Energy experts and investors say Coalition nuclear plan is ‘virtually impossible’ without taxpayer funding

Australia’s climate wars are heating up again, and the country’s future energy mix looks potentially radioactive.

Although Federal Opposition Leader Peter Dutton insists nuclear power is the best way to achieve net zero by 2050, his position has not attracted strong support from senior state Coalition MPs, particularly in New South Wales, Victoria and Queensland.

Earlier this year, Victorian Liberal leader John Pesutto told ABC Radio Melbourne he did not support building nuclear reactors in the La Trobe Valley, replacing existing coal-fired power stations.

Queensland Liberal National leader David Crisafulli said nuclear power was not on his agenda “because it’s just not going to happen until Canberra sorts it out.”

Some of the most vocal opposition comes from former New South Wales Liberal treasurer Matt Kean, who dismissed nuclear power as “extremely expensive” and a “Trojan horse” for the coal industry.

Additionally, the country’s leading scientific body, CSIRO, says it will take at least 15 years to build a large nuclear power plant and that producing electricity in nuclear reactors will cost twice as much compared to renewable sources.

Nuclear power generation has been banned since the 1990s under legislation passed by the Howard government.

Yet shadow treasurer Angus Taylor insists nuclear reactors are “commercially viable” and can be built without taxpayer subsidies.

Essentially, the argument is that the free market and private investors will choose to support nuclear power because it will guarantee a return on investment.

We spoke to some of Australia’s biggest energy companies, billionaire investors and fund managers to find out their thoughts.

Landing…

Radioactive unicorns

AGL Energy chief executive Damien Nicks has said nuclear power is not part of his company’s plans.

“There is no real timetable for the regulation or development of nuclear energy in Australia and the costs, construction time and public opinion are prohibitive,” he said.

“AGL is strongly focused on ensuring a strong social license among the communities and traditional owner groups in which we operate, and as a result, many unanswered questions remain regarding costs and plans for radioactive waste.

“Policy certainty is important to companies like AGL, and the ongoing debate on this issue risks unnecessarily complicating the long-term investment decisions needed for the energy transition.”

Meanwhile, Origin Energy said the company is focusing on renewable energy and battery storage.

“At this stage, our primary focus is on increasing supply through mature low-carbon technologies,” an Origin spokesman said.

“However, we will continue to watch for progress on any emerging technologies that can help reduce emissions over time.”

Alinta Energy CEO Jeff Dimery is not considering nuclear power at all.

In April, speaking to the Dimery Press Club, he compared the federal opposition’s plans to replace coal-fired power plants with nuclear energy to “looking for unicorns in the garden.”

He also rejected the idea of using Alinta’s LaTrobe Valley land or any other existing coal-fired power plant to build nuclear reactors.

“You can imagine that our shareholders and our board of directors would not be very impressed if the management team sat around and considered building illegal power plants. It wouldn’t be a very good use of our time.”

Brett Chatfield, Cbus Super’s chief investment officer, is also not convinced.

Asked whether nuclear energy would become part of his company’s investment portfolio if the Coalition won the next election, he replied: “We don’t see nuclear energy as a real part of the future energy transition.”

“We are much more focused on the renewable energy space – offshore and onshore wind, as well as solar energy.”

Cbus manages over $85 billion in retirement savings for over 910,000 Australian workers.

Nuclear energy is not cumulative

Fortescue executive chairman Andrew Forrest has been one of Australia’s largest investors in renewable energy and green hydrogen in recent years.

He is also opposed to the idea of Australia choosing the nuclear option because he believes it is the most expensive form of new energy and the slowest to build.

“I’m not a pro-technology person and I just want to get fossil fuels out of Australia’s energy mix as quickly as possible, but as an industrialist I’ve looked at nuclear power and it doesn’t work,” he said.

“We cannot allow politicians trying to exploit the difference to get elected at any cost to take our country back when we have such enormous opportunities before us.”

Forrest said a combination of large-scale wind and solar projects combined with storage and green hydrogen was the fastest and cheapest way to reduce energy costs for all Australians.

“Business needs the public to speak up because oil and gas lobbyists have been suppressing opposition for 100 years and now it is a matter of life and death,” he said.

“We cannot allow them to paralyze green energy and give them a free hand to destroy the planet.”

Andrew Forrest believes that nuclear energy is not profitable.(AAP: Matt Jelonek)

‘Practically impossible’ to build without subsidies

IMF Investors’ head of global infrastructure, Kyle Mangini, said it was “virtually impossible” for the private sector to absorb the financial risks of building nuclear reactors without taxpayer subsidies.

“If you look at where nuclear facilities are built around the world, almost in all cases they are built by governments,” said Mangini, whose position manages $110 billion in energy and infrastructure investments.

“Australia has never built a nuclear facility, so there is no skilled labor.

“And this is just the beginning; a nuclear facility would need a very long-term sales agreement to sell power – about 30 years at a fixed price. This is not available on this market.

“The nature of these facilities is such that it is extremely difficult to find someone who will build them for you at a fixed price.”

Kyle Mangini says the cost of removing nuclear waste is too financially risky.(ABC news)

He also said: “It is extremely difficult to predict with any accuracy what the costs will be.”

Mr. Mangini referred in particular to the Hinkley Point C nuclear power plant currently under construction in Somerset in southwest England. Construction is behind schedule and well over budget.

Hinkley was scheduled to cost $35 billion over nine years to build and begin generating power in 2025.

However, this amount is currently expected to reach as much as $88 billion over 15 years, which means the system may not become operational until 2031.

Around the world, nuclear construction projects tend to suffer from long delays and inflated costs.

Nuclear reactors often take longer than expected to be built.(IEA, Financial Times)

Data from the International Energy Agency (IEA) show that since 2007, construction of China’s nuclear reactors has taken on average two years longer than expected. In North America, the delay was the longest at over six years.

Mangini also said another reason why nuclear power is not an attractive investment is the unknown costs of disposing of radioactive waste.

“If you don’t have a clear path to divestment, you’re essentially dealing with a liability that you can’t value. It will cost you, but you don’t know what it will cost.”

‘Substantial need’ for nuclear investment

Despite the financial risks associated with investing in nuclear energy, Maple-Brown Abbott portfolio manager Phillip Hudak believes it is important for Australia to meet its emissions reduction targets.

“Grants are an important element in starting this change,” he said.

“We see this with wind and solar, and there is no exception that you would need government subsidies to successfully deploy nuclear.”

Phillip Hudak says nuclear power will help quell the growth in energy demand.(ABC news)

For private investors to get a return on their nuclear investment, Hudak said: “Government subsidies need to be provided initially, given the lack of technology and skills availability we have in the Australian market.

“But we expected higher levels of efficiency once nuclear reactors were operational here in Australia.”

Global energy consumption is expected to skyrocket in the coming decades, particularly due to the growing use of electric cars, artificial intelligence and data centers.

That’s why Hudak says nuclear power will play a key role in providing “reliable baseload power” as a backup in the event of renewable failures.

“Completely unconfirmed”

According to Climate Energy chief financial officer Tim Buckley, the biggest problem with nuclear power is that “the technology in the Australian context is completely anecdotal.”

“We don’t have any supply chain, labor, skilled labor or knowledge to actually do this,” he said.

Tim Buckley says nuclear power is the most expensive way to produce energy.(ABC news)

He stated that it is “impossible” for any private investor (without taxpayer subsidies) to take the risk of building a nuclear power plant.

“When we look at the U.S. market, nuclear plants are under a multi-year government offtake agreement, so the prices are fixed,” he said.

“If you look at the UK, Hinkley Point is on a 30-year government price support program that starts at around $200 per megawatt hour and then increases to an inflation (rate) over 35 years, or 3.5 percent. whichever one is lower.

Essentially, Buckley argues that energy produced in nuclear reactors is the most expensive option for Australia – unlike renewables, where energy production costs are falling by “double digits” annually.

“It is therefore strange that anyone would claim that a nuclear power plant could be built in Australia without massive, decades-long financial support from the government,” he said.