Key points
- Currently, nuclear energy does not provide an economically competitive solution in Australia.
- GenCost lead author Paul Graham says updated costs for a key project in the US have been found to be very high.
- The costs of small modular reactors (SMRs) could improve over time, but it will be too late to make a significant contribution to achieving net zero emissions.
This explanation was updated on December 21, 2023. This is intended to take into account new data on the costs of nuclear small modular reactors (SMRs) included in the GenCost 2023-24 consultation draft.
As Australia seeks to meet ambitious emissions reduction targets during the transition to net zero, we know the energy sector has an important role to play. We also know that it makes sense to be informed and evaluate a full range of technologies: some new and emerging, others established and proven.
In this context, it is not surprising that a debate around nuclear energy has been revived. Nuclear energy advocates suggest there is potential for SMRs to be used for low-emission electricity generation in Australia, providing essential firming capacity to support variable renewables.
However, a review of the available evidence makes this clear. Although nuclear energy is a component of electricity generation for 16 per cent of the world's countries, it does not currently provide an economically competitive solution in Australia. We also do not have the relevant frameworks for its consideration and operation within the required period. In summary:
- Nuclear energy is not currently legislated in Australia
- Large-scale nuclear power is not the right size for Australia's relatively small power grids.
- The time required for nuclear SMR to prove commercially viable and overcome other hurdles excludes it from any major role in the power sector emissions reductions needed for Australia to reach its 2050 net-zero emissions target.
GenCost 2023-2024: the cost of electricity generation
Every year CSIRO works with the Australian Energy Market Operator (AEMO) to produce GenCost. This is a detailed report providing current and projected costs for electricity generation, storage and hydrogen technologies.
The annual GenCost process is highly collaborative and draws on the deep experience and knowledge of numerous energy industry stakeholders. There are opportunities for members of the energy community to review the work and provide feedback prior to publication to ensure it accurately represents the sector's assessment.
Paul Graham, CSIRO energy economist and lead author of the report, says it is a public and open process in which many people can participate.
"AEMO wants to know that the data they use to plan and forecast outcomes is based on a good level of consultation and lots of quality checks. Everyone in the industry has an equal opportunity to participate," says Paul.
The sixth GenCost report was released as a draft for public consultation on December 21, 2023.. It remained consistent with findings from previous years, which show that renewables, led by onshore wind and solar photovoltaics (PV), have the lowest cost range of all power generation technologies.
"We know the report is not just used by AEMO. It is also used by people working on energy strategy and policy in governments across Australia who need a clear, simple metric to inform their decision-making," Paul says.
"Because of this, we provide a levelized cost of electricity analysis that allows easy comparison of technologies on a common basis. We arrive at a dollar cost per megawatt hour that takes into account both financing costs and the initial capital cost of the project. and any ongoing fuel and operation and maintenance costs."
To avoid introducing too many variables and losing that common ground, the Levelized costs used in the GenCost report. Do not take into account any potential externalities. These could include bird strikes at a wind farm, site remediation or nuclear waste storage costs. But to calculate the most accurate cost of wind and solar, they do include the additional storage and transmission costs that are an essential part of supporting those variable renewables.
Using the standard formula for levelized costs plus additional calculations specific to additional storage and transmission needs, wind and solar will average $112 per megawatt hour in 2023, declining to $82 per megawatt hour in 2030.
In contrast, based on available updated cost data, SMRs will cost an average of $509 per megawatt hour in 2023, declining to $282 in 2030. This projection shows that capital costs for nuclear SMRs are almost half of today , but still well above projected costs. for wind and solar energy.
"Nuclear costs per megawatt hour are calculated by converting physical infrastructure costs into annual loan payments, adding other annual costs such as fuel and maintenance, and then dividing that sum by annual energy production. Each element of the calculation has a factor of uncertainty that results in a range of costs," says Paul.
Updated costs for a key US project
He Carbon Free Power Project (CFPP), was an SMR nuclear project in the United States conceived in 2015 and scheduled for operation in 2029. It was the first and only project that had to receive design certification from the Nuclear Regulatory Commission, an essential step before construction can begin. construction. The project was canceled in November 2023 after reporting that project costs had increased by 70 percent over previous estimates.
Despite being cancelled, this project is the first to provide cost estimates for a commercial project with detailed data.
"The main area of uncertainty with respect to nuclear SMRs has been around capital costs," says Paul.
“This new data means we can be more confident about the current capital costs of nuclear SMR and the data confirms that it is currently a very high-cost technology.
"We do not disagree with the principle of SMRs. They are an attempt to speed up the construction process of nuclear plants using standardized components in a modular system, and it is possible that cost reductions could be achieved over time. However, for Now, the technology has not yet been implemented commercially."
Australian marks are not ready
Beyond the unfavorable economic aspects, there is the long time necessary to develop nuclear capacity. The opportunity for technology to play a major role in reducing emissions in Australia is rapidly closing.
According Renewables 2022the latest edition of International Energy Agency (IEA) Annual sector report, renewable energy will surpass coal by early 2025 as the largest source of global electricity. Over the forecast period, its energy share will increase by 10 percentage points, reaching 38 percent in 2027. Electricity generation from renewable energy is the only energy source expected to grow, while Coal, natural gas, nuclear energy and oil will increase. decline.
“We know that when it comes to tackling climate change and achieving emissions reduction targets, the power sector really needs to be at the center,” says Paul.
"First it must work - and it must do so very quickly - and then other sectors such as transport, construction and manufacturing can use electrification to reduce their own emissions. It would be a real challenge for nuclear power to come in and make a contribution. opportune time."
This is especially true in Australia, where there are other considerations at play: not least that nuclear power is not currently permitted by law. Two Commonwealth laws – the Australian Radiation Protection and Nuclear Safety Act 1998 and the Environment Protection and Biodiversity Conservation Act 1999 – prohibit the approval, licensing, construction or operation of a nuclear plant. The only exception to that rule is a research reactor in Lucas Heights, Sydney, which is used for scientific research and the production of medical isotopes.
"Many other people have argued against nuclear power based on issues such as lack of social license or location challenges. Those issues are not unique to nuclear power, but unlike other technologies, nuclear power is not he had to do it." go through placement or approval processes earlier in Australia," says Paul.
"Taking all that into account, and knowing that the longer it takes to build something, the more likely it is that actual costs will increase rather than decrease, it is very clear that nuclear power will find it very difficult to compete with renewables in Australia." .
