[Analytics] Nuclear power doesn’t stack up: The Australia Institute

A nuclear power station being built in the UK should serve as a warning for Australia’s ambitions, a new report has warned. The Australia Institute has rejected suggestions Australia should adopt nuclear power, saying it just doesn’t stack up. Charis Chang specially for the News.com.au.

The progressive think tank will appear before a parliamentary inquiry today on whether nuclear is a feasible solution for the country’s future energy needs.

It has released a report today saying nuclear generators are expensive compared with other forms of power and “essentially uninsurable” so risks would be borne by the public.

Even new designs like small modular reactors were “economically speculative” and still in development.

The Australia Institute climate and energy program director Richie Merzian said the main problem with nuclear power was its high cost.

“The biggest barrier to nuclear power in Australia is that it is uneconomic, the costs of establishing a nuclear industry simply don’t stack up,” Mr Merzian said.

The report points out that reactors built over the last decade took on average 10 years to construct, with times ranging from 4.1 years to 43.5 years. Almost all nuclear plans experienced cost blowouts.

In particular, the report highlighted the UK’s new Hinkley Point C power station, which was granted a licence in 2012.

Construction of the power plant began in 2018 and is due to finish in 2026.

Over the years, the costs have ballooned.

Originally estimated to cost £6 billion ($A11 billion) in 2013, this grew to £14.5 billion ($A27.4 billion) in 2015, then blew out to £37 billion ($A70 billion) just a year later.

By 2017, estimates suggested it could cost a staggering £50 billion ($A94 billion) over its operation.

The developers of the project have also been guaranteed a price of £92.50 ($A174) per megawatt hour for all electricity sold to the market over a 35-year term. This price is more than double the current average wholesale price in the UK.

Nuclear power analysts have concluded “nuclear energy is never profitable” and the report states that large government subsidies have been necessary to build reactors so far.

For nuclear power to be feasible, the report suggests there at least needs to be a carbon price, although this may not be enough.

THE PUBLIC WILL HAVE TO PAY

The report also points out that none of Australia’s major insurance agencies is willing to provide cover for nuclear disasters.

“If nuclear power operators were made to adequately insure against the risk of nuclear accidents, the insurance premiums would make nuclear power completely uneconomic,” Mr Merzian said.

Mr Merzian said it was common for energy companies to take out private insurance coverage for their power plants in Australia, but no one would be willing to cover nuclear.

“Insurance companies provide coverage to power stations in Australia, although some insurers are pulling out of coal power plants to align their portfolios with the climate agenda in the Paris Agreement,” he said.

“The low probability, high-cost risks of nuclear power are exceptional and require special legislation to limit operator liability. The public have to cover most of the risk for nuclear power stations, whether they like it or not.”

In countries that already have nuclear power, the industry is stagnating with few new reactors being built and companies going bankrupt or facing economic distress.

“In existing nuclear nations, nuclear power is stagnating or going backwards, with companies in distress being bailed out,” the report said.

The cost of nuclear power also has a history of being more expensive over time due to things like changes to safety regulations in contrast to other technology like renewables.

“In a country with no existing nuclear industry and vast renewable energy resources, it makes no economic sense to establish nuclear generation,” Mr Merzian said.

“Given a commercial nuclear generator has never been constructed in Australia, it is likely that build times in Australia would be above the global average,” the report said.

EXPERTS ARE SCEPTICAL

Even small modular reactors, which are being spruiked as an exciting new option, face uncertainties about design and regulation, and some experts believe it is too expensive on a per-unit-power basis.

“A wide range of analysts are sceptical, including many supporters of nuclear power,” the report states.

Other problems include nuclear power requiring large amounts of water for cooling and the reactors being vulnerable to heat, which is a problem in Australia due to increasing droughts and heatwaves.

So far no country has managed to implement a long-term storage solution for nuclear waste, and despite being promoted as a reliable source of power, nuclear is often offline due to unplanned outages.

“A sensible, fact-based conversation about nuclear power in Australia must start in economics, and given the industry’s dismal economic outlook, really that is where the conversation should end,” Mr Merzian said.

The Australia Institute believes nuclear power is unnecessary for Australia due to the falling costs of renewables and storage and the increasing need for energy to be available on demand.

“Renewables, demand management and storage can meet Australian energy needs safely and at best cost,” Mr Merzian said.