Open Letter: The Coalition’s Nuclear Plan Doesn’t Add Up—Spend the Money on Household Clean Energy Instead

In the wake of the Government’s announcement of its Cheaper Home Batteries Program, 60 Australian economists, energy analysts and policy specialists have signed a letter comparing the economic consequences of pursuing nuclear energy against those of subsidising distributed clean energy technologies, including batteries. The comparison lays out a stark choice with implications for electricity prices, inflation, sovereign capability, economic diversity, job creation, and public health.

— 

As economists, energy analysts and policy specialists we strongly support government investment in household clean energy and industrial electrification and not in nuclear energy.  Why? Because simple household clean energy upgrades can deliver immediate cost-of-living benefits and reductions in carbon emissions, and electrification can safeguard the future of industrial jobs and the communities that rely on them.

The construction of nuclear power plants would take at least 15 years at a cost of at least $330 billion. It would result in higher household energy costs, drain investment away from renewable energy and energy-intensive manufacturing, and leave the Australian economy precariously over-dependent on increasingly automated mineral extraction.

Australia’s energy system is transitioning as we work to reduce climate impacts and replace aging, outage-prone coal power stations. But what’s the best value to be gained from Commonwealth Government spending as we seek a secure, affordable and sustainable energy future for all Australians?

We support a nation-wide program to upgrade homes and industry with clean renewable energy technologies that would allocate funds to:

• Electrification: Large-scale home electrification with smart appliances could deliver bill savings and more comfortable, healthier homes, especially for low-income households unable to afford the upfront costs of electrification.
• Energy-efficiency upgrades: Australian homes are consistently ranked amongst the lowest for energy efficiency. Poor energy efficiency is also often associated with uncomfortable homes which are hot in summer and cold in winter that harm the health of residents.[1]
• Battery storage: household energy costs can be decreased by shifting energy usage into the middle of the day (e.g. water heating), but storage is also required to save surplus solar for night-time use. Programs to encourage household and local community battery storage would address a major gap in domestic energy policy.
• Hot water retrofits: Around one-quarter of household energy is used to heat water, and modelling has found a national roll-out of efficient heat pump and electric resistance water heaters with storage could save households between $4.7 – $6.7 billion by 2040.[2]

The benefits and savings of this pathway include:

• Household cost-of-living relief and health benefits: an extensive number of studies have found household electrification and energy upgrades would generate immediate household savings, helping to address cost-of-living pressures.[3] Modelling for ACOSS found the average household would save almost $3500 a year. A shift away from gas will also have public health benefits, reducing unhealthy homes.[4]
• Economy-wide benefits: a meta-analysis of 9 modelling studies, analysing different technologies, estimated ‘distributed energy resources’ (rooftop solar, smart appliances, EVs) could deliver economic benefits of over $19 billion by 2040, in large part by reducing the costs of expensive infrastructure provision.[5] The pathway we propose would also generate jobs in household energy upgrades for auditors, trades (eg electricians), and more. [6] And it would be anti-inflationary, due to less reliance on volatile international gas markets.
• Benefits for Australian manufacturing: Low-cost, secure electricity is required for all industry in the near-term. Major Australian firms are increasingly signing agreements to purchase electricity from solar and wind farms – recent examples include Rio Tinto, BHP Mitsubishi, Telstra, Woolworths, Coles.  There has been a recent supply shortage relative to demand. It is vital that the sources of renewable energy scale up to meet demand. For example, the recently announced $2billion Green Aluminium Production Credit will support aluminium manufacturers to transition to renewable energy, and to access the growing global market for green metals, thus securing the future of local jobs for this industry.

All of these benefits would be delivered much faster and at a fraction of the cost of nuclear energy. For instance, the Energy Bill Savings Plan recently released by the Renew Australia for All alliance would extend home clean energy upgrades to a large majority of Australian households for an investment of $5 billion annually over ten years.[7]

This pathway is far preferable to the alternative future that the nuclear option offers. The nuclear energy plan released by the Coalition proposes to build seven nuclear reactors with the first of these not operational until 2035. This plan has a number of flaws.

Nuclear will result in higher household energy costs. Independent modelling by the Institute of Energy Economics and Finance found it would increase the electricity bill of an average household by $665 per year. [8] There are numerous and significant flaws in the modelling used by the Coalition, which deploys an array of assumptions and sleights-of-hand to enable the conclusion it would lower costs. For example, the modelling:

• assumes a lower-cost build than recent plants and rapid declines in cost in the years until construction would commence in Australia;
• does not use net present value which is a standard cost-benefit analysis technique;
• applies a very high capacity factor that assumes the nuclear plants are running over 90% of the time. The only way such high capacity factors could be achieved by the mid-2030s is by curtailment of renewable energy, including household rooftop solar; and
• does not include costs for the energy generation that would need to be built into the period before nuclear power stations could be constructed.[9]

The Coalition nuclear plan will also have detrimental impacts on the Australian economy. It will decrease bank and investor certainty, which will in turn increase the cost of renewable energy.  Renewable energy is capital-intensive and therefore the cost of borrowing has a major impact on project costs.  Banks will apply higher risk premiums impacting on the cost of renewable energy. Nuclear also has a substantial opportunity cost given the $330 billion price-tag – which is likely to be much higher.  Investing in nuclear power would take away money that could be invested in more cost-effective household clean energy. The nuclear proposal in effect delays the benefits of cheaper clean energy and prolongs expensive polluting energy sources.

And the Coalition nuclear plan will undermine domestic manufacturing. One of the ways the Coalition’s modelling claimed it would lower costs was the assumption of over 25% lower energy demand than the scenario broadly aligned with current Commonwealth policy. This translates into a smaller economy, in particular the closure of major manufacturing operations producing energy-intensive products such as aluminium and steel, with associated job losses. Yet many of Australia’s best industrial development opportunities are in supplying these products using green energy to a decarbonising world.

**

In summary, Australians face a stark choice regarding their energy future. The pathway we support reduces household costs and keeps the door open for a strong manufacturing sector with greater economic diversity, while the nuclear option closes it. Preserving and expanding this production capacity is crucial. In the wake of the pandemic, both major parties prioritized sovereign capability across multiple economic sectors in response to supply chain uncertainties. Today, with rising geopolitical tensions, trade wars, and accelerating climate breakdown, sovereign capability is even more critical. Renewables enable Australia to maintain this capability—nuclear does not.

We believe Commonwealth Government investment to subsidise household and industrial clean energy is a far more effective use of public expenditure than funding to construct seven nuclear reactors. We urge all parties, candidates and voters in the 2025 Federal Election to support the upgrading and electrification of Australian households with solar power, battery storage, energy-efficiency measures and smart appliances.

Signed,

1. Professor Jane Andrew, University of Sydney
2. Dr Chris Briggs, University of Technology Sydney
3. Associate Professor Anna Bruce, University of NSW
4. Associate Professor Gareth Bryant, University of Sydney
5. Mr Tim Buckley, Director, Climate Energy Finance
6. Anna Cain, University of NSW
7. Associate Professor Andreas Cebulla, Flinders University
8. Professor Lynne Chester, University of Sydney
9. Professor Neil Coe, University of Sydney
10. Dr Joe Collins, Central Queensland University
11. Professor Linda Connor, University of Sydney
12. Ms Emma Dawson, Executive Director Per Capita
13. Professor Bradon Ellem, University of Sydney
14. Dr Ben Elliston, Australian National University
15. Dr John Falzon, Sociologist
16. Dr Frances Flanagan, University of Technology Sydney
17. Professor Devleena Ghosh, University of Technology Sydney
18. Professor Chris Gibson, University of Wollongong
19. Professor Katherine Gibson, Western Sydney University
20. Dr Alison Gill, Western Sydney University
21. Professor James Goodman, University of Technology Sydney
22. Associate Professor Stephen Healy, Western Sydney University
23. Dr Simon Heslop, University of NSW
24. Dr Michael Hewson, Central Queensland University
25. Professor Heather Horst, University of Sydney
26. Dr Elizabeth Humphrys, University of Technology Sydney
27. Professor Kurt Iveson, University of Sydney
28. Dr Evan Jones, University of Sydney
29. Dr Gabrielle Kuiper, DER Specialist, Sydney
30. Professor Martin Konings, University of Sydney
31. Associate Professor Ruth Lane, Monash University
32. Dr Emma Lees, University of Sydney
33. Associate Professor (Honourary) Thilak Mallawaarachchi, University of Queensland
34. Professor Johanna Macneil, RMIT University
35. Dr Jonathan Marshall, University of Technology Sydney
36. Dr Rex Martin, University of NSW
37. Dr Dylan McConnell, University of NSW
38. Professor Paula McDonald, Queensland University of Technology
39. Professor Abby Mellick Lopes, University of Technology Sydney
40. Professor Bronwen Morgan, UNSW Sydney
41. Dr David Morawetz, Founder and Director Social Justice Fund
42. Associate Professor Anitra Nelson, University of Melbourne
43. Dr Jo Orsatti, University of Sydney
44. Dr Claire Parfitt, University of Sydney
45. Professor Susan Park, University of Sydney
46. Dr Robert Passey, University of NSW
47. Dr Patricia Ranald, University of Sydney
48. Dr Mike Roberts, University of NSW
49. Associate Professor Stuart Rosewarne, University of Sydney
50. Dr Matthew Ryan, University of Technology Sydney
51. Professor Juan Salazar, Western Sydney University
52. Professor David Schlosberg, University of Sydney
53. Associate Professor Ben Spies-Butcher, Macquarie University
54. Professor Emeritus Frank Stilwell, University of Sydney
55. Associate Professor Amanda Tattersall, University of Sydney
56. Professor Cameron Tonkinwise, University of Technology Sydney
57. Dr Sophie Webber, University of Sydney
58. Dr Lee White, University of Sydney
59. Lance Worrall, Industry Development Specialist, Adelaide
60. Dr Baran Yildiz, University of NSW

[1] Murray-Leech. R. (2023) Clean Energy Clean Demand, Energy Efficiency Council; ‘Energy Efficient Homes are boosting your health’, https://www.uts.edu.au/isf/news/energy-efficient-homes-are-boosting-your-health;

[2] Roche, D., Dwyer, S., Rispler, J., Chatterjee, A, Fane, S & White, S. (2023) Domestic Hot Water and Flexibility,  https://www.uts.edu.au/sites/default/files/2023-06/Domestic%20Hot%20Water%20and%20Flexibility.pdf, Australian  Renewable Energy Agency.

[3] Gordon, J. (2023) ‘Managing the transition to all-electric homes’, https://ieefa.org/sites/default/files/2023-11/Managing%20the%20transition%20to%20all-electric%20Victorian%20homes_Nov23.pdf; Kuiper, G. (2024) DER could provide $19 billion boost by 2040, Institute for Energy Economics and Financial Analysis, https://ieefa.org/resources/der-could-provide-19-billion-economic-boost-2040; Benefits of Household Electrification in Australia (2023), Monash Climate Change Communication Research Hub, Monash University, Australia. ACOSS, https://www.acoss.org.au/media_release/efficiency-electrification-and-solar-could-save-low-income-households-up-to-6000/;

[4] Puzzolo, E. et al. (2024) Estimated health effects from domestic use of gaseous fuels for cooking and heating in high-income, middle-income, and low-income countries: a systematic review and meta-analyses, The Lancet Respiratory Medicine, 12(4), 281 – 293.

[5] Kuiper, G. (2024) DER could provide $19 billion boost by 2040, Institute for Energy Economics and Financial Analysis, https://ieefa.org/resources/der-could-provide-19-billion-economic-boost-2040

[6] Green Energy Markets, Energy Efficiency Council and Energy Savings Industry Association (2021), Energy Efficiency Employment in Australia, https://www.eec.org.au/uploads/Projects/Energy%20Efficiency%20Employment%20in%20Australia%20-%20full%20report.pdf

[7] See https://renewaustraliaforall.org/wp-content/uploads/2024/09/Renew-Australia-For-All-Energy-Bill-Savings-Plan-Policy-Overview-4.pdf

[8] Bowyer, J & Edis, T (2024) Nuclear in Australia would increase household energy bills, Institute for Energy Economics and Financial Analysis.  https://ieefa.org/sites/default/files/2024-09/Nuclear%20in%20Australia%20would%20increase%20household%20power%20bills_Sep24.pdf, accessed January 27 2024

[9] Edis; Hamilton, S, (2024) ‘Economics of Coalitions nuclear modelling are worth nothing’, Australian  Financial Review, December 15 https://www.afr.com/policy/energy-and-climate/economics-of-coalition-s-nuclear-modelling-are-worth-nothing-20241214-p5kydg; Leitch, D (2024) ‘This Talk of Nuclear is a Waste of Time: Wind, solar and firming can clearly do the job’, Renew Economy, https://reneweconomy.com.au/this-talk-of-nuclear-is-a-waste-of-time-wind-solar-and-firming-can-clearly-do-the-job/