The NSW Productivity Commissioner’s recently released Productivity Commission White Paper 2021 has proposed the ban on nuclear power generation be lifted for small modular reactors. The technology is being developed in the United States, where the first small modular reactor is expected to be operating by 2026.
Australia has, to date, foregone nuclear power generation, which is subject to a national ban even though the country has considerable uranium reserves which are exported. The ban is due to operational safety and concerns over disposal of spent nuclear fuel, which is highly radioactive.
Large-scale nuclear reactors have high fixed costs and long delivery times mean such reactors tend not to be feasible for private investors. Existing nuclear reactors have been delivered either by state-owned or regulated monopolies, with consumers and taxpayers shouldering some of the risk. Low-cost renewables now pose an additional risk to the economics of large reactors.
Prospects are better, however, for smaller nuclear generators that can firm energy systems and support overall security.
Proponents say their modularity generates economies of scale, with pre-fabrication of individual components at specialist facilities; they are less risky in the face of earthquakes and floods and can incorporate contemporary fail-safe mechanisms that largely eliminate potential for catastrophic failure; and their reduced consumption of water for cooling avoids the requirement to build near large water sources, which can be flood prone.
However, there is still a wide degree of uncertainty about future price paths for small-scale nuclear reactors. The Commonwealth Scientific and Industrial Research Organisation (CSIRO) and AEMO find they are only viable with ambitious decarbonisation objectives for the energy sector and limited deployment of renewables. The lack of a national carbon price and accelerating investment in solar and wind capacity suggest these conditions are unlikely to be met. Even for high-deployment scenarios, CSIRO and AEMO do not project capital costs to fall much below $7,000 per kilowatt.
“Uncertainty notwithstanding, New South Wales should not support ongoing prohibition of potential sources of firming capacity. It should, instead, seek lifting of the ban on nuclear energy generation, subject to safety concerns being addressed,” the report states.
According to the Electrical Trades Union National and NSW Secretary, Allen Hicks, nuclear reactors are still a pipe dream and not the answer to NSW’s productivity growth.
“Even if someone finally manages to build one that works, the electricity price forecast for their output is six times more expensive than renewables.”
Instead, he said, the government should focus on renewable energy such as the massive offshore wind projects waiting for federal approval off the NSW coast near Newcastle, Wollongong and Eden.
The Maritime Union of Australia (MUA) has questioned the report’s decision to not mention offshore wind generation, despite the proven technology producing a growing share of electricity around the world and several major proposals awaiting approval off the NSW coast.
A recent report by the CSIRO on electricity generation costs showed SMR nuclear reactors cost approximately $16,000 per kilowatt, nearly three times offshore wind. Recent UK analysis has found the cost of developing offshore wind is even lower.
MUA Deputy National Secretary, Warren Smith, said it is unbelievable that the NSW Productivity Commission proposes a major regulatory overhaul for a theoretical technology that doesn’t operate anywhere on earth, and not mention one of the fastest-growing forms of energy generation.
“Australia has the advantage of long coastlines close to population centres, along with highly skilled seafarers and offshore oil and gas workers who could be utilised to construct local wind projects.”
“The development of an offshore wind industry would also provide an opportunity to transition highly-skilled workers from fossil fuel industries into a clean, green alternative.”
The NSW Productivity Commission’s White Paper can be found here.