Australia is at the crux of an energy debate that has implications for not just its green credentials, but also for the economy. As the country aims for aggressive emissions reduction targets, the argument for diversifying the energy portfolio has been heating up. One of the technologies that has garnered attention is nuclear power, specifically small modular reactors (SMRs). While proponents argue that SMRs offer a low-emission option to balance renewable energy sources like wind and solar, the figures don’t quite add up, at least not according to GenCost 2022-2023.
GenCost is an annual collaborative report by CSIRO and the Australian Energy Market Operator (AEMO) that provides an evaluation of the current and projected costs for different electricity generation and storage technologies. This report has consistently shown that renewable energy technologies, particularly onshore wind and solar photovoltaic (PV), are the cheapest available options for power generation.
The GenCost process prides itself on its collaborative nature, engaging experts and stakeholders within the energy industry to scrutinise the findings before they go public. The aim, according to Paul Graham, CSIRO energy economist and lead author of the report, is to furnish AEMO and policymakers across Australia with high-quality data for sound decision-making.
One way the report keeps the comparison fair is by using a common yardstick—the levelised cost of electricity (LCOE). This takes into account the costs of initial capital investment, and ongoing fuel and operation and maintenance costs, giving a dollar amount per megawatt-hour (MWh). For renewables like wind and solar, this includes additional storage and transmission costs. Yet, even with these variables, renewables come out on top financially.
Projected for 2030, the earliest possible date that a nuclear SMR could feasibly be built in Australia, wind and solar are estimated to have a maximum LCOE of $83 per MWh. In contrast, SMRs have a projected range of $130-311 per MWh, making them significantly less competitive. Moreover, these estimates have already accounted for the possibility that capital costs for SMRs could halve from their current levels.
But what makes the cost calculation for SMRs even trickier is the lack of real-world data. According to Paul Graham, the available data for SMRs comes mostly from theoretical studies, as only two are known to be operating globally—both of which have experienced cost overruns and delays. Without concrete data, it’s difficult to assess the economic viability of SMRs.
To make matters more complicated, Australia’s legal framework is currently not supportive of nuclear power. It is prohibited by two separate pieces of legislation: the Australian Radiation Protection and Nuclear Safety Act 1998 and the Environment Protection and Biodiversity Conservation Act 1999. This legal barrier adds another layer of complexity, and it would take time to change these laws—a luxury that the urgency of climate change does not afford.
Add to this the findings of the International Energy Agency’s (IEA) Renewables 2022 report, which expects renewable energy to surpass coal as the largest global electricity source by early 2025, and you have a compelling case against nuclear. “The electricity sector needs to be the linchpin in reducing emissions, and it needs to act quickly. Nuclear faces serious challenges in contributing in a timely way,” Paul Graham stresses.
Given the existing legislative barriers, the absence of high-quality data, and the cost-competitiveness of renewables, it becomes increasingly clear that while the nuclear debate may be intriguing, it may not be Australia’s most prudent path to a sustainable, economical energy future.
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Australia's GenCost report finds #nuclear small modular reactors (SMRs) less cost-effective compared to renewables, hindering their role in the country's energy transition. #TheIndianSunhttps://t.co/qfRhOJbtOu
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