Interview with Sabra Lane, ABC AM

SABRA LANE: Building a large-scale nuclear power plant in Australia would cost at least eight and a half billion dollars and take 15 years to deliver, according to the country’s peak scientific agency. The CSIRO has published its annual GenCost report on energy, and it's found nuclear is twice as expensive as renewables, even with transmission and storage costs factored in. The findings are set to kick off a fresh debate about energy and the Coalition’s pivot to nuclear power.

Chris Bowen is the federal Minister for Energy and Climate Change, and he joined me earlier. Chris Bowen, before we talk about today’s report, many of our listeners will remember the Australian Energy Market Operator warning just yesterday of possible blackouts next summer in Victoria and New South Wales essentially because the rollout of renewables is taking much longer than expected. What can speed up that process?

CHRIS BOWEN: Well, firstly, Sabra, this is a regular report by the Australia Energy Market Operator, and it always – or very, very often points to potential shortfalls, and that’s what it’s designed to do, to help stimulate and guide both government investment and private sector investment. And what the report actually calls for is faster renewable rollout, and, of course, we’re doing that with the Capacity Investment Scheme. And, in fact, Sabra, if you look at yesterday’s report closely, it has two scenarios, and one where government policy is implemented, primarily our Capacity Investment Scheme, finds that those shortfalls are by and large dealt with.

SABRA LANE: Industry analysts point out that eight months ago those warnings weren’t present in AEMO’s report and now they are. What’s happened in that space of eight, nine months?

CHRIS BOWEN: Well, I don’t quite agree with that analysis. The ESOO has been pretty consistent. Of course it changes from time to time. And one of the things in this ESOO, Sabra, is that AEMO quite prudently has factored in potential delays in projects. That doesn’t mean those delays exist or will exist. They have assumed a six-month delay in every project in the new 4.3 gigawatts coming on. Take one example: the Kurri Kurri gas plant. They’ve – I have been advised there is no delay, it is on time. But AEMO has assumed there is a six-month delay and that accounts for some of the shortfalls as well. And that’s quite appropriate to assume those delays.

SABRA LANE: How worried are you that public support for renewables will vanish if there are blackouts and prices for power remain high because of this lumpy rollout?

CHRIS BOWEN: Well, let me make a couple of points: people said there’d be blackouts last summer. Peter Dutton and Ted O’Brien ran around quite inappropriately saying the lights were going out. The lights did not go out. We had no blackouts due to lack of energy generation. We had some power lines down and some transmission towers down. That can happen at any time. But what we didn’t have is a lack of power in any power grid in the country over the last summer, despite claims to the contrary. And, of course, we’ve seen the draft DMO, we’ll see the final DMO in coming days, showing that actually power prices are coming down.

And to your question about public support, I mean, every poll I see continues to show renewables being the most popular form of energy, the most supported form of energy with nuclear right at the bottom of that category.

SABRA LANE: Today’s CSIRO report, what’s the main takeout for you?

CHRIS BOWEN: Well, the main takeout is it’s yet another confirmation that renewables are the cheapest form of energy and nuclear is by far the most expensive form of energy. There are changes in this GenCost. They have – CSIRO and AEMO have looked at large-scale nuclear for the first time. It finds that that would be six times more expensive than renewables. Despite claims from the opposition, quite inappropriate attacks on CSIRO and AEMO from the opposition, that they hadn’t counted the cost of transmission, the cost of transmission and storage is counted, and still renewables comes out as the cheapest. And, of course, the CSIRO points out that nuclear will be a very long lead time to build, very slow to build. So nuclear is slow and expensive and is risky when it comes to the reliability of Australia’s energy system.

SABRA LANE: Some who also point out that Snowy 2.0 is proving to be pretty risky. Initially that was costed at something like 7 billion; now currently on track for 12 billion. The ABC has revealed today the tunnel boring machine Florence is again stuck. This particular program seems to be proving the initial critics right – under costed at the beginning, not delivered on time and possibly a costly mistake.

CHRIS BOWEN: Well, it was under costed at the beginning. There was not enough work done on the due diligence of the tunnelling and the risks involved, and there should have been another boring machine ordered right at the beginning when the project was started. But the new management of Snowy 2.0 under the new chief executive Dennis Barnes has done a remarkable job in turning the project around and improving it. It is now 57 per cent complete.

Yes, the Florence boring machine has hit some hard rock, but the advice to me is that the project is still on track for the previously announced completion date. And on your point, Sabra, even with these cost increases, Snowy is still pound for pound much cheaper than nuclear even though the cost has increased substantially.

SABRA LANE: You had big hopes for offshore wind generation. The GenCost reports paints a pretty gloomy outlook for that. It’s costing twice as much as onshore wind. Do the economics stack up?

CHRIS BOWEN: It’s still much cheaper than nuclear, Sabra. And it’s always been the case that offshore wind as a new technology is more expensive than onshore wind. But it has other advantages. It is very constant; it is always windy offshore. That’s regarded by the IEA as variable base load because it is so constant. It is jobs rich with maritime jobs created. And it is a very important part of the economic future of those regions that are going to see coal fired power closures, whether it be the Hunter or Gippsland or other regions. So offshore wind has a role to play. It is still much cheaper than some of the alternatives like nuclear, even though it is more expensive than onshore wind or solar.

SABRA LANE: Chris Bowen, thanks for talking to AM this morning.

CHRIS BOWEN: Good on you, Sabra.