Extract from ABC News
Cast your mind back, not into the dim, dark recesses of your memory but just a little, to shortly after we emerged from the COVID pandemic.
Two years ago, in February, when Vladimir Putin embarked on his ill-advised and misguided invasion of Ukraine – a conflict he claimed would be completed within a week – global trade links were jolted and energy supplies interrupted.
The resulting fuel shortages across Europe proved to be a volatile accelerant to a troublesome inflation outbreak which emerged just as the world economy was waking up from its enforced slumber.
Two years later, after one of the most blistering rounds of interest rate hikes in memory, we're still dealing with the aftermath.
Retail fuel and electricity prices remain elevated despite a collapse in global oil, coal and gas prices and continue to prop up stubbornly high inflation levels.
If there was a silver lining in the events of the past few years, at least from an environmental viewpoint, it was that the savage lift in something as essential as household power would spur a renewed push to replace our aging power plants with more modern, cheaper and cleaner technologies.
Suddenly, the debate has come full circle. While coal-fired steam engines are unlikely ever to be built here again, there is a renewed push to examine the merits of nuclear-powered plants despite a complete lack of interest from the corporate world.
Expensive uranium won't generate cheap electricity
For the past month or more, the argument rejecting nuclear energy has overwhelmingly been about cost and to a lesser extent the time involved in building large-scale nuclear power plants.
When it comes to cost, the focus has centred mainly on the enormous build costs involved in projects of such complexity and the high likelihood of delays and overruns.
But there are other cost issues involved. An important consideration is the cost of the raw materials needed to fuel nuclear power plants.
In the past four years, the price of uranium has quadrupled with the graph showing similar signs to the great uranium spike of 2007.
The cause for the sudden price breakout relates to factors on both the supply and demand side. Last year, the US House of Representatives banned the purchase of Russian uranium, which supplies about 24 per cent of all US power company needs.
In future, American power utilities will need to source their raw material elsewhere.
More recently, Kazakhstan – the world's biggest producer – signalled it was encountering production problems with shortfalls predicted through this year and next.
Nuclear proponents argue that, unlike coal or gas, nuclear fuel is a relatively minor component of plant costs, making uranium costs less critical to plant profitability and, as a result, electricity prices.
But even the World Nuclear Association, the main global nuclear lobby group, notes that "for nuclear power plants operating in competitive power markets, where it is impossible to pass on any fuel price increases, higher uranium prices will cut corporate profitability."
Written two years ago, it adds this rider: "Only if uranium prices rise to above $US100 per pound and stay there for a prolonged period (which seems very unlikely), will the impact on nuclear-generating costs be considerable."
A quick look at the above graph illustrates that prices have already risen to $US100 a pound with US investment banking giant Citi tipping prices to average $US110 next year and broking firm Shaw looking at prices topping $US150.
Rates hit nuclear power harder
The larger and more complex the project, the longer it is likely to take and the more it's going to cost, particularly when it comes to finance. And one factor that can really blow out costs on long-term infrastructure projects is the interest rate, or the cost of money.
While a recent study by the country's chief scientific body, the CSIRO, found nuclear power to be the most expensive option for Australia – a study that has been derided by the federal opposition – it is in good company.
Even the World Nuclear Association admits that, as interest rates rise, nuclear power plants become far and away the most expensive form of electricity generation to construct as the graph below shows.
The axis on the left shows the levelised cost of electricity while the bottom axis charts interest rates.
The lobby group identifies gas as the cheapest form of electricity generation, under almost all interest rate scenarios, followed by coal, wind and solar.
That contradicts other studies that identify renewables as the cheaper option. But it is in furious agreement with almost every other study that higher interest rates can turn nuclear power into a financial disaster.
Miners vs Canberra, round II
Given Australia is one of the world's biggest sources and suppliers of uranium, you'd think it logical it could be a cheap source of energy to generate electricity.
But we also happen to be the world's biggest seaborne coal exporter and the world's largest supplier of shipped Liquefied Natural Gas. That, however, didn't insulate us from the mayhem that followed the Ukraine invasion.
In fact, the price of Australian gas often can be found cheaper in Asian markets than here where domestic shortages push up local electricity prices. It is highly likely we'd get the same result if we built a nuclear-powered electricity grid.
As the world's fourth biggest uranium producer, our exporters are hoping to capitalise on improved global prices, rather than provide cheap fodder to benefit the national interest.
They'd fiercely resist any effort to provide the domestic market with fuel, just as they have with gas.
BHP is sitting on the world's biggest deposit at Olympic Dam in South Australia while other local companies include Paladin Energy with mines in Australia, Canada and Namibia along with a host of smaller explorers and producers.
Clean-up costs
Damien Nicks, the boss of AGL, one of our biggest power companies, made it clear where he stood last week when he ruled out nuclear as an option for Australia's power grid.
The build time, the cost and public opinion were prohibitive, he said. AGL was committed to its investment rollout in renewables.
Which then begs the question: If private capital won't invest, who would pick up the tab?
It is possible a federal government could build and operate nuclear power plants but taxpayers would end up lumbered with bigger deficits and escalating debts if wholesale electricity prices did not cover the cost of generation.
And given renewables often flood wholesale markets with electricity at zero cost, it wouldn't take much for a nuclear plant to become an expensive and obsolete monument to ideology.
Mining giant Rio Tinto, meanwhile, is also committed to renewable investments, to power its smelters at Tomago in Newcastle and Boyne Island near Gladstone, Queensland and, ironically, has dismissed nuclear power as too expensive.
Perhaps that's because it's still being stung by uranium. The former owner of the Ranger Uranium Mine in the Northern Territory, Rio Tinto has been lumbered with massive clean-up costs for the now mothballed operation.
Two years ago, it told the Australian Securities Exchange it could be up for $2.2 billion in rehabilitation costs.
And then, just before Christmas, it warned that its subsidiary, Energy Resources Australia, may have to raise another $1 billion to fund the clean-up.
A costly past it no longer wants to repeat.
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