A Choice Between Impractical Renewables and Unaffordable Nuclear – Watts Up With That?

Essay by Eric Worrall

Domestic energy policy blunders from politicians on all sides are killing Australia’s manufacturing industry.

‘The big lie’: Why governments can’t deliver cheaper power

Political leaders have been promising lower power bills for two decades. But with the energy transition in full swing, its high time they came clean about its true costs.

Ryan Cropp Energy and climate reporter
Mar 27, 2025 – 5.00am

Since the early 2010s, when Australia’s climate wars began in earnest, practically every federal political leader has at some point in the electoral cycle pledged to do something about power prices. Very rarely have they followed through.

The Albanese government is the latest to walk into the trap. On Tuesday night, Treasurer Jim Chalmers offered up a third round of electricity rebates, in part to cover its tracks after its ill-fated 2022 election promise to reduce bills by $275 was overtaken by events – albeit largely beyond their control.

Not to be deterred, though, the Coalition is heading into the federal election selling an equally ill-advised counterclaim that its policy to replace Australia’s coal power stations with seven government-owned nuclear power stations will lower power bills by 44 per cent.

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But whichever way you slice it, Australia’s energy system is at a crossroads. It is reliant upon an ageing and increasingly unreliable fleet of coal-fired power stations that will eventually need to be replaced. Whether governments choose to do that with renewables, nuclear or something else entirely, it’s going to cost a lot of money.

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Read more (paywalled): https://www.afr.com/policy/energy-and-climate/the-big-lie-why-governments-can-t-deliver-cheaper-power-20250318-p5lki3

Australia’s energy infrastructure is not “at a crossroads”, it is on the verge of falling apart. Decrepit power systems have been maintained well beyond their expected end of life, because decades of hostile regulatory policies have deterred investment in new generators.

The impact of incompetent, ill considered government energy policy interventions from both sides of Australian politics has been devastating.

Australia’s failed energy system crashes on economy

Leith van Onselen
Tuesday 18 March 2025

Electricity prices soar by up to 9% 

Labor’s 2021 Powering Australia Plan, released prior to the last federal election, promised that Australians would save $275 on their residential electricity bills by 2025 and $379 by 2030.

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Last week, the Australian Energy Regulator (AER) announced that electricity bills will rise by up to 9% from 1 July. The largest jump will be seen in NSW (up to 9%), whereas QLD will see prices rise by up to 6%.

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Incitec Pivot has downsized its fertiliser production because of high energy costs. It closed its Gibson facility in Queensland in 2022, impacting 170 jobs. Incitec’s Geelong fertiliser business also closed last year, costing 40 jobs.

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Last year, Australia’s last major plastics manufacturer, Qenos, closed due to high energy costs, making Australia wholly reliant on imported plastics from China.

Australia’s only architectural glass manufacturer, Oceania Glass, closed last week after 169 years of operation.

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Read more: https://www.macrobusiness.com.au/2025/03/australias-failed-energy-system-crashes-on-economy/

The article blames gas exports for high prices, but why are gas companies prioritising exports over domestic consumption? Sometimes at a lower paper profit?

The answer is obvious – the export market is safer and more predictable. Exporters know when they sign those contracts that they will make money.

The same cant be said for the domestic gas market, which in Australia is subject to capricious government price controls.

While in theory the export market is just as vulnerable to government tinkering as the domestic market, in practice the integrity of the gas export market is protected by angry foreigners who threaten massive economic retaliation whenever Aussie politicians try to interfere.

There have also been hints gas giants will play the “Atlas Shrugged” card if the Aussie Government gets too interventionist. Argentina in particular is attracting attention as an alternative to Australia, they have vast, underexploited gas reserves. Pro-business President Milei, often described as the Argentina’s answer to President Trump, is pushing hard for businesses to invest in the vast Vaca Muerta shale gas field (estimated reserve 308 trillion cubic feet). While Argentina is not currently a serious player in the gas export market, and faces onto the Atlantic rather than the Pacific, it won’t take long for solutions to be found if there is sufficient demand. In a few years, Asia will no longer need to look to Australia for gas.

In the face of this threat of imminent demand destruction, why is Australia being such a troublesome gas export partner?

The reason for all this political foolishness is no mainstream Australian political leader is focussed on prosperity. With a few honourable exceptions, politicians on all sides of the Australian political spectrum are obsessed with tinkering with energy policy, trying to create an energy policy with offends the least number of voters, instead of an energy policy which works.

It doesn’t have to be this way. Australia could easily have the best of both worlds, by using cheap coal for domestic industrial energy, especially brown coal, which is immune to international price changes because nobody else wants it, and letting international trading partners have all the gas they want. Japan, which desperately needs gas, might be persuaded to stick with Australia instead of diverting development resources to places like Argentina. They might even be persuaded to build some new high efficiency coal power plants at rock bottom prices, in return for better long term access to Australian gas – if Australia acts quickly enough.

The mainstream opposition plan for a government funded nuclear programme is a step up from the incoherent renewable energy plans of the incumbents, but crisis hit Aussie manufacturing needs a solution which delivers now, not in 20 years. Nuclear will do nothing in the short term to alleviate the pain of Australian energy prices.

The long term benefits of nuclear are dubious for a nation like Australia. Nuclear is a viable technology, but Australia has lots of coal. The upfront capital costs of nuclear power are much greater than coal. With the opposition proposed government funded nuclear programme, all the capital cost of building nuclear power plants will pile onto Australia’s national debt, just as baby boom demographics are starting to bite. Even if the nuclear plants are completed, the cost of energy produced by nuclear plants will be significantly higher than coal – especially in a nation which is sitting on a mountain of accessible, shovel ready coal resources.

Don’t get me wrong, there are places in Australia where nuclear makes sense, where remoteness and a lack of local fossil fuel energy resources tips the balance firmly in favour of nuclear. Advances in nuclear energy could alter this balance further. But where coal is available, Australia needs a solution which delivers today, not 20 years from now, otherwise there will be no manufacturing industry to rescue.

Even if you think I am wrong about nuclear, we need something to tide us over while the nuclear plants are being built. Nuclear power plant construction is not something which should be rushed, especially in a nation as inexperienced as Australia.

The next Aussie federal election is 3rd May 2025. But whichever mainstream party wins, Australian manufacturers will lose. This Aussie federal election provides no prospect for relief for what is left of Australia’s manufacturing industry.

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