What would be required for nuclear energy plants to be operating in Australia from the 2030s?

Professor Stephen Wilson, Adjunct Professor, School of Mechanical and Mining Engineering, University of Queensland, Concept Study Lead Author

By 2050 all of Australia’s power generation assets will have passed their technical design lives, except for the hydropower plants and Australia’s youngest and most efficient coal-fired power plant, Kogan Creek, west of Brisbane, which was commissioned in 2007.

And the Queensland government has announced the intention to retire that plant before its 50th birthday. This situation is a reminder of two large and uncomfortable facts. Firstly, regardless of views on climate change, Australia must rebuild our national generation fleet during the next 30 years. And secondly, wind and solar energy are not ‘forever’ energy, just as they are not ‘free’ energy.

There is a view that wind turbines and solar panels will simply be replaced on the same sites every 15, 20 or 25 years. There is universal agreement, by both enthusiasts and critics of renewable energy, that installed capacity many times greater than that of existing thermal power plants, requiring far greater physical land footprints, and multiples of the existing high voltage transmission capacity will be required for a high-share renewable energy system.

There is a popular view that Australia can achieve an emissions-free power sector by relying only on renewable energy. This is seriously doubted by many engineers, including the present author. That is the subject for another article, but it provides important context for the study conducted at UQ in 2020-21 and set out in a report published by the university in December 2021.

In late 2019 I was approached by our research benefactor with the question: What would be required for nuclear energy plants to be operating in Australia from the 2030s? Following the disruption of the pandemic in 2020, I assembled a team of researchers, mentors, expert contributors and reviewers over the summer of 2020 to focus our minds on this beautifully simple, open, brilliant question.

The study aimed to provide a straightforward, factual answer strongly focused on a practical, concrete, time-focused response. As a university publication, the resulting report is factual and not an advocacy document. It was peer-reviewed by over two dozen people in Australia, Europe and the United States, with expertise in nuclear power, electricity systems, international energy governance, energy contracts and nuclear law, commodities and resources, banking and finance, and government and the public service. Any remaining errors remain the responsibility of the lead author: I would be grateful if readers inform me of any problems they identify.

The study report explains how one or more nuclear plants could be deployed, applying the project development cycle model used by all well-managed engineering projects. This article represents excerpts from the full report, summarising key factors that would affect the success or failure of using nuclear power as part of Australia’s emerging low-emissions energy sector.

The rationale for nuclear energy in Australia’s energy supply mix is based on:

• Challenges and opportunities from Australia’s looming coal fleet retirements

• Inability of other emissions-free technologies to offer the full set of grid services that nuclear energy can provide.

The report focuses on the possibility of replacing retired and retiring coal-fired power stations by the inclusion of plants from the new class of Small Modular Reactors. SMRs are emerging as a viable, safe, low-cost option. In Australia SMRs can diversify the fuel mix, helping balance the electricity grid, and meet Australia’s future energy requirements as the system decarbonises.

Looking forward to 2060 and beyond, the research team considered what type of nuclear power generation could be viable and meet the expected demand for affordable, reliable energy. Models of governance, financing, community support and ongoing project management were considered for Australia to merge nuclear generation into the National Electricity Market from the 2030s.

The research team ruled out large reactors, which have historically meant lengthy, individualised construction of government-owned projects with very large capital outlays.

Large plants have been successful in large countries, especially in Asia and the Middle East. However, in many Western countries, large reactor plants have generally eroded public confidence in the economics of nuclear power as an emissions-free energy source. Larger reactors would be difficult to integrate with the Australian grid, and are not required for projected energy demand.

It is notable that civil nuclear power in more than 30 countries has accumulated 18,000 reactor years of experience and has a safety record that compares favourably with other safety-critical industries. The data shows nuclear energy is the safest form of electricity per MWh generated. The report takes the approach of specifically modelling the NuScale Power Module (NPM). Following over 20 years of progress from the initial concept, the NPM is one of the very few safety-certified designs approved by the US Nuclear Regulatory Commission. It’s currently the furthest advanced of a handful of SMR designs being prepared for their first build in the USA.

In Australia, SMRs could serve as an ideal addition to Australia’s energy mix, gradually replacing the existing 23GW of coal-fired capacity as it is retired between 2030 and 2050. Australia will be able to choose a design from a number of SMR vendors. This will be a crucial decision, as building a fleet of identical plants is an important key to cost reduction from learning. SMRs apply modular principles with highly standardised designs, economies of replication and passive safety techniques to well-understood proven technology for pressurised-water reactors. With modular design, an SMR site could produce power from 50MW to 1GW or more. For a sense of scale, more than 100 NuScale modular reactors could fit within the containment building of a single conventional (large) gigawatt reactor.

A NuScale reactor core would contain only 8% as much fuel as the bigger reactor’s core. Contrary to a widely-circulated paper from Stanford university published after the UQ report, US DOE studies confirm that SMRs will not produce significantly larger quantities of used fuel (sometimes called ‘waste’) than large units. Aside from the technological aspects, bringing SMR projects to fruition in Australia will depend heavily on wider interconnected factors, including: • Nuclear energy legislation reform (removing the bans) and governance regulation • Project engineering and management • Capabilities of people and institutions • Siting of nuclear facilities • Society – social licence and public confidence • Economic factors and financing considerations.

Nuclear energy legislation and governance

Strong governance capabilities exist in Australia already. We have mature institutions that provide for our international obligations under treaties and conventions. There’s also adequate supervision of non-proliferation and security safeguards, including safety, health and environmental protection, along with radioactive waste management.

Currently, the Environment Protection and Biodiversity Conservation Act 1999 and the Australian Radiation Protection and Nuclear Safety Act 19998 for Commonwealth entities prohibit the deployment of commercial nuclear power plants and associated fuel facilities in Australia. Most Australian states also have prohibition legislation in force. Western Australia is the only state that does not prohibit nuclear power. Legislation will need to be repealed and reviewed, with appropriate regulations and licensing processes introduced to govern the nuclear power plant lifecycle.

Ideally, the reforms to legislation need to reach a stage so that the regulator is resourced and ready to scrutinise, and, if appropriate, licence the first plant. And given the number of agencies likely to be involved, coordination by an implementing body will be a crucial factor.

Project engineering and management

Many engineering fields in Australia – from defence to aerospace to advanced nuclear research and materials sciences are already more technically advanced than is required to deploy commercial nuclear energy plants. With Australia’s superb track record of operating internationally sourced safety-critical technologies, deployment of nuclear power plants would follow well-established and proven engineering project management processes.

To ‘de-risk’ a nuclear power project across its century-long lifecycle, the report suggests using the stage gate concept to decrease the ‘unknowns and large uncertainties.’ This takes the form of robust studies to produce scoping, prefeasibility, feasibility and EIS approvals, financing, delivery, operation and closure options which are prepared well ahead of the time they are needed. In this way, ‘Real Options’ are created before final investment decisions are required.

Capabilities

The research shows that the nation can build on existing capabilities to commit to, contract, construct, regulate and safely operate nuclear power plants based on SMRs. For example, some SMR staffing requirements are similar to coal-fired power stations, so there is good scope for retraining operational staff once a plant is commissioned.

There are several strong nuclear-focused tertiary programs already running, although more are needed. Graduates also require years of experience in their fields of speciality. Australia does have one exemplar nuclear project to follow as a case study. Our one operational nuclear research reactor, the OPAL reactor in Sydney, is a showcase example of Australian engineers’ ability to procure, construct, commission and successfully operate safely and reliably over the long term.

Building the full capacity required to qualify and prepare people to plan, finance and build those plants ready to operate from as early as the 2030s requires forethought, direction and planning. Education and training institutions at all levels need to step up now to engage with this process. Alongside skills transfer from other industries, we would likely need to supplement capacity by engaging experienced professionals from overseas.

Again, the overarching message is that capacity-building needs to be ramped up sooner rather than later, to provide the right mix of expertise when it’s needed. The acquisition of nuclear submarine propulsion technology under the AUKUS agreement was announced as the UQ study report was being prepared for the press. Naval propulsion and land-based power generation are complementary for sovereign capability.

The original civilian nuclear energy programme in the United States was developed from the submarine propulsion programme: Admiral Rickover was in charge of the first submarine Nautilus and the first commercial reactor at Shippingport in Pennsylvania.

Social licence and public confidence

Securing public trust is central to the question of this study. With a decade or more before nuclear energy may be deployed in Australia, an orderly process to make informed adoption of nuclear energy possible should be commenced now. The country is starting at a baseline of growing public interest and recent parliamentary enquiries, with a watching brief on international developments of nuclear energy alternatives.

The next step is engaging in national dialogues openly to build trust through thoughtful, evidence-based discussion, mature debate and taking time to agree on principles. This will not be a oneoff process but will require ongoing engagement for broad and enduring community support. The conversation has already started, with politicians, academic experts and lobby groups calling for early consideration of the actions that need to be implemented now, to build the foundation for a successful rollout of nuclear energy in the next decade.

When in draft form, the UQ report was presented in Canberra to the crossparty group Parliamentary Friends of Nuclear Industries in June 2021 in the 46th Parliament, and copies of the draft and final reports were provided to a large number of senior politicians of both major parties at state and federal levels. The cross-party group has been reconvened in the 47th Parliament.

The co-convenor, Dr David Gillespie, arranged a forum at Parliament House in November 2022, at which a group of engineers, energy and nuclear industry professionals presented on the role of nuclear power in reaching Australia's net-zero emissions by 2050 target.

Some principles for public discussion could include:

• Australians have a stake in the national energy mix, its environmental and social impacts

• Governments have enduring responsibilities in the energy sector, regardless of the extent of private investment and competition.

• Civil discussion can and should be recognised as healthy, non-hazardous and essential for national progress.

• Nuclear energy can and should be treated as a normal industrial activity. The process must facilitate mutual listening to diverse views and perspectives; seek to understand; identify critical issues clearly and systematically, and connect them with Australia’s available choices.

Siting an Australian SMR power plant

Power generation siting involves consideration of a wide range of criteria, requiring concerns to be appropriately balanced. In Australia particularly, the generation-transmission system is a product of decades of complex physical growth and, more recently, competitive market forces. As the report comments, ‘power plant siting today sits somewhat uneasily between central planning models and outcomes of laissez-faire free markets.’

The research team suggests using a ground-up approach (declareacknowledge-vision-evaluate) to gain community buy-in rather than a topdown screening and filtering process (decide-announce-defend) to identify possible sites.

A significant benefit of the SMR plant model is that it faces fewer technical and regulatory constraints than large nuclear plants. With their smaller footprint and higher inherent safety, SMRs require a fraction of the land emergency planning zone – one square kilometre compared to 813 square kilometres for a large reactor.

Considering the life cycle times of our existing power generation equipment, from generation through to networks, it appears evident that the nation is at the cusp of a once-in-a-generation opportunity – build everything afresh over the next 30 years, or re-use what we have by adapting and evolving. One potential, for example, is to reuse retired coal plant sites for new SMR plants with transmission connections and other infrastructure close to communities with skilled workforces.

Economic factors

Economic considerations were debated in no less than three recent parliamentary inquiries on nuclear energy. At the end of the day, the one firm assertion was this, ‘no one can produce a bankable price forecast of the electricity market’. In broadbrush terms, for Australia, the gamut of economic factors alone needs to be worked through using the gated decision models of study as suggested earlier.

For nuclear power generation, a long-term view (40 – 80 years or longer) is required because nuclear asset life, while shorter than for hydropower, is far longer than wind or solar power. There is also far more to costs and prices than simple estimates of the levelised cost of energy (LCoE) suggest.

Electricity economics must be viewed from a system perspective, which the LCoE metric cannot do. SMR plants could play other roles: hydrogen production, desalination, and industrial heat may complement electricity generation, for example.

Well-informed expectations and understanding of costs, disciplined project management and selection of the optimum scale of units and plants are all important. Without options for nuclear energy, we could easily be in a scenario in which it is impossible simultaneously to meet service reliability standards and emissions targets at reasonable, or any prices.

The recommendation is that Australia should focus on creating project-based real options for deploying SMR technology. Understanding the option value is the first step to deciding how far to progress an option, and what the country is prepared to pay to exercise the option.

Finance considerations

Financing a national infrastructure project is the hinge on which the project advances or fails. Before financing, it’s all paper. After the finance investment decision is made, it all becomes reality, and financing continues to play a major role right through to project closure.

The multiple variables and unknowns only allow researchers to go as far as identifying keys to successful financing, such as:

• The future revenue stream must be sufficiently certain: sales arrangements are critical.

• Financing must allow for a competitive weighted average cost of capital - based on the interest on debt, coupons on special bonds issued, and the total return, including dividends expected by shareholders.

This means both government and private sector financing is crucial. Economically, a project comprising a pilot plant followed by securing a programme of plant establishment would be better suited to efficient financing compared to financing a one-off plant.

Experts on all sides of the nuclear debate agree that government participation in finance, insurance and liability cover is fundamental (and recognised in international law), and direct government investment is also indispensable. Investment in nuclear technology in the Australian energy sector would also need financing from large consortia of national and international banks, and private sector investment throughout the project life cycle.

It follows that investor confidence in government policy, plans and intents is also indispensable. Continually changing market rules (as is evident in current National Electricity and Gas Rules and the current issues in state and national electricity infrastructure) tend to undermine confidence in building new assets with long lifespans, like SMRs.

What’s next?

Building on the Australian Government’s watching brief on SMR technology in 2020 and the technology cooperation partnership with the UK, a natural next step is for the government to sponsor a scoping study to evaluate the range of choices for Australia to prepare to be in a position to adopt nuclear energy. Scoping studies would encompass all the factors mentioned here, plus many more outside the scope of this particular report.

As Peter Varghese AO, Chancellor of UQ puts it, “There is no single correct answer to this question. Opinions will vary and differ. But if we are to have any chance of arriving at workable answers, we must be prepared critically to examine the various options.”

Securing public trust is central to the question of this study. With a decade or more before nuclear energy may be deployed in Australia, an orderly process to make informed adoption of nuclear energy possible should be commenced now.