Nuclear power in Australia: does it tick the required boxes?

Australians thought the “climate wars” were behind us. But with the federal Opposition shunning renewables in favour of nuclear power, divisive debates and uncertainty have returned. This article explores the pros and cons of nuclear power in Australia, and whether we can afford it.

“Should we have nuclear power in Australia?” It can be a polarising debate, despite having been used for many years in other countries. To assess whether it’s the energy solution for Australia, I went in search of answers to key questions like:

• Is nuclear power safe?
• How much does it cost?
• How quickly could it be built?
• Could it replace all our coal and gas?

Perhaps the most important question is, “If nuclear power is the solution, what is the problem?”

In this article, I start with the nature of the problem we need to solve, then address key questions about nuclear vs renewables. I provide some further context and challenges for our collective thinking and conclude with the findings as I see them.

What is the problem we’re trying to solve?

The current cost of living crisis and regional opposition to transmission lines for renewable power have been catalysts for the promotion of nuclear power. What we must remember, however, is why we’re having the energy conversation at all.

Global greenhouse gas emissions must fall quickly

All but four countries (Iran, Libya, Yemen, Eritrea) have ratified the 2015 Paris climate agreement, accepting the need to rapidly reduce greenhouse gas (GHG) emissions to reduce global warming and avoid the worst effects of climate change.

The global consensus is that global warming should not exceed 1.5°C above pre-industrial levels, and we definitely want to remain under 2°C.

Every small increase in global temperature is serious. Impacts don’t rise linearly, but exponentially and with compounding effects, reducing the time and options available to us and ecosystems to adapt.

To achieve a 2 in 3 chance of staying under 2°C, global emissions can’t exceed 940 gigatonnes of GHGs [1]. At current emission rates, we will exceed this allowance by 2050. If we don’t like those lousy odds, we need to reduce emissions much faster.

Some industries are hard to decarbonise. Coal and gas will be required for some time to produce steel, cement, fertilisers and plastics. So, we must reduce emissions faster where it’s easier, like in power production.

Coal communities need our support

Coal is Australia’s major export, earning $465billion or 15% of all export income over the period 2017-2023 [2]. Mining of thermal coal and coal-fired power production involves around 25,000 workers, supporting families and small businesses in regions like the Hunter Valley (NSW), Bowen Basin (Qld) and Latrobe Valley (Vic).

With the world moving away from thermal coal, workers and communities need support to transition to jobs of the future. But as key technologies rapidly evolve (in energy, transport, food, materials, digital), industries will also transform. This makes it challenging to predict the future of jobs with confidence. It’s clear that more effort and investment is required to support coal communities in this challenging transition.

While it’s feasible that the production of power (with nuclear, renewables, and/or gas) can provide many of the much-needed jobs, replacing export income remains a national challenge.

Clean power must be reliable, affordable, and secure

If the first objective is achieving clean power, the second and third objectives are reliability and affordability. In a world of increasing geopolitical tension, security becomes the fourth objective.

Historically, coal-fired power has been cheap, reliable and secure, but dirty and unhealthy.

Until recently, renewable energy was expensive. To be reliable it also requires daily and seasonal storage so that energy can be provided when solar or wind power generation is low. And just as we have transmitted coal-fired power over long distances, the same is required to connect renewable power with consumers.

Fortunately, Australia has some of the best solar and wind resources in the world. The cost of renewables and batteries also continues to fall, as typically happens as technology investment and adoption grows.

In the process of transitioning from coal and gas fired power to renewables and possibly nuclear, gas will still be needed to fill power generation gaps over the medium term. Gas turbines produce electricity with at least 40% less emissions than coal-fired power plants [3].

Demand for clean energy will continue to grow

Over the next 10 years, 90% of Australia’s remaining coal-fired power generation is likely to retire [4]. At the same time, as we move away from fossil fuels (including petroleum), we will use more electricity in industry, houses, and vehicles.

More efficient use of electricity will be offset by the growing demand for energy in other sectors. Digital technologies like artificial intelligence and crypto currencies are extraordinarily energy hungry. Energy required to produce hydrogen as a liquid fuel would further escalate the demand for clean power.

Overall, the Australian Energy Market Operator (AEMO) estimates that electricity demand will roughly double by 2050 [5].

So, the problem we’re trying to solve is: reducing GHG emissions in the most safe and affordable way, while ensuring reliable electricity supply to more users with the least impact on affected communities.

Where might nuclear power fit in?

Nuclear power is clean, safe and reliable

Commercial generation of nuclear power has existed since the mid-1950s, with the greatest use today in United States, France, China, Russia and South Korea.

Nuclear power plants run continuously, producing virtually no GHGs or air pollution during their operation. Some emissions occur during uranium mining, plant construction and waste management.

The International Atomic Energy Agency (IAEA) indicates that the whole-of-life emissions for nuclear power are in the range of 15-50 g CO2e per kWh. This compares to 7-16 g CO2e per kWh for wind, and 30-50 g CO2e per kWh for solar power [6].

Some scary events have occurred at Three Mile Island (1979), Chernobyl (1986) and Fukushima (2011), directly resulting in 32 deaths [7]. But scary doesn’t mean dangerous. Indeed, nuclear energy remains one of the safest forms of power production.

Of course, to be safe, nuclear reactors must be built to strict protocols, in geologically stable areas, and operated safely. Security considerations and climate resilience must be addressed too.

Nuclear power can use existing transmission lines

Nuclear power plants can be built on the site of old or retiring coal fired power plants, thereby using existing power transmission lines to get electricity to customers.

In contrast, the Australian Energy Market Operator (AEMO) estimates that high voltage transmission lines need to be expanded by 25% or 10,000 kilometres to connect solar and wind power to the grid [4].

Nuclear power can work alongside renewables

If constructed, the proposed nuclear power plants would likely generate 7–10 gigawatts (GW) or 33–50% of the remaining 21 GW produced by coal-fired power stations. Other sources of energy like renewables and gas would still be required to meet current and projected energy demands.

From an engineering and operational standpoint, integrating “always on” nuclear power with variable renewable energy sources, hydropower, and batteries can enhance the stability and reliability of power.

Modern nuclear plants can adjust their output to complement the variability of renewables, but it demands careful planning and investment in control systems and grid infrastructure. Note, however, an operator would want to run a nuclear plant near full capacity to maximise their return on investment.

Small modular reactors are not yet ready for use

Australia would need to import key components of nuclear power stations from firms like Rolls Royce (UK), GE Hitachi and NuScale Power (USA), including pressure vessels, nuclear fuel assemblies and specialised controls. Australians could build the related structures, civil works and connections to the power grid.

In comparison to large conventional nuclear power plants, new Small Modular Reactors (SMRs) generate a third of the power, can be factory-built, work side-by-side, and require 5% of the land area. They are, however, still in development with only a few prototypes operating. Commercial SMRs may be available in the 2030s but their cost is currently high, and it is uncertain what reductions can be achieved [8].

Nuclear energy is probably more expensive than solar and wind

When comparing alternative ways of producing electricity you must account for the cost of reliable power generation, transmission, and distribution over a comparable time period, e.g. over 40+ years.

Currently, renewable energy (wind and solar) is cheaper than nuclear power, even when accounting for their shorter lifespans and need for more frequent refurbishment.

Independent analysis by the financial advisory and asset management firm, Lazard, and peer-reviewed academic research produces similar estimates to those of CSIRO in Figure 4 [9].

Furthermore, it is difficult to see how nuclear power becomes economically competitive with renewables unless the market is artificially distorted by government policy, which would only serve to increase the overall cost of energy.

The price paid by consumers may, of course, differ if subsidised by government.

Several factors could increase nuclear power costs

Everyone is familiar with delays and cost increases in major infrastructure projects. Indeed, experience over many years shows that major infrastructure projects routinely run 30% over budget and over schedule [10].

Similar cost escalations could occur due to:

• Shortages in specialised components, materials or skilled labour, particularly with increasing activity in nuclear power generation.
• Lack of skills in trades and engineering due to competing infrastructure projects and policies restricting immigration.
• Lack of affordable housing and services in the regions to accommodate an increasing workforce.
• Community opposition, environmental approvals and cultural heritage requirements.
• Opposition and delays by trade unions.
• New regulations or elevated safety standards.
• Design customisation for local conditions.

Furthermore, political conflict and policy uncertainty discourages private investors, thereby reducing investment and/or increasing the cost of finance, which ultimately makes the energy transition more expensive.

Decommissioning plants also carries a cost

All power generators eventually need to be decommissioned, including renewables and nuclear. Experience shows that decommissioning costs are roughly 15% of capital costs. However, in absolute terms, nuclear decommissioning is more complex, expensive and lengthy, taking 15 to 30 years or more to complete. Cost estimates range between $300 million to $2 billion per nuclear power plant, depending on the size and type of nuclear reactor [11].

Nuclear (and renewables) could be more affordable if we’re clever

At present, we are struggling to build all the housing, energy and infrastructure projects Australia needs. Treating every project as unique is slow and costly. If we took a modular, manufacturing approach, we may get considerable time and cost savings, including in the construction of renewables and nuclear power plants.

There are examples of this occurring in Australia, but implementing this at scale would require a level of public-private collaboration that is not normally seen outside of war times.

By being smarter, including communities in project planning and design decisions, we can also alleviate social licence issues that impede projects. Indeed, it may prove to be one of the cheapest, fastest and easiest methods to get back on track in meeting Australia’s energy goals. The key is getting project developers to recognise fundamental, costly flaws in the “decide and defend” approach to project design and development that still persists [12].

Clever financing arrangements that reduce, spread and defer the costs and risks of projects can deliver project cost reductions in the order of 20%. This can include public-private partnerships, regulation to ensure future revenue streams, and carbon pricing to improve the relative competitiveness of clean energy generation. While this may reduce the upfront cost to government, it may not reduce prices charged to consumers.

2035 is extremely ambitious

It takes many years to build major infrastructure projects (like roads, rail, or wastewater treatment plants), even when have the skills and knowledge to do. It involves planning, community consultation, cultural heritage reviews, regulatory approvals, procurement, detailed design, construction and commissioning. Even with the best planning, things still go wrong.

We have never built a nuclear power plant in Australia. Existing coal-fired power station sites would need to be secured, cleared, and remediated environmentally before any construction could occur. Every step of the process would need to run like clockwork to deliver a new nuclear power plant in the next 10 years. Objectively, that’s highly unlikely.

International experience suggests that even countries with established nuclear industries typically take 10-15 years to build a single new plant. Furthermore, many projects are over budget and behind schedule.

Consequently, most experts conclude the first plant would likely take until 2040 or later, completing all 7 plants would likely extend well beyond 2050.

"If there is a country that has a lot of (energy) resources from other sources, such as solar and wind, I wouldn’t see nuclear as a priority option. I’m talking about Australia." (Fatih Birol, Executive Director, International Energy Agency [13])

What other issues do we need to consider?

Do our laws enable use of nuclear power?

Despite hosting 33% of the world’s uranium deposits, and being the third largest producer of uranium globally, several federal, state and territory laws currently prohibit nuclear power generation.

A specific exemption exists for the Lucas Heights facility, which is operated by the Australian Nuclear Science and Technology Organisation (ANSTO) for scientific and medical purposes.

State bans would need to be addressed separately by each state government. Experts estimate it could take 3 years or more just to develop an appropriate regulatory framework for consideration by respective parliaments.

The skills challenge is tricky

Do we have the skills to build, operate and maintain nuclear facilities safely? Not yet.

Australia currently lacks the experience to design, construct, and operate nuclear power plants. The main gaps include specialized nuclear engineering, regulatory expertise, and nuclear-specific construction capabilities.

To build a typical large nuclear plant may require 1000 engineers and related specialists and 3500 construction workers. During operation, it employs 500-800 people. SMRs may require half this number.

Developing these skills domestically would likely take 10-15 years, making it challenging to start designing a plant in the late 2020s without significant international support over the medium term.

Australia will need to pursue international partnerships, expanded education programs, and leverage experience from the AUKUS submarine program.

Fortunately, workers from coal-fired power plants will have some relevant skills, making them suitable (with upskilling) for employment in nuclear power operations.

Waste remains an issue for all technologies

Nuclear power generates small volumes of highly radioactive waste requiring complex, long-term management (i.e. thousands of years). This includes spent fuel and contaminated materials, which often remain on-site for several years prior to off-site containment. Management costs can be up to $2billion per plant or 10% of the total costs of power production [14]. The main challenges are secure long-term storage and public acceptance of disposal sites.

Solar and wind power produce larger volumes of less hazardous waste, primarily end-of-life panels, inverters, and turbine components. Currently, most of this waste ends up in landfills due to limited recycling infrastructure. Decommissioning costs for wind turbines range from $400,000 to $600,000 each.

Under the AUKUS defence agreement, Australia has committed to managing all (high and low level) radioactive waste generated by its nuclear-powered submarines, including waste from operations, maintenance, and decommissioning. This will take practical effect in the 2050s.

Australia has been searching for a site for a National Radioactive Waste Management Facility (NRWMF) since the 1970s. Multiple sites have been proposed and rejected and a site is still not confirmed.

Less politics, better outcomes

Many of the costs we face in the energy transition are of our own making. As we enter a period of transformation involving higher costs, every dollar must be spent wisely. Mature and objective policy discussions must take the place of personality politics, recognising difficult decisions and trade-offs will be required.

It’s time to stop inflicting self-harm

The costs we face today to tackle climate change and transition to clean energy are much higher than they should be.

A decade of inaction on climate change, the rejection of a carbon price, the inability to be open-minded to all technologies, and confusing signals to investors have all meant action is slower and costlier than it should be.

It leaves the country more vulnerable, with less time to adjust, particularly regional communities and poorer sectors of society.

Costs will remain higher in a period of transformation

This is something you should know but governments don’t want to talk about.

Our economy and society is going through a period of transformation, driven primarily by changing societal needs (including climate action) and rapid technological developments. It is an amazing time full of challenge and opportunity.

During this period of transformation, as new industries grow and others decline, uncertainty, change and relative scarcity of resources will keep prices high. Demands on government will continue to outstrip capacity within federal and state budgets. This will be the case irrespective of which government is in power.

Over time, if we work together in a clever and collaborative way, we will enjoy the benefits, including reduced prices and reinvigorated communities. Success, however, is not guaranteed. It’s in our collective hands.

Current arguments are riddled with contradictions

Magicians are the masters of framing and deception. They focus your attention on one thing to divert it from another. In the renewed debate around clean energy and climate, framing is similarly important and is current riddled with contradictions.

You might hear that:

• It’s bad to be ambitious about renewable energy. Why then is it good to be ambitious about nuclear?
• Governments shouldn’t “pick (technology) winners”, that markets should decide. Yet, nuclear power is either being picked or denied as the solution.
• It’s not right to impose renewable energy on farming communities. So, why would it be okay to impose nuclear power on towns and businesses?
• If clever approaches to financing nuclear can reduce its costs to consumers, why can’t the same methods be applied to renewable energy solutions?
• “We care about the climate.” How can any credible proposal then delay action to decarbonise power production?

This is not to say there may not be good reasons to make new and different decisions that, on first glance, appear contradictory or deceptive.

What you should ask for is a credible explanation that fits together with other pieces of the energy, climate, community and market puzzle.

Conclusions

The outcomes you reach from this article may differ from mine. At this point in time, my assessment is that:

• We must keep an open mind, evaluating all options against all five objectives of GHG emissions, safety, reliability, security, and affordability.
• As the energy system evolves, new power generation options must enable the whole system to perform better, in the short and longer term.
• Nuclear power generation appears to be too expensive and too far into the future to address the critical needs of energy affordability and GHG emissions this decade.
• We should keep a close eye on nuclear technologies, particularly SMRs, which may evolve to become a financially viable option in Australia’s energy mix in coming decades.
• We must tackle the social licence impediments to building renewable energy sources and transmission lines in regional areas, tapping into the best insight and working collaboratively with farming communities.
• We all have a role in achieving a mature policy debate in favour of a stable, market-based and technology neutral approach that enhances certainty and confidence for all stakeholders.

References

Many information sources were used in preparing this article. References for key facts and figures, where not indicated in the text or illustrations, are listed below.

[1] Mercator Research Institute on Global Commons and Climate Change. Retrieved from: https://www.mcc-berlin.net/en/research/co2-budget.html

[2] Based on ABS trade data on DFAT STARS database and ABS catalogues International Trade in Goods (Sep-2023), Balance of Payments and International Investment Position, Australia (Sept Qtr 2023) & Australian National Accounts: Tourism Satellite Account

[3] RMIT ABC Fact Check (2020) Adam Bandt says gas is just as dirty as coal. Is he correct? 3 Nov 2020

[4] AEMO (2023) Draft 2024 Integrated System Plan for the National Electricity Market – A Roadmap for the Energy Transition, Australian Energy Market Operator, Melbourne

[5] AEMO (2023) 2023 Inputs, Assumptions and Scenarios Report, Australian Energy Market Operator, Melbourne

[6] World Nuclear Association (2024) Carbon Dioxide Emissions From Electricity. Retrieved from: https://world-nuclear.org/information-library/energy-and-the-environment/carbon-dioxide-emissions-from-electricity

[7] Hannah Ritchie and Pablo Rosado (2024) “Nuclear Energy” OurWorldInData.org. Retrieved from: https://ourworldindata.org/nuclear-energy

[8] ANSTO (2024) Small Modular Reactors: An Overview: Retrieved from: https://www.ansto.gov.au/news/small-modular-reactors-an-overview

[9] Steven Hamilton, Luke Heeney (2024) Nuclear unviable because of economics, not engineering, Australian Financial Review, 24 June

[10] Greg Moran (2020) $34b and counting: beware cost overruns in an era of megaprojects, Grattan Institute, Melbourne

[11] World Nuclear Association (2022) Decommissioning nuclear facilities. Retrieved from: https://world-nuclear.org/information-library/nuclear-fuel-cycle/nuclear-waste/decommissioning-nuclear-facilities

[12] Nick Fleming (2020) Taming the flames – How infrastructure developers can stop causing self-harm to their social licence and enhance the value of their assets, Innergise Pty Ltd, Melbourne.

[13] Hans van Leeuwen (2024) The world’s most unlikely climate hero, Australian Financial Review, 11 May

[14] World Nuclear Association (2022) Radioactive Waste – Myths and Realities. Retrieved from: https://world-nuclear.org/information-library/nuclear-fuel-cycle/nuclear-waste/radioactive-wastes-myths-and-realities

Originally posted at: www.innergise.com.au on24 June 2024.