Political arguments about nuclear power in Australia are not new, but the energy minister, Angus Taylor, says this time is different.

Announcing a parliamentary inquiry into what would be necessary to develop a nuclear energy industry, Taylor suggested people should no longer be thinking of the large-scale plants that had dominated the global industry since the 1950s. The future of nuclear, if it had one, was small.

“The technology that’s emerging is not gigawatt power, it is actually small modular reactors,” Taylor told the ABC.

He said there were no plans to drop Australia’s moratorium on nuclear energy, but there were different points of view on the subject and the cost of small modular reactors was changing quickly. “Finding affordable, sustainable, reliable, baseload power for the decades ahead is an important role of government and of parliament and that’s why I have asked for this inquiry,” he said.

The Guardian asked Taylor’s office what had shaped his belief that small modular reactors were getting cheaper, but did not get an answer.

At least in part, the minister seems to have been informed by the work of SMR Nuclear Technology, a company hoping to bring the technology to Australia. Its directors include coal power plant owner and Coalition donor Trevor St Baker, who the company says has met Taylor on the issue.

Small nuclear reactors are in some ways not a new idea. Similar technology is employed in nuclear-powered submarines and icebreakers. But they are next to non-existent in power generation.

The model favoured by SMR Nuclear Technology is being developed by a US company, NuScale Power, which originally hoped to have a plant running by 2022. Its plan for 60-megawatt nuclear modules is yet to receive regulatory approval in the US. The company hopes to clear this hurdle by September 2020, for construction of the first module to start in 2023 and for it to start producing electricity by late 2026.

The industry says small modular reactors have several benefits: they have less nuclear material and better temperature regulation and are therefore easier to keep safe; the reactor can be installed underground to provide protection from above ground risks such as extreme weather and terrorism; the initial capital cost is low and building modules in factories can cut costs further.

Given the technology has yet to complete a three-year review, the cost is difficult to assess, but some experts have given estimates.

In Australia, the last full examination of nuclear power was a 2016 South Australian royal commission that found neither large nor modular nuclear reactors were likely to deliver a commercial return between now and 2050 even if a strong carbon price was introduced, something the government says it has no intention of doing.

It found that while the smaller version had the benefit of requiring less upfront capital investment, it also raised a number of potential cost hurdles. They included that small modules were likely to require more fuel than large reactors, and promised cost-savings from building in factories would not kick in unless the industry reached a scale that justified a production line.

Angus Taylor says the emerging nuclear technology is small modular reactors, not large-scale plants. Photograph: Mike Bowers/The Guardian

More recently, an analysis of the cost of electricity generation by the CSIRO and the Australian Energy Market Operator published in December found modular nuclear power was likely to be far more expensive out to 2050 than all other forms currently used or seriously considered by the government, including solar and wind with storage.

From a global perspective, an assessment by the International Energy Agency in May found nuclear power in the developed world was in decline, with plants closing due to age and little new investment. Only four large-scale plants are under construction in Europe and North America, and all have suffered delays, cost blowouts or both. Construction costs have nearly doubled since 2015.

Despite this, given the depth of emissions cuts needed to meet the goals of the Paris agreement, the agency has urged countries to take action to help nuclear energy. It said that should include a focus on modular generators, which it described as not yet technologically mature but potentially safer and easier to finance than big plants.

The agency gave a shortlist of countries where early-stage work or planning for modular reactors was under way. Russia says it is about to launch a floating modular nuclear plant aboard a ship that will help power remote industrial sites in the Arctic. Critics point out the project has been developed in secret, long delayed and more expensive than promised. The company behind it has failed to sell the technology on the scale it planned. There are also early-stage projects in China, which is developing a modular demonstration plant it says it could connect to the grid this year, and Canada, where the government has received licence applications.

In Australia, the industry is blocked by a legislated ban on “nuclear action” in national environment laws. Tony Irwin, technical director of SMR Nuclear Technologies, acknowledges the political challenge of winning bipartisan support for change and believes nuclear plants will be built here only if communities volunteer to host them. He says some have expressed an interest, but declines to name them.

On cost, Irwin says existing estimates are either out-of-date or wildly inaccurate. He says conservative estimates suggest building a NuScale plant in Australia would cost $7m per megawatt, or $420m for a single module. Analysts say this is significantly more what it would cost to build a new coal-fired power plant, and new coal is considered commercially unviable next to renewable energy backed by storage.

On what policy settings would be needed to make nuclear generation competitive, Irwin says: “What we believe is that all low-emissions technology should be treated the same.”

Given the question mark over cost, the case for bringing nuclear into the Australian grid largely turns on the need for “dispatchable” power, which is sometimes mislabelled as “baseload”, as coal is phased out. Irwin says there are only four realistic options for low-emissions electricity – solar, wind, hydro and nuclear – and nuclear is “the only one not dependent on the weather”.

Simon Holmes à Court, a senior adviser at the University of Melbourne’s climate and energy college, says this argument ignores the large amounts of dispatchable generation available from hydro, gas, bioenergy, demand response and storage. He considers Irwin’s outlook overly optimistic on a number of fronts, not least construction costs, which are routinely significantly higher in the Australian than in the US.

He says the arguments against nuclear power in Australia at the moment are clear: it missed the boat in the 20th century, is too expensive and slow to be built, and newer technologies are the better part of a decade away from being demonstrated. “They will only be available from the 2030s if everything goes right, something nobody should assume will happen given previous delays,” he says.

Holmes à Court does not completely dismiss the possibility of an eventual nuclear power industry, but believes there is no case for the current parliamentary inquiry beyond short-term politics.

“We already know that existing nuclear technology is uncompetitive and new nuclear technologies are far from ready,” he says. “If and when the industry develops a product that is cheap, safe, flexible and fast to build, I think it will be worth having a national discussion about removing the ban.

“Until then, this is just a political inquiry to satisfy a few on the backbench, not an energy inquiry. Australia has energy experts coming out the wazoo that are so much better placed to keep a watching brief on this than a rabble of energy illiterate MPs.”

Holmes à Court says the ideal time for the next expert study is after a commercial next-generation reactor comes online, probably late next decade. Taylor says he does not have all the answers but the government needs to plan for the long-term.

The inquiry by the standing committee on the environment and energy is due to report back within four months.