Dutton’s nuclear dream promises delays, cost blowouts and government debt

Farewell, small modular reactors, we hardly knew ye.

Last year, the Coalition was all over the purported future of nuclear power, constantly reiterating that SMRs were the solution to Australia’s energy needs. “With the plug-and-play of the new small modular reactors, you can replace the coal-fired generation and distribute through the existing network,” Peter Dutton said.

Indeed, SMRs are “the only feasible firming option” he told an economic conference. The only thing that was in the way was the ideology of “old hippies” in Labor. Otherwise, we could just “plug and play” our way to unlimited atomic power.

Alas, pack your bags, SMRs. As of yesterday, and fresh off what even the press gallery is now describing as a poor outcome in Dunkley, the opposition leader has moved on to large nuclear reactors. In the Financial Review, Phil Coorey cruelly quoted Dutton’s hapless LNP energy shadow Ted O’Brien last year referring to how “nobody wants old Soviet technology, you wouldn’t touch it with a barge pole”.

Well, someone found Dutton a barge pole and he’s sticking it into the reactor core.

What has changed is the only company in the US trying to build an SMR, NuScale Power in Idaho, cancelled its project in November. O’Brien, humiliatingly, had touted NuScale in a piece for News Corp in May. “NuScale’s integrated reactors offer exceptional flexibility with modulars making for simple expansion. Its first build will be in Idaho in 2029,” O’Brien trilled.

O’Brien hadn’t done his research — the Idaho SMR died, despite more than US$1 billion in government subsidies, because no-one wanted to pay $89/MWh for power, which is the cost the company revealed last January. NuScale had previously claimed the SMR would produce power at $58/MWh.

Ah… cost increases. On Monday, French newspaper Les Echos reported that French state-owned utility EDF had raised its already large cost estimate for the construction of six new nuclear reactors from €51.7 billion to €67.4 billion (US$73 billion or A$110 billion) — and flagged costs could rise higher. France gets 70% of its electricity from nuclear power and now needs to build new plans to replace ageing operations built in the 1960s and 1970s.

This is unrelated to the cost blowouts at EDF’s Flamanville project (or “Phlegm Orville” as the Institute of Public Affairs calls it), which is more than a decade late and at least triple its original estimate (it’s been under construction since 2007). Dutton has touted both major EDF projects.

EDF also has to fund the construction of the Hinkley Point reactor project in the UK. Originally budgeted at £20 billion, then £26-27 billion in 2022, last year EDF revised the cost up to £32.7 billion, or more than A$63 billion. Originally scheduled to be completed in 2027, Hinkley Point has been delayed to at least 2029-31.

EDF is the most experienced nuclear power operator in the Western world, and if it can’t get its costings right, then no-one can. The French government’s expensive re-nationalisation of the utility in 2023 was an admission that nuclear power is not a commercially viable sector.

These massive cost increases and delays come with a real cost for consumers. As the NuScale debacle illustrates, endless construction cost increases — and the debt they demand for the companies behind the projects — push up the eventual cost per MWh for consumers.

The poster child for this is the Vogtle project in Georgia — two new nuclear power reactors to go with two older installations, which cost an estimated US$35 billion (A$53 billion), compared to an initial costing of US$14 billion. The Trump administration was forced to step in to guarantee US$12 billion in debt for the project, which ended up eight years late. Vogtle’s estimated electricity costs are US$170–180/MWh — including an extra 10% a month to help offset the final uncovered costs of the reactors.

Never mind the “which electorate will the reactors go in” stuff: this is what Dutton is now selling — decade-long delays, cost blowouts in the tens of billions, monstrously expensive power, government debt guarantees as the very least, and likely a direct government role in funding the power industry.

Many have now cottoned on to the fact that — as Crikey has been saying for years — proposing nuclear power in Australia is simply a delaying tactic to prop up coal-fired power. But Dutton is proposing a colossal big-government policy that will risk the federal budget, force consumers to pay extraordinary power costs, and, of course, deliver nothing until the 2040s.

Still, perhaps we can wait a few months, and Dutton will change his policy yet again. Anyone got a barge pole?

Is there merit to Dutton’s nuclear proposal? Let us know your thoughts by writing to letters@crikey.com.au. Please include your full name to be considered for publication. We reserve the right to edit for length and clarity.