Deciding who is right in nuclear debate depends on your assumptions

When it comes to energy indecision, we're the main contenders for Olympic gold.

Since the turn of the century, Australian politicians have been fighting over how best to keep the lights on.

From the Howard government's plan to introduce an emissions trading scheme to the overthrow of Malcolm Turnbull as Coalition leader on the very same issue, to Kevin Rudd's abandoned effort and Tony Abbott's victorious jubilation in axing Julia Gillard's carbon tax — the battle just goes on.

Just when it seemed the issue had been settled, the debate has been re-opened on a new frontier with a timeline that extends potentially into the next century.

That's because climate policy is directly linked to energy and, more specifically, electricity generation, given the sector is among the biggest carbon emitters in the country.

In the past, Coalition leaders have questioned the validity of climate science.

The "so-called 'settled' science of climate change [is] absolute crap," Abbott told a conference in 2017.

While Opposition Leader Peter Dutton doesn't attack the science behind climate change, he's proposed an entirely new way of reducing or even eliminating greenhouse gas emissions from our power generation.

Announced earlier this year, his plan — uncosted until just last Friday — proposes the rollout of seven nuclear power plants around the country, to be funded entirely by the taxpayer.

The large companies operating the country's power generation systems have dismissed the plan, primarily because they've all invested huge amounts of money in a renewable energy future.

And they're not the only ones.

Australian households' rooftop revolution

Perhaps it's a coincidence. But while Canberra has been locked in a pitched battle over climate and energy for 25 years, Australian households have decided to go it alone.

Australia is the global leader in household-generated solar energy.

Across the nation, nearly 4 million households and businesses have solar panels attached to their roofs.

It's a phenomenon that has accelerated the demise of coal-fired generators, which have found their profits undercut by a flood of cheap solar power throughout the day.

As solar energy feeds into the system throughout the day, the wholesale cost of electricity plunges, occasionally to zero, which plays havoc with coal-fired generators, forcing them to operate at a loss.

That's because, as baseload generators, they can't shut down.

So, they keep burning expensive coal and funnelling power into the grid even though they're racking up losses.

Those same economic forces will play havoc with the profitability of nuclear plants.

They too are baseload generators, meaning they have limited capacity to ramp up and down their output but can't easily be shut down or restarted.

As battery and other energy storage systems become more sophisticated, that daily surge into the grid may diminish.

But that creates its own problems for a nuclear-powered future.

While vast numbers of Australian households generate their own power, only a small proportion currently have battery storage.

If the technology improves and the costs drop, households and businesses are likely to add battery storage, which would greatly diminish demand from the grid.

Meddling, assumptions and modelling

The battle lines in the debate between nuclear power and renewable energy will largely be fought over economics and costings.

And both sides will argue their technology is cheaper.

The Coalition, armed with a study that it has commissioned, argues nuclear is the cheapest.

The CSIRO, a government instrumentality, has argued for years that it is the most expensive.

That's in line with global experts such as Lazard and Bloomberg New Energy Finance.

How could that possibly be? Why is there such a huge divergence?

The answer revolves around the assumptions that are made, and there are many — from what interest rate you employ, to the generators' life span, the construction time and the amount of time they actually run.

Alter any of those and you change the costings.

The Coalition was critical of the CSIRO on several of its assumptions.

It argued that because nuclear plants had a longer life span, the numbers stacked up better.

It also argued that the CSIRO should assume that nuclear plants would run 93 per cent of the time for their entire life.

Like coal, because nuclear plants are so expensive to build, they need to run almost non-stop to generate any kind of return and recoup their costs.

But while nuclear plants do operate at that level in the US, the global average is just 80 per cent.

And when it comes to longevity, most finance experts agree that it does make a difference but only marginally.

Look at the system, not the source

The CSIRO originally assumed a 30-year life span because that is the usual loan term of a bank.

Plus, after that time, nuclear plants, like any other form of machinery, need to be seriously overhauled.

Former investment banker David Leitch argues that because renewables flood the power system during the day, causing wholesale energy prices to plummet, no rational operator would run a nuclear plant during daylight hours, let alone five to 10 of them.

Essentially, you can do your costings with the assumption you'll run them 93 per cent of the time but for practical purposes, you'd be mad to run them for more than 70 per cent, which then would ruin the economics.

He argues that it is impossible to consider a form of electricity generation in isolation, that you need to consider how it would fit into the existing system, an argument backed up by economists Steven Hamilton and Luke Heeney.

"The defining characteristic of being 'compatible' with renewables is the ability to scale up and down as needed to 'firm' renewables.

"Countries like France can only make nuclear work by exporting large amounts of energy when it's surplus to demand."

As Leitch points out, nuclear does have some advantages.

"Against that, it has massive disadvantages. It's incredibly expensive, the potential construction delay risk is totally unacceptable and the technology is fundamentally unsuited to Australia's generation mix."

For the next few months, in the lead-up to the election, we'll be bombarded with competing arguments and a barrage of numbers.

While the debate rages over where to go with large-scale energy generation — along with the potential for a taxpayer-funded nuclear giant to imperil the huge private investment already made in large-scale wind and solar farms — one thing is certain:

Ordinary Australians will continue to slap solar panels on their roofs to escape the entire drama and decide the future without Canberra.