Nuclear Power in Australia – Federal parliament determines to have another review

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James_Turner_New_Energy_SolarJames Turner6 September 2019

Australia has a long and complex relationship with the nuclear industry.  Despite uranium being produced in approximately 20 countries, Australia accounts for 12% of world production and has the largest uranium resources, approximately 30% of the world’s identified reserves1.  The presence of this highly valuable and sought-after resource has resulted in years of debate around whether we should extract and export uranium, which countries should it be sold to, in addition to the question as to whether Australia should be employing nuclear power in its own electricity mix.

Currently, federal legislation prevents the consideration of nuclear power plants by prohibiting their environmental assessment and regulation by federal departments and agencies as covered in the Environment Protection and Biodiversity Conservation Act 1999 (the EPBC Act) and the Australian Radiation Protection and Nuclear Safety Act 1998 (the ARPANS Act).

The last major federal government-commissioned report on the role of Australia in the nuclear industry reported in 1984 to then Prime Minister Hawke, who stated at the time:

“The Government has made it clear that the mining and export of uranium will continue subject to strict safeguards conditions, but only from the Narbalek, Ranger and Olympic Dam mines. The Government has decided that the development of further stages of the nuclear fuel cycle in Australia will not be permitted.”2

Since that time the Australian Government has established two ‘taskforces’ into the nuclear fuel cycle. The first, in August 2005, to identify opportunities for the development of the Australian uranium industry, including accepting international nuclear waste. The second, established some 10 months later in June 2006, to undertake an “objective, scientific and comprehensive review” of the same or similar issues, including nuclear power generation3.

Now, in the face of looming power shortages and energy sector disruption, the Federal Liberal Government has determined to re-examine the question of nuclear energy.  Following a referral from the Minister for Energy and Emissions Reduction, the Hon Angus Taylor MP, the House of Representatives Standing Committee on the Environment and Energy resolved on 6 August 2019 to conduct an inquiry into the prerequisites for nuclear energy in Australia.

The announcement of the inquiry states that:

“The Committee will look at the necessary circumstances and requirements for any future government’s consideration of nuclear energy generation, including using small modular reactor technologies.

“The Committee will consider a range of matters including waste management, health and safety, environmental impacts, energy affordability and reliability, economic feasibility and workforce capability, security implications, community engagement and national consensus.”4

"…half of all new nuclear projects planned in the UK have collapsed in the past year after failing to secure the necessary private financing…"

 

In a letter to the committee chair and LNP member Ted O’Brien, Mr Taylor said "This will be the first inquiry into the use of nuclear power in Australia in more than a decade and is designed to consider the economic, environmental and safety implications of nuclear power"5.

While the previous taskforces did not alter Australia’s stand on nuclear energy, Dr Ziggy Switkowski who headed the 2006 review, was recently quoted as saying in the first hearing of the new parliamentary inquiry that although nuclear power had “no social licence at this time” the legislative ban against it should “absolutely” be abolished. “We really should not be making decisions in 2019 based on legislation passed in 1999 reflecting the views of 1979,” he said6.

He went on to comment that new developments in nuclear power like the small modular reactors (SMRs)  of between 60 and 200 megawatts may provide opportunities to employ nuclear in the power mix for Australia, but it would be important to see how the technology was deployed overseas and that this was unlikely to occur in a widespread way for another 10 or so years.

Many commentators agree that nuclear reactors make sense to replace the phasing out of coal-fired power stations, particularly given their low emissions and hence ability to assist in meeting national environmental and emissions reduction targets.  However, Dr Switkowski argued in the first hearing that nuclear reactors were the most capital-intensive energy technology, took the longest to recoup investment and would require significant government support over multiple political cycles.

“Given that Australia would begin from a standing start, the first reactor of any commercial scale would take about 15 years to reach normal operation and generate revenues,” Dr Switkowski said7.

He also felt the lack of current energy policy would be a hinderance to the adoption of nuclear power in Australia, saying:

“Can you graft a long-term commitment to nuclear energy on to a currently unconfirmed national energy policy?  The answer to this is no, in my opinion.”8

In comments echoing Dr Switkowski’s views on the economics of nuclear power, the Australian Nuclear Association (ANA), which advocates for nuclear science and technology, says that nuclear power could provide cheap, reliable carbon-free energy in Australia, but it would only be cost competitive with gas and coal generation if pollution was priced.

“They [reactors] don’t stack up in the current environment unless you have got some direct government intervention or a carbon price,” the ANA’s vice president, Robert Parker, said, suggesting a carbon price of about $20 a tonne would be sufficient for the sector to be competitive.9

The experience and debate in the UK in relation to nuclear power is instructive when considering these submissions.  The Financial Times reports that half of all new nuclear projects planned in the UK have collapsed in the past year after failing to secure the necessary private financing, including Hitachi’s decision to suspend the £20bn Wylfa plant in north Wales and Toshiba’s cancellation of its development in Moorside, Cumbria.10

Further, while the French-built Hinkley Point C nuclear power plant in Somerset in the UK is currently being built, the time horizon of the project is lengthy with plans announced over a decade ago, final approval received in 2016 and completion scheduled for 2025, at best.  Originally projected to cost £18 billion, recent cost estimates range as high as £20.3 billion.11

Apart from the build costs, the actual cost of power from the plant has precipitated vigorous debate given the UK government’s decision to guarantee a price of £92.50 per megawatt hour for electricity from the plant – roughly double the current market rate.  The price is also anticipated to increase as it is indexed against inflation12.

To put this cost in an Australian context, at current exchange rates13 £92.50 per megawatt hour is equivalent to A$165.39 per megawatt hour and current estimates of the levelized (unsubsidised) cost of solar and wind in Australia are approximately A$4514 to A$7515 per megawatt hour.  When firmed with gas, the levelized cost of solar or wind and gas is estimated at between A$5416 and A$12517 per megawatt hour.

While the Australian government is optimistic as to what the current review can achieve, history would suggest that the lack of political bipartisanship in the energy sphere, together with the very emotive nature of the nuclear power debate, could mitigate against meaningful outcomes from this latest review. 

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