Nuclear war between super funds

Industry Super Australia (ISA) - a research and advocacy body for Industry SuperFunds - has published a report promoting nuclear power, prompting a sceptical response from Industry Super Holdings, which is controlled by super funds including AustralianSuper, Cbus, Hostplus and HESTA. Most of those super funds are also involved in ISA, so the sector is at war with itself - or perhaps the sceptical response can be read as the sector's response to the authors of the pro-nuclear report.

The context for this debate is welcome - super funds urging governments to speed up climate action, and considering using some part of their own vast wealth to make needed investments for climate change abatement.

But the ISA report - 'Modernising Electricity Sectors: A guide to long-run investment decisions', written by ISA Chief Economist Stephen Anthony and Emeritus Professor Alex Coram from the University of WA - misses the mark on nuclear power.

ISA gives itself some wriggle-room by noting that the views expressed in the report do not necessarily reflect those of ISA. And the authors give themselves some wriggle-room: for all their nuclear boosterism, they note that it 'is unlikely that nuclear offers opportunities for investment in the short term' and that it should be placed on a 'watching brief'.

On the other hand, the authors argue that Australia's lack of experience managing a nuclear power plant 'pre-empts the ability to make decisions between all major options for emission reduction.' So Australia should introduce nuclear power in order to make a decision as to whether or not to develop nuclear power? Insofar as there is any logic to that argument, it is dizzyingly circular.

The authors fret that Australia has no capacity to build or operate a nuclear facility and thus lags geographical neighbours such as Indonesia and Vietnam. That's nonsense. All three countries are in the same position: operating research reactors, no capacity to build power reactors and no serious plans to acquire them from overseas vendors (Vietnam abandoned its quest for nuclear power in 2016, citing excessive costs).

The authors aim to 'to provide the best analysis possible' but there isn't even passing mention of salient issues such as the proliferation and security issues associated with nuclear power, or the industry's sickening record of mistreating indigenous peoples, or the nuclear waste legacy, or the occasional catastrophic accident costing hundreds of billions of dollars in addition to the human and environmental costs.

Nuclear economics

The authors state that levelised costs of energy are not a good basis for long-term investment or policy decisions, and they prefer grid-level cost estimates (which make allowance for such things as the cost of back-up power). Fine - but the inputs they choose undermine their work. Rubbish in, rubbish out.

The ISA report estimates 'composite total grid-level costs' at 10% and 30% penetration levels for different power sources. Even at 30% penetration, the high estimate for nuclear (US$192 / megawatt-hour (MWh)) is far higher than the high estimates for coal ($144), solar PV ($88), onshore wind ($84), and gas ($75).

Nuclear only begins to look attractive with ISA's low estimate of US$38 / MWh. That figure is three times lower than the lower end of Lazard's nuclear cost estimate of US$112-189 / MWh.

So where does the US$38 / MWh figure come from? It is derived from the Energy Information Reform Project (EIRP), which purports to have conducted a 'standardized cost analysis of advanced nuclear technologies in commercial development'. But the EIRP doesn't have any credible cost data or estimates for the 'advanced nuclear technologies' it considers (none of which are in commercial development).