainty is important”, commented Damian Nicks, the chief executive officer at AGL Energy. The company has invested $4.8bn in renewable energy generation and its climate transition plan envisages a total $20bn in renewable energy investment by 2036. “Nuclear is not part of our strategy”, he affirmed.
Angela Karl, head of energy transition at alternative asset manager HMC Capital called for bipartisanship on the energy transition. “There is ambition, but uncertainty makes it difficult to make investment decisions”, she said.
In an audience poll conducted during the summit, over 50% of participants echoed Angela Karl’s call for bipartisanship.
Daniel Westerman, chief executive officer at AEMO - the Australian energy market regulator - confirmed that nuclear energy is not part of the AEMO’s vision. “The Integrated System Plan (ISP) does not include nuclear energy because it is not permitted by law”, he said. The ISP is a 25-year roadmap for Australia’s electricity market.
An uncertain policy terrain would also increase risks for Australian asset owners who have accelerated their exposure to renewable energy assets in recent years. Australian superannuation funds’ direct holding of renewable energy generation capacity in 2016 was below 100MW, today that number is above 500MW. If indirect holdings are included, super fund investments account for about 10% of the country’s generation capacity.
The case against nuclear energy in Australia
The industry’s opposition to nuclear energy in Australia is on two fronts: technological viability and cost. Investors and renewable energy leaders attending the summit repeatedly questioned the technological and financial feasibility of Mr. Dutton’s nuclear energy plan.
“Time and practicality work against the viability of nuclear energy”, said Angela. “It is highly unlikely that a nuclear strategy would roll out”, she added. AEMO’s Daniel Westerman agreed: “We know that nuclear is comparatively expensive. It will also not be ready in time”.
“The first nuclear power plant they say will come online only 2037”, said Rob Wheals, chief executive officer of Squadron Energy – a renewable energy company. This would make the timeline of delivering nuclear energy incompatible with retiring Australia’s coal power plants.
Wheals also questioned the motivation behind reviving the nuclear energy debate in Australia. “Is this about kicking the can down the road, so that coal can stay for longer?”, he asked.
Political risk on display
Both sides of the political aisle addressed the summit. Assistant minister for Climate Change, Jenny McAllister framed the nuclear debate as a “distraction” from the economic opportunities of decarbonisation.
Ted O’Brien, shadow minister for Climate Change and Energy presented an opposing view. According to him, the government’s plan relies heavily on one source of future energy – renewables. “I see no sense in putting all eggs in one basket”, he commented.
He went on to argue that there are risks associated with coal power plant retirements. “We are closing down one system before another is ready to go”, he stressed. The coalition’s plan, according to the shadow minister, is to replace retiring coal power plants with nuclear energy.
The divide between the two parties over nuclear energy’s role in Australia’s energy transition was on display at the summit. For the renewable energy industry and its investors this means that the years ahead could be marked by regulatory turbulence, conditional on the election next year.
