Antinuclear

Australian news, and some related international items

Major financial risks for South Australia are ignored by Nuclear Fuel Cycle Royal Commission

scrutiny-Royal-Commission CHAINThe proposal has major financial risks to taxpayers that have been ignored or played down in the Tentative Findings. These are sufficient grounds to reject the scheme. However, if the Royal Commission is determined to ignore or downplay the risks and recommend the proposed project, it should also recommend that 5 the substantial financial risks be taken by a private corporation or consortium, not Australian taxpayers
Nuclear Fuel Cycle Royal Commission
submission goodDiesendorf-MarkComments on the Cost Analysis, Business Case and Risks of Management for Storage and Disposal of Nuclear Waste in South Australia
Dr Mark Diesendorf Associate Professor in Interdisciplinary Environmental Studies School of Biological, Earth and Environmental Sciences UNSW Australia 18 March 2016
Introduction One of the Key Tentative Findings of the Nuclear Fuel Cycle Royal Commission (2016, p.3) is that:
The storage and disposal of used nuclear fuel in South Australia is likely to deliver substantial economic benefits to the South Australian community. An integrated storage and disposal facility would be commercially viable and the storage facility could be operational in the late 2020s.
The Tentative Finding summarised above is given in more detail in Findings 81- 94 on pp.17-20. These findings appear to be based to a large degree upon a report by Jacobs MCM (2016) that had not been available for public scrutiny until February 2016, around the time of the release of the Commission’s Tentative Findings. The following comments examine critically some of the assumptions underlying the Tentative Findings and Jacobs MCM (2016), especially the latter’s Paper 5. They also discuss the financial risks of the proposed project. The comments focus on the storage and management of high and intermediate level wastes.
Understanding the scenarios  Both the Tentative Findings and Jacobs MCM (2016) lack a detailed account of the scenarios and their assumptions. They do not even discuss the form(s) in which the wastes would arrive at the port. The only scenario in the Tentative Findings is the very brief Finding 89. In Paper 5 of Jacobs MCM (2016) some of the basic assumptions can be inferred implicitly from the commercial model, specifically Tables 3.1 and 3.2 and Figs 3.1 and 3.2. From these tables, figures and the brief text explaining them, the following points emerge:

1. It is assumed that revenue commences when waste arrives at the port in South Australia (SA). This is chosen to be Year 11 in the baseline timing scenario and Year 8 in the ‘aggressive’ timeline scenario.

2. Before the first waste arrives, significant up-front costs ($2.4 billion) have to be met by the project owner, assumed to be the State of SA. These costs include construction of infrastructure (e.g. port, interim storage facility). After the wastes begin to arrive, very substantial infrastructure expenditure would be made (e.g. long-term underground repositories, railway, electricity supply) while the interim storage is managed, guarded and monitored. These costs receive surprisingly little attention in the Tentative Findings and Paper 5; instead the focus is on the alleged revenue…….. ( 4 more points on costs)
Risks A possible scenario is another overseas nuclear disaster comparable with Chernobyl or Fukushima, which leads to the shut down of many or most existing nuclear power reactors in the world. This would severely limit the market to existing nuclear waste. There is only a single, short, superficial paragraph on p.212 of Paper 5 on risk of disruption to (including cessation of) the import of wastes. This claims that
following the upfront capital investment to achieve initial operating capability and commissioning, all of the types of storage and disposal facility are expanded in a phased fashion.
The implication is that the capital costs of the IDR and GDR would be directly proportional to the quantity of wastes to be stored, without any significant upfront fixed cost. In reality there would be substantial fixed costs, especially for site preparation, railway and transmission line for a GDF. As a result the capital cost per tonne stored of constructing a GDF would increase rapidly as the storage size of the facility decreases. This requires detailed analysis rather than a brief dismissal.
Another risk, that is neither considered by the Royal Commission’s Tentative Findings nor by Jacobs MCM (2016), is that after the first part of the project, the arrival and interim storage of nuclear wastes, goes ahead, the much more expensive part of the project, the construction of the GDF and IDR will be cancelled. …..
Clearly the financial risks of this proposed project could be substantial, although they cannot be quantified. They should be examined in much more detail instead of being dismissed glibly.
If such a risky project is developed, the SA and Australian governments should ensure that the risk be carried by a private developer, not the State or the nation. After all, if the project is potentially as profitable as the Jacobs report claims, it could be implemented by a large corporation or consortium.
 The federal government would still set and enforce safety standards and the state could still contract to receive taxes and royalties. Neither the Tentative Findings nor Jacobs MCM considers this possibility seriously. The Tentative Findings simply state (Finding 90) that government must own the facilities (and implicitly the risk) “because of the long-term nature of the activity and the need to secure the longterm trust and confidence of customer countries”. Since governments in Australia have only a 3-4 year lifetime between elections, the securing of longterm trust by government is debatable. Indeed, the cancellation of the Yucca Mountain repository in the USA followed a change of president.
Conclusion The Royal Commission’s Tentative Finding, that substantial economic benefits could be obtained at low risk from the storage and disposal of used nuclear fuel in South Australia, is not soundly based. Excessive reliance has been placed on Jacobs MCM (2016), which has made over-optimistic assumptions in the financial analysis, such as the willingness of potential customers to pay for their share of the cost of the geological disposal facility before it has been built.
Even buying an apartment off the plan is risky, let alone buying a permanent underground high-level nuclear waste repository, when not a single facility is operating in the whole world. Another questionable assumption is that the substantial fixed costs of the geological disposal facility can be ignored if the size of the planned facility has to be decreased substantially, due to a large decrease in the expected market.
The proposal has major financial risks to taxpayers that have been ignored or played down in the Tentative Findings. These are sufficient grounds to reject the scheme. However, if the Royal Commission is determined to ignore or downplay the risks and recommend the proposed project, it should also recommend that 5 the substantial financial risks be taken by a private corporation or consortium, not Australian taxpayers…….http://nuclearrc.sa.gov.au/app/uploads/2016/04/Diesendorf-Mark.pdf
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May 6, 2016 - Posted by | significant submissions to 6 May

3 Comments »

  1. Glade to see someone who knows what he is talking about.

    Comment by Quentin Bristow-Smith | September 20, 2016 | Reply

  2. […] Check out the outgoings references in this report: it was https://antinuclear.net/2016/05/06/major-financial-risks-for-south-australia-are-ignored-by-nuclear-… […]

    Pingback by Long delay for money in for South Australia’s Temporary Nuclear Waste Storage facility in South Australia « Antinuclear | September 30, 2016 | Reply


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