South Australia: Making money by solving “waste” problems of others
South Australia is making progress in its effort to profitably address an issue that has slowed nuclear energy’s growth prospects for more than 40 years.
On May 9th South Australian premier Jay Weatherill released the final version of the Nuclear Fuel Cycle Royal Commission report that had been briefed to him on May 6.
The report is the result of a 14-month process of evidence gathering, hearings, public meetings, report drafting, and comment response that cost the South Australian government a little more than A$7 million ($5.2 million).
The Royal Commission listened to 132 witnesses, many of whom were experts in various aspects of nuclear energy.
A few were professional nuclear energy opponents, including Helen Caldicott, Princeton professor Frank Von Hippel, and the Union of Concerned Scientists’ Ed Lyman.
The panel also addressed more than 170 responses submitted during the comment period following release of the tentative findings in February.
The report’s conclusions and recommended next steps were broken into four major categories: exploration and mining; processing and fabrication; electricity generation; and radioactive waste management, storage and disposal. (See Highlights below.)
The commission found that the world’s nuclear fuel processing and fabrication markets were oversupplied and offered few near term opportunities for new entrants.
It noted that South Australia is home to 25% of the world’s known uranium resources and 80% of Australia’s known uranium, but that market is also oversupplied and underpriced.
It determined that there are no commercially proven nuclear generators that can economically compete in the South Australian electricity market as it is currently structured, even if the federal statutory prohibition on nuclear power in Australia was eliminated.
On a far more positive note, the commission made a strong case for its conclusion that there is a large, profitable and almost completely underserved market in the world for a credible, reliable, bankable supplier of handling, storage and disposal services for used nuclear fuel and intermediate nuclear waste.
The report provided details about the assumptions and calculations that led it to make the following statement on page 99:
“Integrated facilities with capacity to store and dispose of used fuel would be viable. On a number of realistic scenarios, such a facility would be highly profitable.”
A bit later in the report, there are numbers from one of the realistic scenarios that quantify the words “highly profitable.”
They showed how a program could result in total revenue of A$257 billion ($190 billion), with total costs–largely in the form of salaries and wages to South Australian workers–of A$145 billion ($107 billion), leaving more than A$100 billion ($74 billion) in profits.
The commission reported that if half of those profits were invested into a state wealth fund, they could accumulate a total of A$445 billion ($328 billion) before waste deliveries stop.
That calculation was for a notional project that envisions South Australia earning income for 70 years from storing about 25% of the world’s available used fuel and intermediate nuclear waste.
Aside: There would be no real reason to stop there if both hosts and customers were happy with the arrangement. End Aside
Long-time antinuclear campaigner Dave Sweeny (@NukeDaveSweeny) from the Australian Conservation Foundation was quoted in several news stories as having said, “We’ll be increasing our profile, our presence and our concerns….It might include protests, it certainly will include boots on the ground.”
In contrast, The Advertiser published an editorial indicating that many more people are thinking about the opportunity than about joining the opposition.
“There were just two protesters outside Government House on Friday when Rear Admiral Scarce handed over the report. At the height of anti-nuclear sentiment a generation ago, it’s likely thousands would have been marching in the streets.”
Writing for Forbes James Conca said, “This is is a very big deal. And also a very good idea.” He also provided a third party quote worth cribbing.
“Agneta Rising, Director General of the London-based World Nuclear Association, said that the report had ‘fundamentally changed the nature of the global nuclear waste discourse.’”
The federal government, in a statement issued by Josh Frydenberg, the energy and resources minister, expressed support for the commission’s report.
Next Steps
Premier Jay Weatherill indicated that solicitations of interest have been sent out to 25,000 randomly selected South Australians. A pool of 50 from that group will form a citizens’ jury to compile key questions raised by the commission report.
A second group of 350 from the initial group would seek community responses during the summer and report back to the government in September.
By November, the government will decide if it plans to move forward with plans for a storage facility and disposal repository. At that point it will begin the challenging process of finding a willing community host.
“Social consent is fundamental to undertaking any new nuclear project,” the report said. “Social consent requires sufficient public support in South Australia to proceed with legislating, planning and implementing a project. Local community consent is required to host a facility.”
The commission expects that the consent-seeking process might take as long as 10 years.
Even though the commission did not see any near term use of nuclear power in South Australia, it recommended several actions to keep that option available in the future.
It recommended efforts to legislatively remove the prohibition and expert monitoring and reporting of international advances in nuclear technology that might change the economics for proven systems.
Other Report Highlights
The Royal Commission’s report also provided detailed reviews of all other available energy options and explained why it cautions against the assumption that currently rosy views of renewable energy and storage cost reduction might not prove to be accurate.
The report contained a lengthy explanation of the reasons why, in South Australia, climate change concerns are a primary motivation for reconsidering and revising current law. There is a far more than adequate supply of fossil fuels and other energy sources for the small population.
Some nuclear energy professionals actively resist the introduction of climate change as a primary reason why uranium deserves a place in the energy mix, but I hope they don’t waste much time trying to convince the South Australian government that it should find a different reason to become strongly pro-nuclear.
There is a synergistic aspect to South Australia’s willingness to host a multilateral used fuel storage facility and repository that the report does not adequately address.
Perhaps it’s a result of an understandable desire to avoid irrational exuberance.
If South Australia’s used fuel acceptance program is successful and imitated by one or more competitors, the entire nuclear industry may begin to recover from the lethargy that has been imposed by 40 years of constipation—-the situation that some have described as a focus on “the waste issue.”
If South Australians agree to accept the facility and the new enterprise because they’re convinced that the benefits far outweigh the almost imaginary risks, the resulting nuclear power growth should dramatically accelerate the process of working off the oversupply situations described in the report’s skeptical sections on opportunities in fuel cycle activities.
Highlights: Royal Commission Report
Exploration and Mining
Current conclusion: Limited opportunities for expansion in current low price environment.
- Simplification of state and federal mining to deliver single assessment and approvals process
- Enhance pre-competitive geophysical data including counter-cyclical investment in exploring new areas
- Obtain better guarantees for decommissioning and remediation from miners
Processing and Fabrication
Current conclusion: Market is oversupplied with little room for new competition.
- Remove existing prohibitions on licensing processing & fabrication to enable fuel leasing strategy
- Promote commercialization of isotopes from cyclotron at SAHMRI
Electricity Generation
Current conclusion: Not economically competitive under today’s market rules.
- Remove federal prohibitions on nuclear power
- Develop national energy policy that enables nuclear to participate in low carbon, reliable, lowest possible system cost electricity network
- Assign experts to keep track of new nuclear systems that may improve economic value of nuclear power
Radioactive Waste Management, Storage, Disposal
Current conclusion: There is a lucrative opportunity to supply desired service with current market void.
- Vigorously pursue opportunity to establish storage and disposal facilities for intermediate level waste and used nuclear fuel
- Take immediate steps allowed under existing laws to set stage for community decision process
Remove constraint that precludes thorough analysis and discussion of opportunity
The above article was first printed in Fuel Cycle Week #661 dated May 12, 2016. It is reprinted here under prior arrangements between author and publishers.
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Concrete-and-stainless canisters ought to have a useful lifespan of centuries (particularly if buried in e.g. sand to keep them below the frost line), which is long enough for even SNF to decay to the point of being handled with gloves. Further, the amount of higher actinides plus re-enrichable uranium is considerable. “Out of sight, out of mind” seems silly to me, but I’m not in the target demographic for this idea.
If SA can capitalize on other people’s psychological need for OOS,OOM then more power to them. Then they’ll be sitting on a stockpile of driver fuel for the next generation of fast-spectrum reactors.
Australia & Alberta have a lot in common, in regards to GHG emissions and zero-nuclear power. I show climate-minded Albertans Bed Heard’s talk as it is just as pertinent here.
Hope Australia moves ahead on this, if at least to show folks here how it can happen.
There’s a soveriegn island in the Pacific with a population of 25.
$328BN split 25 ways.
With that much cash they could all buy another island each somewhere else.
Interesting that you mention Jim Conca’s article.
That article states that “countries having, or planning, less than five reactors, such as Argentina, South Africa and about 40 other countries, will not have sufficient waste generation, or a favorable geologic site, to justify the economic and environmental issues of developing their own repository.”
That five reactors limit appears to be aimed at excluding countries which ARE developing their own repository, but have five or just over, reactors.
That includes Switzerland, Czech Republic, Finland, Sweden and Belgium.
Wonder what those “40 other countries” with less than five reactors are?
I can think of Mexico, Slovenia and Taiwan, but not 40.
Besides which, the volume of SNF from those countries is small, even when combined.
Did the NFCRC ever list which countries they figured would make the business case ? (if so, I seem to have missed it).
They do, it is in the consultants report (Jacobs MCM) that did the analysis on the dollar figures Rod quoted. Pages 108 to 110. You can find the report at the following link as well as all the other reports on other aspects of the fuel cycle (scroll down):
http://nuclearrc.sa.gov.au/tentative-findings/
Note that the figures that are quoted are assuming that only 50% of the inventories listed will be imported, and they do exclude countries with local storage solutions.
Good point Jaro. Only 47 countries have or have had reactors, Perhaps there are a lot planning to have reactors?
Thanks.
That is a curious document.
They are counting countries which already have plans for repositories — right after saying they wouldn’t do that.
In addition, they count many countries which currently don’t have NP, without analyzing what their future policies might be in regards to SNF storage or processing.
https://dl.dropboxusercontent.com/u/11686324/Jacobs_MCM_2016_potential_client_countries.jpg
All that matters is that the modelling, by assuming either 25%, 50% or 75% of the listed inventory is imported, takes those concerns into account.
Just to add an additional comment on the inventories.
The 50% model scenario requires 138,260 tonnes of spent fuel. If we assume that all the material in the proposed section never comes to fruition then we are left with existing inventories (Table 2.1 p.108-109). 138,360 tonnes represents 61% of that tables total inventory to 2080, in other words that 88,280 tonnes is not imported. This figure is enough to satisfy Switzerland, Belgium and some others from not exporting any spent fuel.
I should point out that the finding of nuclear power generation not being economic in SA is based on the size & location of the South Australian grid, the size of the connector to the remainder of the east coast, & the legislated grid priority of wind, solar & hydro.
Basically South Australian wind & solar would effectively curtail ANY other generator to the extent that it would become uneconomic to operate in South Australia. The ONLY way a non renewable source could possibly be economic, would be to have it connected to 3 other state grids (as in Victoria’s case) and to be cheaper than coal, OR to be treated equally on both grid priority & subsidization to “renewables”.
If that profit included getting used fuel from all countries, I’m skeptical. I would hope countries would be smart enough to realize that paying someone to take something that still has 97% fresh fuel might later require them to pay SA to get that material back again for future fast reactors.
Indulging the OOS,OOM delusion is likely to have deferred costs, yes.
That was going to be the question I was going to ask.
I’ve spent the last ~20 minutes trying to find the average cost of electricity in SA and finding that a straight answer is surprisingly difficult to come by, but as best as I can figure it seems to be somewhere in the ballpark of $0.30 AUD per kWh. Please correct me if I’m wrong there.
Now with that in mind and combined with the large uranium reserves in the area, something like a CANDU is an absolute economic impossibility? Really? That just smelled off to me.
But I guess if The Law mandates ‘Use solar and wind first!’ it kind of throws a wrench into the gears of what I’d consider normal thinking.
Commission papers I saw indicated any alternative generator (including nuclear) would be curtailed 75% of the time with the current incentives to build renewables combined with their legislated grid priority, and the fact that Victorian brown coal across the interconnector is about $35MWh.
Nuclear could only be economic if there was a strong desire to reduce CO2 (which was not the question asked of the evaluation)
The Australian Energy Regulator has a good breakdown of retail prices in their State of the energy market annual reports found here:
https://www.aer.gov.au/publications/state-of-the-energy-market-reports
You are correct that the retail price is around 30c/kWh (AUD). Page 132 of the 2015 state of the energy market report has the breakdown by Stateand what components of that retail price are transmission, generation etc.
Superb job with this summary Rod, just superb.
@Ben
Thank you for the kind words.
I agree with reprocessing rather than stocking of used fuel. The customers could pay for reprocessing. It should be partitioned in following parts.
1. Cladding and inactive materials.
2. Uranium, the major part.
3. Fission products. This could give important isotopes in some conditions.
4. Transuranics including plutonium. This could form the valuable fissile component of fast reactorfuel or thorium based fuel.
@Jagdish Dhall
Recycling is a good long term option, but there isn’t much sense in pushing it before there is a profitable market for the resulting products. The used fuel gets easier to handle with each passing year. The containers are affordable, require little or no maintenance and do not take up much space.
Surface storage will work fine and last a long time. When we’re building new nuclear plants at a pace sufficient to address some of society’s most important challenges, there will be demand for the materials that is sufficient to pay for the costs of the infrastructure investments needed to extract them from the stored, stable assemblies.
some interesting commentary on the SA generators, baseload and the ability to sell “reewable energy certificates” https://actinideage.com/2016/05/26/fact-check-south-australian-baseload/
Exactly, Rod. Extremely durable, secure, self-cooling, basically maintenance free casks with dose rates barely above background will/are working just fine.