Green Energy: WoodMac says $2 trillion of investment in nuclear power and small modular reactors needed to meet Paris targets
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As much as $2 trillion must be spent building nuclear power plants to meet Paris Agreement targets of keeping global warming to under 2C, Wood Mackenzie says.
It could open a new market for small modular reactors, which WoodMac believes will play a crucial role in decarbonising power generation.
Around 125GW of new large-scale nuclear capacity is in the pipeline, a third of that in China, WoodMac Asia Pacific Head of Markets and Transitions Prakash Sharma said.
But with some countries pushing ahead with phase out plans, that will not make up the 88% increase WoodMac analysts believe will be required to reach the 625GW of nuclear capacity needed to meet the 2C target.
At a typical size of 150-450MW, WoodMac says small modular reactors can help as they become lower cost, quicker and easier to construct as they can be placed in more locations, and have enhanced safety features on full scale reactors.
The current levelised cost of electricity for SMRs is around US$120 per megawatt hour in Europe, the US and Japan, roughly comparable to other new “clean energy” methods like fossil fuel plants with carbon capture and storage, bioenergy with CCS or hydrogen combustion.
But government support and innovation could bring that down to US$80/MWh, with China’s ability to quickly bring down the cost of new technologies another factor.
Sharma said the key would be whittling down the 70-odd SMR concepts under development.
“While the concept of SMRs has been around for some time, there are only a handful of them in operation or under construction,” he said.
“Around 70 different SMR concepts in different phases of development are happening around the world currently.
“The challenge is to scale down the number of concepts to realise cost reductions in a highly regulated industry.”
Other new technologies have been similarly quick to ramp and reduce in cost, with the rapid uptake of solar and wind renewable energy around the world now making it cheaper to build and run than coal.
SMRs could be deployed as dispatchable back-up plants for intermittent wind and solar technology, and even be used as a power source for the production of carbon-free hydrogen, according to Sharma.
“SMRs may still be at its infancy, but its potential is endless. They can play a role in producing low-carbon hydrogen, which is a cornerstone of almost all deep decarbonisation scenarios,” he said.
“Using our proprietary levelised cost of hydrogen model, we estimate that if power from an SMR could be delivered at US$65/MWh, and paired electrolysers can be run at very high load factors, nuclear-produced hydrogen could compete with green hydrogen.”
With a lack of government direction and subsidies, electric vehicle take up in Australia has lagged rapidly growing markets in Europe and China.
According to figures from the Electric Vehicle Council, just 0.78% of new vehicle sales in Australia in 2020 were EVs, compared to 10.7% in the UK and an incredible 74% in Norway.
That compares to a 4.2% average worldwide, although the 8688 EVs sold in 2021 to date represent 1.57% of light vehicle sales and have already outstripped the record of 6900 sales in CY2020.
Some support could well come from the rapid increase in public fast EV chargers, which will reduce the range anxiety partly responsible for holding back passenger EV sales.
We’ve seen major government investments in this area recently, including a $24.5 million ARENA initiative to fund 403 EV fast charging stations across Australia, as well as a commitment from the WA government to set up 90 fast-charge stations from Esperance to Kununurra.
Now private capital is getting on board with BlackRock taking a major equity stake in Australia’s JOLT Charge and pledging a $100 million of investment based on capital milestones to support the rollout over time of some 5000 EV fast charging stations.
JOLT already has operational charging stations in Adelaide and a partnership with Ausgrid to transform existing street side kiosks into state-of-the-art EV charging stations, and will roll out the first of its new fast-charging stations in Sydney, in the Hornsby and Northern Beaches areas.
JOLT CEO Doug McNamee said institutional investors will “play a critical role” in developing infrastructure to boost EV uptake in Australia.
“We’re thrilled to have secured support from BlackRock Real Assets, (which) recognises our vision to help transform the future of transport through electrification,” he said.
“Australia has a critical role to play in advancing towards a net zero emissions future.
“We’re excited to be leading the way forward by building the vital infrastructure needed to power our roads, address range anxiety and help get more Australians behind the wheel of an EV.”
Bloomberg New Energy Finance estimates that by 2030 passenger EV sales will rise to 170 million units from just 3.1 million globally in 2020.
“The EV charging industry in APAC has tremendous near and long-term growth potential, which creates exciting investment opportunities for BlackRock’s clients,” BlackRock Renewable Power managing director Charlie Reid said.
“We believe the electrification of transport plays a pivotal role in advancing Australia’s energy transition and we look forward to harnessing this through our investment in JOLT.”
The deal is the first in the EV charging space in Asia-Pacific region for the BlackRock Global Renewable Power Fund, which raised US$4.8 billion from investors at its close this year to support investments in green energy.