South Australia considers nuclear industry potential

17 February 2015

Is South Australia's plan to set up a royal commission into the potential for nuclear power a local or national story, writes Ian Hore-Lacy.

The question of nuclear power for Australia has been raised several times over the last 60 years, but usually on the conservative side of politics. Apart from anything else, there has not been a strong need – the country has abundant coal located close to main population centres, and in using this for more than 80% of the electricity, has enjoyed some of the world's lowest power prices. But climate change concerns have changed the outlook nationally, and South Australia has always been less well-off than the eastern states in electricity options. Half its 5.3 GWe capacity is gas-fired, and its average wholesale power prices are one third greater than in the eastern states. Grid connections eastward amount to only 680 MWe.

Now a left-of-centre Labor government in South Australia is setting up a royal commission into the potential for nuclear power in that state, which already produces two thirds of Australia's uranium – all for export. The terms of reference are likely to include fuel cycle and high-level waste disposal. The inquiry is supported by the state Liberal (conservative) opposition and the federal Liberal coalition government, but not by the federal Labor party (though it supports uranium mining). However a former Labor Prime Minister, Bob Hawke, has been vocal in support: "I've always said that ignorance is the enemy of good policy and a royal commission will establish discussion free of prejudice," he said.

"The royal commission provides an important opportunity to get past the accretion of folklore and negative impressions from distant events."

The quasi-legal commission is to be headed by former governor of South Australia, Kevin Scarce, who said that he had an open mind on the issue. Media reports and editorials have been almost uniformly supportive.

Assuming that the royal commission's findings are positive, the main question is: to what extent will they be accepted nationally? Certainly before any nuclear capacity was built anywhere, federal laws would need to be changed.

A previous Liberal coalition federal government commissioned a high-level inquiry into nuclear power and it reported positively in 2006 – the Uranium Mining, Processing and Nuclear Energy Review (UMPNER). That Review concluded that any long-term energy strategy for Australia should include nuclear power in the mix alongside coal, gas and renewable energy, and that commercial opportunities existed in uranium mining, processing and enrichment, and in developing storage solutions for long-lived radioactive waste – but much has changed since then, notably the uranium price. Its chairman, Dr Ziggy Switkowski, said that the new inquiry was "timely for a number of reasons" and that "nuclear power still offers the greatest option in providing cost-effective, clean, base-load energy".

To curb CO2 emissions Australia has a Renewable Energy Target (RET) which has since 2001 required retailers each to buy a certain proportion of the electricity they supply from non-hydro renewable sources at whatever price they can, or incur a penalty by paying a shortfall charge. The target was increased in 2009 to 45,000 GWh in 2020, intended to be 20% of supply, and representing a major increase from non-hydro sources. With rising prices and declining power demand, this will now be more like 27-30% of supply, and will increase power costs further. Focusing on the purpose of the RET scheme, nuclear power would do the job better.

Dr Switkowski said last week that "Australia, especially SA, will check many boxes required for a vibrant nuclear industry: a leader in the nuclear non-proliferation regime, benign and sparsely populated geology, more than a third of the world's known uranium resources with established international markets, skilled workforce and experience in the nuclear supply chain, effective regulators and strong compliance ethos, support for industry development, job creation, and new intrastate commerce and export opportunities. Plus the new OPAL reactor at Lucas Heights continues to help Australia grow its global market share of diagnostic and therapeutic radioisotopes while building capability in nuclear research and technologies."

In contrast with most G20 countries, the main driver for nuclear power in Australia is reduction of CO2 emissions, or costs arising from that. Apart from that, Australia's huge coal resources and significant natural gas underwrite energy security and provide low-cost power. The 2006 inquiry reported that nuclear power would be 20-50% more expensive than coal-fired power at that time and (with renewables) it would only be competitive if "low to moderate" costs were imposed on carbon emissions (A$ 15-40 - US$ 12-30 - per tonne CO2). "Nuclear power is the least-cost low-emission technology that can provide base-load power" and has low life cycle impacts environmentally. Since then, household power prices have approximately doubled.

The National Generators Forum published a report in 2006 on Reducing Greenhouse Gas Emissions from Power Generation which concluded that "Stabilising emissions at present levels and meeting base-load requirements could be achieved with nuclear power at comparatively modest cost." While electricity cost increases to 2050 were projected to be more than 120%, using nuclear power would halve the increase. "At $20 per tonne of CO2 price, nuclear starts to become more cost-effective than current fossil fuel technologies."

Around 1960, nuclear power was considered for the large new power station at Port Augusta in SA, then in 1969 the South Australian government proposed a nuclear power plant in SA to supply the eastern states' grid. In 1976, the SA government in its submission to the Ranger Uranium Mine Inquiry said nuclear power appeared inevitable for SA, perhaps by 2000.

Insofar as the royal commission will direct future power investment in SA, the question of reactor unit size arises. At present the unit size of any generating unit there is regulated at 260 MWe, though modelling has shown 500 MWe units are possible. Small modular reactors would therefor be indicated. But if transmission links were expanded a SA nuclear power plant with large reactors could serve the eastern states.

South Australia is mostly very dry, so desalination will be certain to feature.

The royal commission provides an important opportunity to get past the accretion of folklore and negative impressions from distant events to grapple with technical, social and economic realities.

Ian Hore-Lacy

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Ian Hore-Lacy is a Senior Research Analyst with the World Nuclear Association. One of the WNA's longest serving staffers, Ian is the author of the organisation's Information Library.