Home > Economic policy, Environment > Decarbonising Australia (updated)

Decarbonising Australia (updated)

May 7th, 2013

I’ve been meaning to post about the Australian Energy Market Operator’s report on the feasibility of a 100 per cent renewable electricity supply system for Australia (H/T commenter Ben). In the meantime, Brian Bahnisch at LP has done a detailed summary, so I’ll refer you there and make a few points of my own.

First, this study should kill off, once and for all, claims made here and in many other places (notably, at Brave New Climate) that the intermittency of renewable electricity is an insuperable problem.[1] The AEMO is the body that manages the electricity market on a minute-to-minute basis, so it has the expertise to assess this claim, unlike the many amateurs who have tried their hands. And, since it might have to do the job, it has no reason to understate the difficulties of a renewables-based system.

Second, the estimate cost of $111 to $133 per megawatt-hour represents an increase of $60-80/MwH on current wholesale prices, or 6-8c/Kwh on retail prices. That’s much less than the increase we’ve seen thanks to the mishandling of electricity market reform. If we wound back those costs, we could actually end up with both 100 per cent renewables and cheaper electricity.

Third, although the study envisages a role for electric vehicles, it doesn’t present a full-scale program for decarbonization. But once you have a scalable, fully renewable electricity supply, everything else is comparatively easy.

Finally, if we take Tony Abbott at his word in wanting direct action to deal with climate change, this report provides him with a blueprint. If we want to, we can eliminate the great majority of domestic CO2 emissions simply by mandating renewable technology and electric vehicles. The cost would be substantial in dollar terms ($250 billion for the electricity component). But, over a couple of decades, it would be a barely detectable deduction from growth in national income.

Update As it turns out, there’s a response at Brave New Climate from Martin Nicholson. Nicholson reports on a study of his own, in which nuclear is included in the mix. On Nicholson’s estimates, this substantially reduces capital costs, a point of which he makes a big deal. But obviously, renewables have much lower operating costs and Nicholson estimates the levelised cost for his system at $124/MWh to $126/MWh. As he says:

As this is in the middle of the AEMO range, wholesale prices are likely to be similar with or without nuclear

Given that very few current-generation nuclear plants have been built, cost estimates for nuclear are speculative. The obvious inference for Australia is that we should push along with renewables, and take a “wait and see” position on nuclear, observing developments in the UK, US, France and China. If they can deliver nuclear safely and at low cost, we can add it to the mix (say, after 2030).

Sadly, I think most of the BNC readership are locked into a position that nuclear must be the answer, which requires them to believe that renewables won’t work. Even a comprehensive demonstration that renewables can deliver a 100 per cent solution at a cost comparable with optimistic estimates for nuclear isn’t going to shift them.end update

fn1. This is part of a rhetorical manoeuvre aimed at pushing the conclusion that nuclear is the only feasible zero-carbon option. Once it’s admitted that 100 per cent renewable electricity is feasible, nuclear advocates need to present a case based on comparative costs. In the Australian context, it will be very hard to make that case, given the need to set up a complete nuclear infrastructure from scratch.

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  1. quokka
    May 19th, 2013 at 19:07 | #1

    There has been a barrage of waffle about costs on this thread. If any of the anti-nukes were prepared to put their money where their mouth is, they would insist on an AEMO technology neutral modelling with nuclear allowed using the same source for technology costs ie AETA. All mouth and no trousers, it seems.

    However a glimpse of what the outcome may be can be had from the CSIRO eFuture on-line modelling tool (Goggle is your friend). All of the CSIRO scenarios allowing nuclear end up with a lower final emission intensity by 2050 (by a factor of about two), a faster fall in the rate of emissions, and much less coal in the system after 2030. CSIRO also uses AETA costs.

  2. Nick
    May 19th, 2013 at 19:14 | #2

    Sorry, to clarify – that was based on a $10,000 deposit, $85 a week for 3 years, and then a balloon payment of $21,495. They also offer a 5 year loan term, which should bring that final payment down to about $10,000 (an extra $40 a week you’d need to put aside over the 5 years if you didn’t have it already).

  3. Nick
    May 19th, 2013 at 19:29 | #3

    http://reneweconomy.com.au/2012/csiro-model-how-to-design-your-own-clean-energy-future-39135

    “[...] the Achilles Heal of such models is that CSIRO is forced to rely on third party, “official” estimates for technology and fuel costs. BREE, advised by ACIL Tasman and Worley Parson, got this just about right for many technologies – recognizing the declining costs of renewables, solar PV and wind in particular, and the rising costs of fossil fuels.

    Unfortunately, on nuclear, BREE’s estimates were in fantasy land, estimating that nuclear plants could be built now for as little as $55-$60/MWh in the low cost scenario – about one quarter of the price quoted to the UK government by the world’s leading nuclear developers.

    Most people in the industry, including nuclear developers, think such estimates are risible, and even the “high range” of $100/MWh would only be attainable if plants received cheap government finance (a la China), were ordered in bulk and accepted lower level of safety measures.

    But Joe Public would not know this. He would press on the “yes” button for nuclear, and find that in this scenario nuclear makes up one half of Australia’s energy mix by 2050 and the cost estimates for electricity in 2050 are nearly those of other technology mix. It’s a shame, because such models are designed to inform – but with this particular technology cost option, the effect is to mislead.”

  4. May 19th, 2013 at 19:48 | #4

    Prediction is difficult, especially about the future, but I still feel the need to point out that BREE has a prediction for solar module costs in 2016 that is twice what they cost today. I’m afraid that things such as Britain’s largest solar farm, which is up and running right now and cost one pound and three pence a watt, or Sydney’s $2.33 a watt rooftop solar installation average in April is a lot more convincing that BREE. ‘Cause, you know, it’s real.

  5. rog
    May 20th, 2013 at 07:45 | #5

    @quokka Hard to refute the CSIRO arguments and scenarios. At some point the debate has to allow action.

  6. Hermit
    May 20th, 2013 at 08:00 | #6

    A sobering assessment of Australia’s utter dependence on coal can be found in today’s This is Power or TiP newsletter. Google it.

  7. Ikonoclast
    May 20th, 2013 at 10:47 | #7

    @Hermit

    Hermit, I am very cranky with you. That site “TiP” attempted to attack my PC with Blackhole Toolkit and Malicious Toolkit as detected and blocked (hopefully) by my AV.

    Please DO NOT suggest people go to malicious sites. Sheesh!

  8. Hermit
    May 20th, 2013 at 12:39 | #8

    @Ikonoclast
    Neither Avast nor Malwarebytes can find anything amiss with the website This is Power via the Chrome browser. TiP may also be an acronym for some dodgy sites. I think the site is worth visiting as it reflects what I’d call the CEO view of the energy market. It looks at the big picture for at least a few years ahead.

  9. Ikonoclast
    May 20th, 2013 at 12:54 | #9

    @Hermit

    Absolutely wrong, Hermit. It was the “This is Power” site I visited and it did attempt to insert malware on my PC. It was stopped by Norton 360 Premier Edition. This type of malware is a known problem with WordPress sites (and perhaps others). Spare me any gratutious criticism of Norton AV. PC Mag found it one of the best 3 for 2013. I have run Norton AV for many years and it has never let me down. It sometimes hogs resources sure but that’s about the only thing wrong with it.

    I would VERY strongly advise people NOT to go to this site. I think it poses a real danger to your PC and data. Fortunately, my AV seems to have blocked it successfully.

  10. May 20th, 2013 at 13:16 | #10

    @rog
    It’s hard to refute CSIRO arguements and scenarios unless one looks at reality and sees that the BREE estimate for the cost of solar modules in 2016 is twice what they are now, or considers things such as one pound a watt solar in the UK, or rooftop solar under $2 a watt in Germany, or the current high cost of new nuclear in places such as France, Finland, the UK, and the US. In fact, unless one believes that a report that has estimates that have been shown to be wrong by reality trumps reality, then it’s actually quite easy to refute any arguements and scenarios based on BREE estimates.

  11. May 20th, 2013 at 13:54 | #11

    @Hermit
    Hermit, I’m glad you appreciate that $2 a watt solar can pay for itself quite quickly in Australia, but you also say that, “Coal will be with us for a long time.” Actually, cheap PV is very bad for coal. Currently, a very large number of homes and businesses have an incentive to install rooftop solar to save on their electricity bills. As the cost of solar power decreases the incentive will increase and the average size of installations will also increase, resulting in more solar electricity being sent to the grid for others to use. This will push down the price of electricity during the day until it starts falling below the marginal cost of coal causing coal plants to shut down during these periods. This means that low cost PV has a lot of potential to cut coal use. Some coal plants may carry on in a load following mode to meet the evening peak, but they can be shut down any time we want by increasing the carbon price. Of course, that won’t be necessary if energy storage or other technology gets rid of them first.

  12. Hermit
    May 20th, 2013 at 15:27 | #12

    @Ronald Brak
    Steam generating plant needs either several hours lead time from a shutdown or continuous operation. If wind and solar is ‘must take’ by virtue of a renewable energy target backed by payments and penalties then there will be inefficiencies and duplication in using an overlapping system. What is happening in Europe is that thermal generators want to be paid under a capacity market. It seems one good subsidy deserves another. The way to establish the optimum fraction of wind and solar in the overall mix is to abandon quotas and subsidies but retain a high CO2 price. This appears to be the opposite of what Gillard will do if re-elected.

    A good question is how much PV could we use even if it was free i.e. $0/w. Assume no battery breakthroughs. There is always the problem of the rainy week. If the rain was Australia wide we might need a minimum of 25 GW to get through that week. The providers of that backup service will want top dollar in addition to whatever sweeteners wind and solar get. My suggestions; allow nuclear, drop the RET and have a tough love ETS with few if any concessions.

  13. May 20th, 2013 at 20:26 | #13

    Ran across your blog through http://johnquiggin.com/2013/05/07/decarbonising-australia/.
    Do you have any secrets on methods to get indexed on http:
    //johnquiggin.com/2013/05/07/decarbonising-australia/? I’ve been working away at it recently but they still won’t respond to me.
    Appreciate it

  14. BilB
    May 21st, 2013 at 11:25 | #14

    Deep sea pumped hydro storage looks like becoming the next energy storage hot property judging by the frequency of reporting.

    http://www.gizmag.com/sea-floor-energy/27579/?

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