Australia has a debate about nuclear power. Hamilton and Heeney weigh in with an important point:
On the basis of many discussions about Australia’s energy policy over the years, we can divide the supporters of nuclear energy into three groups.
The first may be called “ideologues”. They like nuclear not because of zero emissions, but despite it. Indeed, many criticize the climate. They hate renewables because the left loves them, and they love nuclear because the left hates them.
The second may be called “engineers”. They like nuclear power because it’s cool. Like Ferrari, they marvel at its performance and stability. They see it as the energy source of the future. The stuff of science fiction.
The third may be called “pragmatists”. They are not very attentive or knowledgeable about the complexities of energy policy. They firmly believe that nuclear can serve as a common-sense solution to the shortcomings of renewables.
There are clearly none who can be called “economists”. They could care less how electrons are produced. They simply want the cheapest energy that meets the lowest reliability and carbon footprint.
On an economic basis, Hamilton and Heeney concluded that nuclear is cost-effective for Australia:
CSIRO estimates the cost of 90 percent renewables, including the cost of reinforcement, transmission, and assembly, at $109 per megawatt hour. Based on South Korea’s cost (about one-third that of the US and Europe), a lifespan of 60 years, a 60 percent economic efficiency (like coal today), and a construction time of eight years (on the global average. ), nuclear it will cost $200 per megawatt hour – almost double.
The same electrons are delivered with the same reliability, costing twice as much under a realistically optimistic scenario.
Note—this assumes that nuclear is available when the sun isn’t shining and the wind isn’t blowing—so are batteries.
I suspect Hamilton and Heeney are right on the numbers but this is the argument I find most compelling:
If you need external validation of these basic economics, look no further than the opposition’s own declaration. Rather than lift the ban and allow private firms to supply nuclear power if it is commercially viable, the opposition has opted for the government to become the owner and operator. A smoking gun of economic inefficiency if ever there was one.
I am very optimistic about the potential of small modular reactors (SMRs) based on new designs. These reactors can be found near AI resources. As I argue in Marginal Revolution Theory of Innovation, innovation is a dynamic process; success rarely comes on the first try. The key to innovation is continuous refinement and improvement. These small reactors based on various technologies offer the opportunity for refinement and improvement. To achieve this, we must overhaul our regulatory framework, which has burdened nuclear power—our greenest energy source—with excessive regulation compared to more dangerous and environmentally unfriendly technologies.
Electrons are electrons. We must allow all electricity generation technologies to compete in the market on an equal footing. Let the best technology prevail.
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