Small Modular Reactors (SMRs): A Risky Gamble Versus Proven Renewable Solutions
This article is based on insights from CHATO International Pty Ltd and The Institute for Energy Economics and Financial Analysis (IEEFA)
Introduction
The renewed interest in Small Modular Reactors (SMRs) as a potential green energy solution has sparked considerable debate. This critical assessment leverages insights from the Institute for Energy Economics and Financial Analysis (IEEFA) and CHATO International Pty Ltd, presenting a unified and urgent argument against the adoption of SMRs. Historical precedents and the poor track record of the Australian opposition in managing complex infrastructure projects further underscore the need for a shift in attitudes and policies.
IEEFA's Perspective: Expensive, Slow, and Risky
The Institute for Energy Economics and Financial Analysis (IEEFA) has reiterated that SMRs remain too expensive, too slow to build, and too risky to play a significant role in transitioning from fossil fuels in the coming 10-15 years. According to IEEFA, investment in SMRs will divert critical resources away from carbon-free and lower-cost renewable technologies that are available today and can significantly accelerate the transition from fossil fuels over the next decade.
Key Points from IEEFA's Latest Report:
Economic Competitiveness: Despite claims from SMR proponents, the new reactors are not economically competitive. Experience with operating and proposed SMRs shows that these reactors will continue to cost far more and take much longer to build than promised.
Resource Allocation: Investment in SMRs takes away resources from renewable technologies that can drive the energy transition more effectively.
Regulatory and Financial Risks: Regulators, utilities, investors, and government officials should recognize the financial and timeline risks associated with SMRs and prioritize renewables.
CHATO International's Perspective: High Sovereign Risk and Unproven Technology
CHATO International's white paper critically examines the proposal to adopt SMRs in Australia, highlighting several key concerns:
Lack of Proven Waste Treatment Solutions: Australia lacks a designated long-term high-level nuclear waste repository, raising significant sovereign hazard risks.
Failure of Synroc Technology: Despite decades of research, Australia's Synroc technology has not succeeded, casting doubt on the country's ability to manage additional nuclear waste.
No Safe Disposal for Radioactive Components: Without a safe, long-term disposal solution, adopting SMRs poses substantial risks.
Historical Patterns of Poor Governance: The opposition's track record with projects like the NBN rollout and Snowy Hydro 2.0 has shown a pattern of neglecting best practices and proper risk management.
Conclusion
The proposal to adopt SMRs as a green energy solution for Australia is fraught with high sovereign risks, unproven technologies, and a historical pattern of poor governance and project management. Both IEEFA and CHATO International emphasize the importance of prioritizing proven, scalable, and low-risk renewable energy technologies over SMRs. This unified stance underscores the necessity for rigorous due diligence, robust risk management, and a commitment to sustainable and economically viable energy solutions.
The findings of IEEFA's report should serve as a cautionary flag for all energy industry participants. In particular, the report recommends:
Regulatory Measures: Regulators should implement restrictions to prevent delays and cost increases from being transferred to ratepayers.
Utility Requirements: Utilities should compare the uncertain costs and completion dates of SMRs with the known costs and construction timetables of renewable alternatives, and should be held financially accountable for exceeding estimates.
Investor Due Diligence: Investors and bankers should thoroughly investigate SMR proposals, understanding the risks involved.
Government Transparency: State and federal governments should make SMR construction costs and schedules publicly available to allow for better risk assessment by ratepayers, taxpayers, and investors.
Finally, the opportunity costs associated with the SMR push must be considered. Investing in SMRs diverts funds from building out renewable energy resources like wind, solar, and battery storage, which are ready today and can significantly advance the transition from fossil fuels within the next decade.