Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 593

Australia is out of step on nuclear power

Nuclear power would provide optionality across the energy spectrum in Australia. There is no valid argument for Australia to continue to ban the use of nuclear power. The removal of this ban would allow both the public and private sectors the ability to implement nuclear power generation if indeed, the investment decision, had validity. It would leave the Final Investment Decisions (FID) for nuclear power infrastructure to those financing and investment professional groups that have the necessary expertise to make that decision.

Safety concerns overblown

The overwhelming issue over the decades has been safety concerns regarding nuclear power. But when compared to other energy sources, nuclear safety is one of the least risky, according to the US Department of Energy. Over those decades, nuclear power has been utilised for power generation, in defence equipment such as nuclear submarines, and in nuclear medical infrastructure such as Lucas Heights in Sydney. There has been less than a handful of headline nuclear disaster. However, even these events have not resulted in fatalities as significant as compared to fossil fuel energy sources. And nuclear safety compares well to those of renewable energy sources.

Nuclear power is key for many countries

Nuclear power is an important low-emission source of electricity, providing about 10% of global electricity generation. In advanced countries, nuclear power generation rises to 20% of total energy source, per the International Energy Agency. Many countries rely on nuclear energy. Look no further than at the nuclear power plants that dot the France countryside, clearly observed during the television coverage of the Tour de France cycle race.

According to the International Atomic Energy Agency and the US Energy Information Agency, the countries with the largest total percentage of electrical generation being sourced from nuclear in 2023 were France (64.8%), Slovakia (61.3%), Hungary (48.8%), Finland (42%) and Belgium (41.2%). The US, China and France are the largest users of nuclear power generation in absolute terms. Approximately 20% of US and 5% of China electricity generation is from nuclear in 2023. There were approximately 440 power reactors and over 50 countries utilize nuclear energy in about 220 research reactors in 2023.


Source: World Nuclear Association. † Ukraine 2023 electricity generation estimated.

European nuclear power plants have been and are being revamped to meet the current power requirements. US tech companies are realising the ongoing and future demand of three large energy requirements – electrification, artificial intelligence and crypto mining – and entering long term power contracts with nuclear power utility companies for sustainable, reliable and continuous data centre power generation.

Partly due to this, the US Electric Power Research Institute estimates that by 2030, data centres will account for approximately 9% of overall US electricity consumption.

Additionally, US utilities are now increasingly including nuclear power sources in their future investment planning. Most of this investment planning is in nuclear energy through Small Modular Reactors (SMR). At the White House Summit on Domestic Nuclear Deployment In May 2024, Duke Energy, a US energy company, announced agreements with Amazon, Google, Microsoft and Nucor to explore new and innovative approaches to support carbon-free energy generation and help utilities serve the future energy needs of large businesses in North Carolina and South Carolina. Duke Energy is executing an ambitious clean energy transition, keeping reliability, affordability and accessibility at the forefront as the company works toward net-zero methane emissions from its natural gas business by 2030 and net-zero carbon emissions from electricity generation by 2050. The company is investing in major electric grid upgrades and cleaner generation, including expanded energy storage, renewables, natural gas and nuclear.

More are signing up to nuclear power

At COP28, the World Climate Action Summit of the 28th Conference of the Parties to the U.N, more than 20 countries from four continents launched the Declaration to Triple Nuclear Energy by 2050. The Declaration recognized the key role of nuclear energy in keeping within reach the goal of limiting temperature rise to 1.5 degrees Celsius. These countries included the US, France, Japan, UK, Sweden and Canada.

Importantly, at Climate Week events in New York in September 2024, and aligning with the commitment of these countries at COP28 to triple nuclear energy by 2050, a group of 14 major global financial institutions expressed support for expanding nuclear energy capacity. This is a commitment by the largest financial institutions that nuclear energy is fundamental to the energy decarbonisation transition requirement to zero carbon emissions by 2050. These financial institutions included Bank of America, Barclays, Citigroup, Goldman Sachs, Morgan Stanley and BNP Paribas.

The US Government has announced long term funding commitments to nuclear power facilities. The Inflation Reduction Act (IRA) provided substantial tax credits and increased the authorities of the Loan Programs Office (LPO) for the deployment of commercial technologies, while demonstration and research programs are funded and underway within the Office of Clean Energy Demonstrations (OCED) and the Office of Nuclear Energy (NE) to de-risk more innovative technologies.

Nuclear offers a differentiated power source in the energy transition to zero carbon emission. It will contribute to reducing the cost of decarbonisation by providing both necessary base load power and optionality, to overcome the disadvantages of renewable energy- namely, variable generation capacity, energy storage and transmission.

According to a recent US Government Department of Energy report, ‘Pathways to Commercial Liftoff: Advanced Nuclear’, the existing fleet of 94 nuclear reactors at 54 sites provide approximately 20% of US electricity generation and almost half of domestic carbon-free electricity. This report noted that ‘US nuclear capacity has the potential to triple from ~100 GW in 2024 to ~300 GW by 2050.’ Importantly this report identified that when total generation and transmission system costs are included, the overall energy power framework is estimated at 37% lower with nuclear as part of the energy mix compared to without nuclear.

At COP29 in November 2024, another six countries were added to the declaration to triple nuclear capacity by 2050. There are now 31 countries that have signed up to the declaration. Nuclear was discussed as a 24/7 energy solution including both electricity and heat and providing optionality and flexibility in decarbonizing global economies.

Australia is being left behind

In April 2024, the World Nuclear Association noted Australia has the largest known uranium resources representing almost one third of the global total uranium resources. It is the fourth largest uranium producer globally. This represents around 8% of global uranium. All Australian uranium is exported.

The overwhelming outcome from reviewing the current use of nuclear power globally is that Australia is an outlier amongst its Western allies when it comes to its energy policy. It’s an outlier to the country’s largest consumer of commodities – China. Is the Australian public going to rely on ideologically and politically based decision making to determine our energy future?

 

Stuart McKibbin is a consultant and independent contractor specialising in portfolio management, investment research, and industry and company thematic strategies. His five-decade long career includes oil and gas experience as a petroleum geologist, investment research and corporate finance. He has written and presented on macro investment themes, company analysis, managed accounts and ETFs.

 

13 Comments
Andrew
January 10, 2025

The Coalition’s use of flawed statistics to support their nuclear scheme has shocked me. This is clearest in their simplest statistics, those on “current Australian electricity costs”. The main evidence is three brief quotes from Mr Dutton’s website.

They got their fair estimate for Australian electricity cost by cherry-picking a high peak-usage cost in South Australia, 56 cents/kWh, making many of their talking points “alternative facts”. We urgently need a law banning politicians from cherry-picking data in capital project debates. This law would protect us from much of this sort of deception.

If nuclear is such a good option for Australia, why has the Coalition extensively used invalid statistics and created misleading talking points?

See https://www.feedbackreigns.net/coalition-fake-nuclear-facts/

OldbutSane
January 10, 2025

What we really need is an intermittent power source (which nuclear is not) to replace coal and gas in order to meet peak demands when there is inadequate solar, hydro and wind.

What we should also be doing is encouraging people to use less electricity as many are using far too much. For example the recent case in the AFR of someone who had bills of $5900 pa before putting in solar and $1900 after. Before solar our bills were never close to even $1900pa and now we have no bills at all with just a 6.6kw system that paid for itself in 3 years. No we don't go cold or hot, but are sensible with our power use and don't waste it (we never ever heat or cool the whole house nor all day), and our house is nothing special when it comes to energy efficiency either eg has eaves on east but not on the west and old fashioned water heater outside (why are they still allowed to use these things and preset them to 70)!

No matter what option we choose, it will run over budget and over time (look at France's latest - 12 years late and four times overbudget and it's not even the first one they have built, so probably double those figures for the first in Australia and Snowy 2 which is both overbudget and overtime). IMHO it is way too late to be looking now at nuclear as the timeline is way too far into the future, but it is a really good idea if you want to keep gas and coal in the mix! Much better to encourage suburb/street based battery systems, where you can feed in the excess power you generate and use it when needed (there are some of these around already).

Peter Bayley
January 10, 2025

Those who want the continuation of wind and solar factories need to see the damage done to Scotland’s mountain landscapes, to valuable habitats and to productive land. It’s not a future worth having. ‘Renewables’ are an expensive con and now it’s older technology. Nuclear is the way forward. We need this technology in this backward country.

BeenThereB4
January 09, 2025

I am agnostic regarding use of different forms of energy.
Regrettably , Stuart McKibbin provides no information regarding the comparative cost of developing nuclear power as against alternatives.

Would, for example, AGL, Origin Energy or Alinta invest in a nuclear power station?

From the little that I know, our governments (both sides) have a patchy track record (Snowy 2, Inland Rail, Melbourne Suburban Rail Loop) on infrastructure projects.

Peter
January 09, 2025

This article is correct for the northern hemisphere where there isn't much sun or wind - unlike Australia.
The time for Australia to have gone nuclear was in the early 2000's before batteries became niche and which are now emerging from peaking power supply to be mainstream suppliers of power (flow batteries). The Coalition when in Government by not supporting nuclear they by default supported renewables as the future of electricity in Australia.
The track record for new nuclear plants is twice as long and three times the cost from initial estimates. This would make the earliest date for an Australian nuclear plant to be operational about 2050 (this is based on the very big assumption of political approval being granted).
So the choice is between wind and solar in small increments in capacity and cost with shorter life spans or a large increase in capacity and huge cost for nuclear.
The rate of change in technology development especially electric cars which can run your house and ability to generate power at home makes betting on nuclear very long odds of success.
Uncertainty being generated by the Coalition and Murdoch press on future electricity supply sources could delay decisions required now to ensure the reliable future supply of electricity and increase the likelihood of power shortages.

Kurt Momodt
January 09, 2025

Ukraine has 55% of power generated by nuclear according to Wikipedia yet not mentioned, if Australia was to construct a reactor would it use Rosatom the only organisation successfully still constructing reactors otherwise the project would only overrun budget and be scrapped. This piece seems to have an inherent bias.

GregA
January 09, 2025

https://reneweconomy.com.au/csiro-patiently-and-methodically-slaps-down-peter-duttons-nuclear-nonsense/

Trevor
January 10, 2025

https://www.cis.org.au/energy-faq/

Roger
January 09, 2025

Irrelevant whether the ban stays in place or not as man-made nuclear reactors will never be competitive with the one in the sky (the sun). The price of renewable energy will continue to fall. The price of battery storage is now falling rapidly. Man made nuclear reactors will never be competitive on price. Just a distraction.

Dudley
January 09, 2025

Land based 'naval reactor' use fuel that is more than 50% 235U. Tied to fuel vendor.

CANDU reactors are omnivores; use natural uranium, natural thorium (and artificial trans uranium elements). Less dependence on vendor.

en passant
January 10, 2025

Utterly wrong!
Solar has a very limited life and the toxic materials used are worse for the environment than asbestos was.
Batteries? You have to be making this up as they are even more toxic

Goronwy
January 09, 2025

Banning this the most powerful form of electricity generation we have makes no sense. The ban has nothing to do with cost or timeline, it really dates from the anti nuclear peace activists of the 1970s who influenced the Green Party and left of the ALP. Prime Minister Howard regrettably accepted banning nuclear energy in order to get Senate agreement for a new medical and research reactor at Lucas Heights.

Buffett Fan
January 10, 2025

Yes, let's just lift the ban and let the free market decide. The best way forward is to let private industry risk its money determining what is the most efficient solution.

 

Leave a Comment:

RELATED ARTICLES

How to find big winners in the energy transition

America, the world's new energy superpower

Buying miners for a new regime

banner

Most viewed in recent weeks

Australian stocks will crush housing over the next decade, one year on

Last year, I wrote an article suggesting returns from ASX stocks would trample those from housing over the next decade. One year later, this is an update on how that forecast is going and what's changed since.

Australia’s shameful super gap

ASFA provides a key guide for how much you will need to live on in retirement. Unfortunately it has many deficiencies, and the averages don't tell the full story of the growing gender superannuation gap.

9 lessons from 2024

Key lessons include expensive stocks can always get more expensive, Bitcoin is our tulip mania, follow the smart money, the young are coming with pitchforks on housing, and the importance of staying invested.

The 20 most popular articles of 2024

Check out the most-read Firstlinks articles from 2024. From '16 ASX stocks to buy and hold forever', to 'The best strategy to build income for life', and 'Where baby boomer wealth will end up', there's something for all.

2025: Another bullish year ahead for equities?

2024 was a banner year for equities, with a run-up in US tech stocks broadening into a global market rally, and the big question now is whether the good times can continue? History suggests optimism is warranted.

Time to announce the X-factor for 2024

What is the X-factor - the largely unexpected influence that wasn’t thought about when the year began but came from left field to have powerful effects on investment returns - for 2024? It's time to select the winner.

Latest Updates

Shares

Howard Marks warns of market froth

The renowned investor has penned his first investor letter for 2025 and it’s a ripper. He runs through what bubbles are, which ones he’s experienced, and whether today’s markets qualify as the third major bubble of this century.

Property

What to expect from the Australian property market in 2025

The housing market was subdued in 2024, and pessimism abounds as we start the new year. 2025 is likely to be a tale of two halves, with interest rate cuts fuelling a resurgence in buyer demand in the second half of the year.

Superannuation

How to fix the Commonwealth Superannuation Scheme

The scheme has not been updated since it was established and is no longer fit for purpose. Members now find themselves disadvantaged in several important ways versus those in other superannuation funds.

Investment strategies

5 key investment themes for the next decade

AI has helped markets to new highs and rightly dominated news headlines. Yet there are other themes, including niche ones such as gene editing, which are also expected to drive investment returns over the next decade.

Shares

New avenues of growth make 2025 exciting for investors

Investors need to be more discerning this year as headline valuations are high and the economic cycle turns. Dig a little deeper, though, and there are big opportunities in overlooked shares with strong tailwinds.

Investment strategies

The pros and cons of debt recycling strategies

Debt recycling is a powerful strategy for those juggling the seemingly competing goals of debt reduction and building an investment portfolio. Yet it's often misunderstood because it isn't just a single strategy.

Investment strategies

Australia is out of step on nuclear power

Globally, nuclear power is gathering momentum as a differentiated power source in the energy transition to zero carbon emissions. Yet in Australia, a nuclear ban remains, making us an outlier among our Western Allies.

Sponsors

Alliances

© 2025 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.