‘Fork in the road': How a failed nuclear plot locked in Australia's renewable future
When Australians went to the polls and voted Anthony Albanese back as prime minister, they also voted for something that will outlive the next election: the power industry's guaranteed switch from coal to renewable energy.
What they didn't vote for were state-owned nuclear reactors, forced delays of coal-fired power station closures and a slew of other Coalition promises widely viewed as threats to the country's era-defining challenge of cutting harmful emissions while keeping electricity supply and prices steady.
Although times remain testing in the energy sector, a feeling of relief is clear. 'The nuclear conversation is dead and buried for the foreseeable future,' said an executive at one of Australia's biggest power suppliers, who asked not to be named. Even as the Nationals keep arguing for a nuclear future, any genuine suggestion that atomic facilities could still be built in time to replace retiring coal plants after the next election rolls around was now downright 'ridiculous', said another, adding that renewable energy was on track to surpass 60 per cent of the grid by 2028. 'That's great for the energy sector – it simplifies the path forward,' they said.
Make no mistake, a seismic shift across the grid has been well under way for years now. Australia's coal-fired power stations – the backbone of the system for half a century – have been breaking down often and closing down earlier, with most remaining plants slated to shut within a decade.
At the same time, power station owners including AGL, Origin Energy and EnergyAustralia are joining a rush of other investors in piling billions of dollars into large-scale renewables and batteries to expand the share of their power that comes from the sun, wind and water. The federal government has an ambitious target for renewable energy to make up 82 per cent of the grid by 2030.
'There won't be a renewable energy industry in 2030; it will just be the energy industry.'
Andrew Richards, Energy Users Association of Australia
The task of balancing a system dominated by less-predictable renewables becomes much more challenging, and requires the multibillion-dollar pipeline of private investment in the transition to continue. But ousted opposition leader Peter Dutton, before losing the May 3 federal election and his own seat, hatched a plan to change that course dramatically. A grid powered mainly by renewables would never be able to 'keep the lights on', Dutton insisted.
Instead, he declared, a Coalition government would tear up Australia's legislated 2030 emissions-reduction commitments, cut short the rollout of renewables, force the extensions of coal-fired generators beyond their owners' retirement plans and eventually replace them with seven nuclear-powered generators, built at the taxpayer's expense, sometime before 2050.
For Australians who wanted to see urgent action to tackle climate change – and investors at the forefront of the shift to cleaner power – the campaign to dump near-term climate targets in favour of nuclear energy came at the worst possible time. Some likened it to a 'near-death experience' for the momentum of the shift to a cleaner, modern energy system that would have wiped out investor confidence and killed off billions of dollars of future renewable projects.
'When you reflect on the significance of energy in the campaign, it's reasonable to say this was a fork in the road,' said Kane Thornton, outgoing chief executive of the Clean Energy Council.
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The Coalition was convinced it was onto a winner. The government had been on the nose in the polls, cost-of-living stresses were everywhere, and Australians were more worried about the size of their electricity bills than where their electrons were coming from.
Dutton argued for months that nuclear plants would be the best way to keep prices down, even though almost no one agreed with him.
'I'm very happy for the election to be a referendum on energy – on nuclear,' he said.
In the end, the idea proved too toxic for voters. It delivered big swings against Dutton's candidates in electorates chosen to host reactors, while support for Labor grew in many of the places selected to develop massive offshore wind farms, which the Coalition had planned to scrap.
The decisive election result 'locks in' the government's ambitious push for an electricity grid almost entirely powered by renewables, said Leonard Quong, the head of Australian research at BloombergNEF.
'The Labor Party's landslide victory … is a win for climate, clean energy and the country's decarbonisation trajectory,' he said.
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The Albanese government's plan to transform the grid as more coal-fired plants exit is backed up by modelling from the Australian Energy Market Operator. It includes accelerating the build-out of renewables, backed up by thousands of kilometres of extra power lines, storage assets such as batteries and pumped hydroelectric dams to stash clean energy for when it's not sunny or windy, and a small but essential fleet of gas-fired power stations.
Over the coming decade, the government's flagship renewable energy policy, known as the Capacity Investment Scheme (CIS), is expected to underwrite the financing of enough new wind and solar farms to double Australia's renewable energy generation capacity, according to BloombergNEF, plus a seven-fold increase in storage.
As things stand, Australia is on track to fall shy of its target for renewables to supply 82 per cent of the grid by 2030. But even if it does, a massive increase is still inevitable. The renewables build-out hit record speed last year, said global consultancy Rystad Energy, putting renewable sources on course to surge from 40 per cent to 65 per cent of the grid by the end of the decade. The government's ambitious targets were 'driving significant change', said Andrew Richards of the Energy Users Association of Australia, representing major manufacturers.
'There won't be a renewable energy industry in 2030 – it will just be the energy industry,' he said.
Still, there are some who work in the energy sector who think the door should not be closed on nuclear power permanently.
Although nuclear is not seen as a viable option for the 2030s or even 2040s (CSIRO calculates the first reactor would take at least 16 years to build), EnergyAustralia chief Mark Collette thinks the technology is at least 'worth considering' as part of a much-longer-horizon energy mix – for instance, when the next generation of large-scale wind farms retires in 20 to 25 years.
There are also questions about whether there will be enough renewable energy, supported by gas, to meet ballooning demand in the 2050s and beyond, especially if the rise of electrification, electric vehicles, artificial intelligence and energy-hungry data centres overshoots current forecasts.
'The gap left by coal will be filled by renewables, but what if we've got demand [forecasts] wrong?' said Matt Rennie, co-chief executive of energy consultancy Rennie Advisory.
'This is where the long-term future for nuclear energy becomes interesting – it makes sense to have the conversation.'
For now, sidelining the nuclear debate will empower the sector to double down on the investment boom into wind, solar and storage projects to get ready for a fast-approaching future without coal, energy companies say.
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There are also hopes that it will recast the focus on big challenges that still stand in the way of a smooth transition. These include the soaring cost of building high-voltage power lines needed to connect far-flung renewable energy zones to major cities, resistance among communities asked to host new energy infrastructure, and an impending domestic shortfall of natural gas that will be needed to power a renewed fleet of gas-fired turbines.
Shannon Hyde, local boss of French energy giant Engie, said policy certainty was 'good for business and investment confidence' as the company sought to progress plans for more large-scale renewable generation and storage projects in Australia.
'But local challenges remain,' he said.
'We know the energy transition will depend on a partnered approach with ambitious and purposeful governments.'
For Kane Thornton, who steps down as head of the Clean Energy Council in August after 10 years, every minute spent talking about nuclear energy was a minute that could have been spent addressing matters that were 'real and important'.
'I think we will look back on this and shake our heads at it as another distraction and another chapter of the quite silly energy policy that we've debated in this country for the past decade,' Thornton said.
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