Dr Jim Green explodes the Australian Financial Review ‘s propaganda promoting Small Modular Nuclear Reactorsll

Aaron Patrick, senior correspondent with the Australian Financial Review (AFR), is the latest journalist to enter the nuclear culture wars with some propaganda that’s indistinguishable from that served up in the Murdoch tabloids.

There’s lots of misinformation in Patrick’s articles. For example he uncritically promotes a dopey Industry Super Australia report, described by RenewEconomy editor Giles Parkinson as “one of the most inept analyses of the energy industry that has been produced in Australia”. (I’ve asked the authors of the Industry Super report if they intend to withdraw or amend it. No response.)

The focus here ‒ and the focus of Patrick’s recent articles ‒ is on small modular reactors (SMRs), which he describes as new, small, safe, cheap and exciting (and he continues to make such claims even as I continue to feed him with evidence suggesting alternative SMR adjectives … non-existent, overhyped, obscenely expensive).

Some history is useful in assessing Patrick’s claims. There’s a long history of small reactors being used for naval propulsion, but every effort to develop land-based SMRs has ended in tears. Academic M.V. Ramana concludes an analysis of the history of SMRs thus:

“Sadly, the nuclear industry continues to practice selective remembrance and to push ideas that haven’t worked. Once again, we see history repeating itself in today’s claims for small reactors ‒ that the demand will be large, that they will be cheap and quick to construct.

“But nothing in the history of small nuclear reactors suggests that they would be more economical than full-size ones. In fact, the record is pretty clear: Without exception, small reactors cost too much for the little electricity they produced, the result of both their low output and their poor performance. …

“Worse, attempts to make them cheaper might end up exacerbating nuclear power’s other problems: production of long-lived radioactive waste, linkage with nuclear weapons, and the occasional catastrophic accident.”

Patrick quotes an SMR company representative saying that SMRs have been “researched and developed for the best part of 50 years”. Fine … but surely AFR readers ought to be informed that every single attempt to commercialise SMRs over the past 50 years has failed.

According to the Coalition’s energy spokesperson (p.34), “new-generation reactors with maximum safety features are now coming into use”. That was 30 years ago, and the spokesperson was Peter McGauran.

A wave of enthusiasm for SMRs came and went without a single SMR being built anywhere in the world, and there’s no reason to believe the current wave of enthusiasm will be more fruitful.

Diseconomies of scale

Interest in SMRs derives primarily from what they are not: large reactor projects which have been prone to catastrophic cost overruns and delays. Cost estimates for all reactors under construction in western Europe and north America range from A$17.5 billion to A$24 billion, and the twin-reactor V.C.

Summer project in South Carolina was abandoned in 2017 after the expenditure of at least A$13 billion, forcing Westinghouse into bankruptcy and almost bankrupting its parent company Toshiba.

But SMRs will cost more (per megawatt and megawatt-hour) because of diseconomies of scale: a 250MW SMR will generate 25 per cent as much power as a 1,000MW reactor, but it will require more than 25 per cent of the material inputs and staffing, and a number of other costs including waste management and decommissioning will be proportionally higher.

So the nuclear industry’s solution to its wildly expensive and hopelessly uncompetitive large reactors is to offer up even-more-expensive reactors. Brilliant. Small wonder that nuclear lobbyists are lamenting the industry’s crisis and pondering what if anything might be salvaged from the “ashes of today’s dying industry“.

Aaron Patrick claims in the AFR that SMRs are “likely” to be installed in North America and Europe. No, they aren’t. William Von Hoene, senior vice-president at Exelon ‒ the largest operator of nuclear power plants in the US ‒ said last year: “Right now, the costs on the SMRs, in part because of the size and in part because of the security that’s associated with any nuclear plant, are prohibitive.”

The prevailing scepticism is evident in a 2017 Lloyd’s Register report based on the insights of almost 600 professionals and experts from utilities, distributors, operators and equipment manufacturers. They predict that SMRs have a “low likelihood of eventual take-up, and will have a minimal impact when they do arrive”.

Likewise, American Nuclear Society consultant Will Davis said in 2014 that the SMR “universe [is] rife with press releases, but devoid of new concrete.”

And a 2014 report produced by Nuclear Energy Insider, drawing on interviews with more than 50 “leading specialists and decision makers”, noted a “pervasive sense of pessimism” resulting from abandoned and scaled-back SMR programs.

Independent economic assessments

SMRs are “leading the way in cost” according to Tania Constable from the Minerals Council of Australia. NSW Deputy Premier John Barilaro claims that SMRs “are becoming very affordable”.

But every independent economic assessment finds that electricity from SMRs will be more expensive than that from large reactors.

A study by WSP / Parsons Brinckerhoff prepared for the 2015/16 South Australian Nuclear Fuel Cycle Royal Commission estimated costs of US$127‒130 per megawatt-hour (MWh) for large reactors, compared to US$140‒159 for SMRs. The Royal Commission’s final report identified numerous hurdles and uncertainties facing SMRs.

A December 2018 report by CSIRO and the Australian Energy Market Operator concluded that “solar and wind generation technologies are currently the lowest-cost ways to generate electricity for Australia, compared to any other new-build technology.”

It found that electricity from SMRs would be more than twice as expensive as that from wind or solar power with storage costs included (two hours of battery storage or six hours of pumped hydro storage).

A report by the consultancy firm Atkins for the UK Department for Business, Energy and Industrial Strategy found that electricity from the first SMR in the UK would be 30 percent more expensive than that from large reactors, because of diseconomies of scale and the costs of deploying first-of-a-kind technology.

A 2015 report by the International Energy Agency and the OECD Nuclear Energy Agency predicted that electricity from SMRs will be 50−100 percent more expensive than that from large reactors, although it holds out some hope that large-volume factory production could reduce costs.

An article by four pro-nuclear researchers from Carnegie Mellon University’s Department of Engineering and Public Policy, published in 2018 in the Proceedings of the National Academy of Science, considered options for the development of an SMR industry in the US.

They concluded that it would not be viable unless the industry received “several hundred billion dollars of direct and indirect subsidies” over the next several decades. That’s billion with a ‘b’: several hundred billion dollars.

SMR corpses and a negative learning curve on steroids

A handful of SMRs are under construction, all by state nuclear agencies in Russia, China and Argentina. Most or all of them are over-budget and behind schedule. None are factory built (the essence of the concept of modular reactors) and none are the least bit promising.

China and Argentina hope to develop an export market for their SMRs, but so far all they can point to are partially-built prototypes that have been subject to major cost overruns and delays. South Korea won’t build any of its ‘SMART’ SMRs domestically, not even a prototype, but nevertheless hopes to establish an export market.

Alarmingly, about half of the SMRs under construction are intended to facilitate the exploitation of fossil fuel reserves in the Arctic, the South China Sea and elsewhere (Russia’s floating power plant, Russia’s RITM-200 icebreaker ships, and China’s ACPR50S demonstration reactor).

Equally alarming are the multifaceted connections between SMR projects, nuclear weapons proliferation and militarism more generally (see here, here and here).

Recent history is littered with SMR corpses (none of them mentioned in Patrick’s articles in the AFR).

The Generation mPower project in the US was abandoned. Transatomic Power gave up on its molten salt reactor R&D. MidAmerican Energy gave up on its plans for SMRs after failing to secure legislation that would force rate-payers to part-pay construction costs. Westinghouse sharply reduced its investment in SMRs after failing to secure US government funding.

Patrick mentions Rolls-Royce’s SMR plans in the AFR, but he doesn’t note that Rolls-Royce scaled back its investment to “a handful of salaries” and is threatening to abandon its R&D altogether unless massive grants are forthcoming from the British government.

Rolls-Royce SMRs “should become commercially available around 2030”, Patrick writes, without noting that they won’t be available ever, anywhere, unless the British government agrees to an outrageous set of demands detailed in an important new report, ‘Prospects for Small Modular Reactors in the UK & Worldwide‘.

Rolls-Royce estimates that Australian demand for SMRs could reach 2,000 megawatts of capacity, Patrick informs AFR readers. So SMRs could supply a very small fraction of Australia’s electricity demand according to a company with skin in the game … gee whiz.

In yet another propaganda piece, titled ‘The Rolls-Royce option for Australian nuclear power’, Patrick regurgitates Rolls-Royce’s claim that it could build an SMR in Australia for  “only £1.5 billion ($2.7 billion)”. No information is provided regarding the capacity of the proposed reactor, so the dollar figure is meaningless.

Surely readers of the Financial Review would expect at least some basic economic literacy from the paper’s Senior Correspondent?

Patrick cites an SMR company representative who claims that costs will become more competitive over time. Let’s compare that speculative claim to a real-world example.In 2004, when Argentina’s CAREM SMR was in the planning stage, the Bariloche Atomic Center estimatedan overnight cost of US$1 billion / gigawatt (GW) for an integrated 300 MW plant.

By April 2017, with construction underway, the costhad increased to a staggering US$21.9 billion / GW. The project is years behind schedule and years from completion, so costs will increase further. It’s a negative learning curve on steroids.

Patrick uncritically quotes an SMR company representative saying that there won’t be “sticker shock” with SMRs. Argentina’s 2190% cost increase isn’t sticker shock?

NuScale’s creative accounting

The US company NuScale Power is the Next Big Thing in the SMR universe, if only because so many other projects have collapsed. NuScale is targeting a cost of US$65 / MWh for its first plant.

But a study by WSP / Parsons Brinckerhoff prepared for the SA Nuclear Fuel Cycle Royal Commission estimated a cost of US$159 / MWh based on the NuScale design ‒ that’s 2.4 times higher than NuScale’s estimate.

Lazard estimates costs of US$112‒189 / MWh for electricity from large nuclear plants. NuScale’s claim that its electricity will be 2‒3 times cheaper than that from large nuclear plants is implausible.

And even if NuScale achieved costs of US$65 / MWh, that would still be higher than Lazard’s figures for wind power (US$29‒56) and utility-scale solar (US$36‒46).

Likewise, NuScale’s construction cost estimate of US$4.2 billion / GW is implausible. The latest cost estimate for the two AP1000 reactors under construction in the US state of Georgia (the only reactors under construction in the US) is US$12.3‒13.6 billion / GW.

NuScale wants us to believe that it will build SMRs at one-third of that cost, despite the unavoidable diseconomies of scale and despite the fact that every independent assessment concludes that SMRs will be more expensive to build (per GW) than large reactors.

No-one wants to pay for SMRs

No company, utility, consortium or national government is seriously considering building the massive supply chain that is the very essence of SMRs ‒ mass, modular factory construction. Yet without that supply chain, SMRs will be expensive curiosities.

In early 2019, Kevin Anderson, North American Project Director for Nuclear Energy Insider, said that there “is unprecedented growth in companies proposing design alternatives for the future of nuclear, but precious little progress in terms of market-ready solutions.”

Anderson argued that it is time to convince investors that the SMR sector is ready for scale-up financing but that it will not be easy: “Even for those sympathetic, the collapse of projects such as V.C. Summer does little to convince financiers that this sector is mature and competent enough to deliver investable projects on time and at cost.”

Dr. Ziggy Switkowski ‒ who headed the Howard Government’s nuclear review in 2006 ‒ recently made a similar point. “Nobody’s putting their money up” to build SMRs, he noted, and thus “it is largely a debate for intellects and advocates because neither generators nor investors are interested because of the risk.”

Switkowski made those comments in an interview with the AFR’s Phil Coorey. But Aaron Patrick doesn’t give AFR readers any sense that SMRs will struggle to get off the ground given the profound reluctance to invest. Current investments ‒ from the private sector and national governments ‒ are orders of magnitude less than would be required to kick-start an SMR industry.

A 2018 US Department of Energy report states that about US$10 billion of government subsidies would be needed to deploy 6 GW of SMR capacity by 2035. But there’s no likelihood that the US government will subsidise the industry to that extent.

To date, the US government has offered US$452 million to support private-sector SMR projects, of which US$111 million was wasted on the mPower project that was abandoned in 2017.

Canadian Nuclear Laboratories has set the goal of siting a demonstration SMR at its Chalk River site by 2026. But serious discussions about paying for a demonstration SMR ‒ let alone a fleet of SMRs ‒ have not yet begun. The Canadian SMR Roadmap website simply states: “Appropriate risk sharing among governments, power utilities and industry will be necessary for SMR demonstration and deployment in Canada.”

In 2018, the UK Government agreed to provide £56 million towards the development and licensing of advanced modular reactor designs and £32 million towards advanced manufacturing research.

This year, the UK Government announced that it may provide up to £18 million to a consortium to help build a demonstration SMR, and up to £45 million to be invested in the second phase of the Advanced Modular Reactor program.

But those government grants are small change: companies seeking to pursue SMR projects in the UK want several billion pounds from the government to build a prototype SMR. “It’s a pretty half-hearted, incredibly British, not-quite-good-enough approach,” one industry insider said.

Another questioned the credibility of SMR developers in the UK: “Almost none of them have got more than a back of a fag packet design drawn with a felt tip.”

Federal inquiry ‒ get your submission in

The Federal Parliament’s Standing Committee on Environment and Energy has begun an ‘inquiry into the prerequisites for nuclear energy in Australia‘ with a focus on SMRs.

The Committee is controlled by Coalition MPs and they need all the education we can offer them ‒ about the whole suite of energy options, not just nuclear power and SMRs ‒ so get your submission in by September 16.

Dr Jim Green is lead author of a Nuclear Monitor report on SMRs and national nuclear campaigner with Friends of the Earth Australia