The nuclear option

As the political debate over the Coalition’s proposed “technology target” to address climate change continues, the nuclear question has inevitably reared its head, with the technology investment blueprint apparently looking into small modular reactors (SMRs). So, it’s a good time to recap this technology and how it may fit into Australia’s energy system.

Firstly, if we were to embark on building any sort of nuclear plant, we’d have to change the law. Last year’s Parliamentary Inquiry into the prerequisites for nuclear energy in Australia recommended consideration of lifting the ban for “new and emerging nuclear technologies only”, conditional on approvals for nuclear facilities obtaining “the prior informed consent of impacted local communities”. Dissenting reports from Labor and Independent committee members suggests there’s no chance of getting a repeal of the ban through the Senate.

In any case, there’s a growing realisation that traditional nuclear plants, which need to be very large (1600 MW or more, similar to a large coal plant) to get the economies of scale needed to keep the huge capital costs down to a reasonable level, are a poor fit for Australia’s energy transition. This was most thoroughly canvassed as part of the 2016 South Australian Nuclear Fuel Cycle Royal Commission. Nuclear’s inflexibility – it is designed to be run as “baseload” plant at consistent, high capacity levels doesn’t integrate well into South Australia, which in Q4 2019 experienced both record peak demand for the quarter and all-time record low demand. Sure, there could be scope to export surplus nuclear power output, especially with the SA-NSW interconnector on its way. The Royal Commission concluded that with greater interconnection, if costs could be reduced and under high carbon pricing, a large reactor could be viable.  Flexible plant is much more likely to thrive among the renewables that are expected to dominate the future grid.

Hence the interest in advanced SMRs, envisaged as between 4 and 200 MW in scale. These have the potential advantages of driving cost economies through standardised manufacturing (all large plants are to some extent one-off projects), inbuilt passive safety features and greater flexibility of where they can be deployed (including potentially brownfield former coal plant sites). Even if they never made it onto the NEM they could be a good fit for remote mining sites, especially as they can be delivered with a lifetime of fuel already included. There remain two key issues.

The most critical one is that none of the several advanced designs under development have actually made it to deployment. Countries that have put the most resources into supporting development (UK, US, Canada) have repeatedly seen projects curtailed as costs escalated or a technical dead end was hit. Older small reactors do exist, mostly military grade units, such as those that power US aircraft carriers and there are a few non-military ones that provide community power and heat in remote Siberia, but these are unlikely to meet the Inquiry’s criterion of “new and emerging technologies”.

Additionally, the likely competition for SMRs, solar-plus-storage is still well in pole position, with ongoing cost reductions, and deployment at mine sites as well as the grid, such as Rio Tinto’s $98m investment in a 34 MW/12MWh project at its Koodaideri mine in the Pilbara.