Loaves and fishes, again

I expanded my earlier analysis of the Galilee Basin mines in this piece for The Guardian. The really striking number is 483, the number of long-term new jobs the Carmichael mine is estimated to generate in the local (Mackay Isaac Whitsunday) region. That estimate comes from a computable general equilibrium (CGE) modelling exercise by Adani’s own consultants, ACIL Allen. Before the Queensland election, of course, much bigger numbers of 10-20 000 were bandied about. That’s partly a difference of coverage – the bigger numbers envisage, implausibly, that all the proposed mines in the Basin will go ahead, along with rail lines and port expansions.

Also, some of them focus on peak numbers during construction for each project, so that the jobs in question would only last a year or so. But the big difference is that the larger estimates were made using the discredited input-output method, in which each job created directly generates many more indirect jobs. This is an extreme version of the Keynesian multiplier effect, valid during a deep recession. But, as ACIL Allen observes, it makes sense only if you assume that the recession is going to last for the life of the project.

20 thoughts on “Loaves and fishes, again

  1. there has been some good coverage by Michael West at Fairfax of the ongoing court case and the evidence on the economics of the project. West was scathing about the vagueness of the Adani financial controller. Any bank lending money for this project should have its shareholders screaming blue murder.

  2. John, is it the case that solar power can now out-compete coal for production of electrical power even without an effective CO2e price? (An effective CO2e price still looks a fair way away for Australia.)

    The other major use of coal as coking coal (making steel ) looks to be with us for a while yet. This may not be a big problem in the overall scheme of things but I am not sure. Cement making creates significant CO2e as well but it does not have to be driven by heat from coal. What is your picture of these issues?

    Finally, how do we de-carbonise transport, machinery and agriculture? How do we get these activities off oil? Do you have any data or information on such developments?

  3. @Ikonoclast

    The competitiveness issue depends on a bunch of things including the RET (an effective carbon price for electricity), distribution pricing and Feed-In Tariffs (largely irrelevant with storage)

    I understand it’s possible to produce cement with low CO2 emissions, and of course steel can be recycled from scrap – there is likely to be a fair bit of scrap around as the China boom winds down/

    Transport can be electrified at modest cost, and the same for most kinds of machinery, including ag machinery. Oil-based fertiliser is not a problem of course – it isn’t burnt and decarbonization of transport implies there will be plenty of oil for a long time to come.

  4. I’m about to do a post on Tesla’s new battery which really looks like changing things radically

  5. AFAIK Tesla’s new home battery will cost about 40c per kwh opex on top of electricity source costs. It won’t get through a rainy week (eg southern Queensland as we speak) without falling back on the despised grid. By then there could be all sorts of fixed and variable charges noting for example Qld firms charge $537 connection fee per day on large power users so there is little relative saving from solar panels.

    Since most Carmichael coal is apparently destined for India via Abbot Pt the question is how can developing countries get ahead without coal? I suspect the answer is we must look the other way while telling ourselves we’re making strides in some vague sense. I understand thermal coal export volumes are increasing even as the price declines. If Galilee doesn’t go ahead other Qld and NSW mines can supply India.

  6. With a capital cost of $500/kwh, a 10 per cent cost of capital and assuming daily discharge and recharge, I get $50.00/365 or about 14 c/Kwh, which is a bit less than the difference between the feed-in tariff (8c/Kwh) and the standard tariff. That ignores installation costs, but those would be modest for new houses.

  7. But even with your number, assume 8c/Kwh for solar PV, with half consumed directly and half stored. The total cost of stored electricity is 48c/Kwh, so the average is 28c/Kwh, which is very close to current grid cost. There’s no serious chance of nuclear power in Australia coming anywhere near this, so this looks like the best option for decarbonization.

  8. Tesla are saying $US3500 for their 10 kwh module so I’ll make it $350 per kwh capex. Part of that would be the cooling system and controllers. Australian households used to use 22 kwh a day now said to be 18 kwh but ESAA figures for residential demand give 6.6 kwh per man woman and child. Note this is before electric cars, replacing gas appliances with electric and time variant grid export/import pricing.

    The service life of the batteries seems to be debated but we could go with 1,000 cycles of 80% depth of discharge. Therefore each 1kwh storage capacity is good for a total of 800 kwh before needing replacement (or trade in?). Dividing $350 by 800 kwh gives 44c per kwh. Now that $350 could be high and could include electronics and there could be trade ins for expired batteries. The cycle life vs depth of discharge curve is near linear so that we get the same result with $700 (double storage capacity) and 40% drawdown ie $700/1600kwh.

    I suggest all approaches miss the fact there will be light battery usage days and heavy usage days. We need to see real world results also how the module copes with frost, extreme heat even fire. God forbid if people in the suburbs get diesel generators for rainy week backup. At this stage I don’t think home batteries are a disruptive technology.

  9. What I find pretty astounding is the Tesla Powerwall will come with an optional extended warranty for a total period of 20 years. I don’t know how much the extended warranty will cost but this definitely should mean they expect the typical unit to last at least 20 years. Now perhaps the extended warranty will only apply to the 10 kilowatt-hour back up system, but even just a 10 year warranty is quite good.

    I’ll mention that for home and business energy storage in Australia we’ll want to look at the 7 kilowatt-hour version that is designed for daily cycling and is priced at $3,000 US and $3,800 Australian at current exchange rates. The 10 kilowatt-hour unit is for back-up storge and only meant for weekly cycling. The 7 kilowatt-hour system is larger than what many on-grid Australian household require, but that’s okay, there are still plenty of households and business that regularly use more than 7 kilowatt-hours overnight, so the on-grid Australian market is still plenty big.

  10. As an aside, this week the power was off one day for maintenance between 8:30am and 3:30pm. I made sure the computer and phone batteries were charged. I had some frozen bottles of water in the freezer, and I put an ice-cube in an egg cup in the freezer so I could get an idea of how things in there might have thawed (which might be a health concern re frozen food).

    When the power came back on I checked on the egg cup and the ice-cube was still whole with no evident melting.

    My personal BAU wasn’t really affected at all.

    I know this isn’t manufacturing or other big energy consumption, but I still think the “intermittency” argument is overblown as an anti-renewable talking point.

    The freeway to Brisbane is often impassible for hours (maybe once every 2 weeks) because of a crash. Nobody uses that “intermittency” issue as an argument against cars or highways.

  11. JQ’s Guardian piece, but not the summary here, includes the recognition that input-output analysis has legitimate applications, which just don’t include project evaluation. Fair enough:
    with fixed coefficients, you will get very much the same indirect job “creation” from any investment, so it’s useless for comparison.

    I tried to point out here that i/o analysis could be useful for estimating total carbon footprints for particular vectors of final consumption. At any rate, it must be better than the supply chain methods commonly used by consultants: supply chains are really trees, and with enough iterations expand to the world economy. As an outsider, I was of couse ignored by the trade.

  12. Re Tesla: the initial markets for home storage must be Australia and Germany, the only countries SFIK which combine a large installed base of residential/commercial solar with high retail electricity rates. They will have a hard time in the US, with 10c/kwh retail rates. They may also be targeting India, with cheap but extremely unreliable grid power. Here batteries compete in the commercial market with diesel backup generators, which are not optional if you want your computers and looms to stay running.

  13. There are states in the US with quite amazingly low retail electricity prices, but there are also heavily populated and quite sunny locations in the US with high electricity prices. For example, California’s population is considerably more than Australia’s, they pay about the same as Victorians do for electricity and Los Angeles apparently receives more sunshine than any Australian state capital. So while Australia is ahead on home and business energy storage paying for itself, there would be several Australias worth of population in the United States that aren’t that far behind.

  14. Intermittency is not an issue when individual solar installations are connected via a grid – it doesn’t rain everywhere all the time.

    Solar also has benefits for the grid as the source of energy is widespread rather than concentrated, eg from a power station.

  15. I puzzled over JQ’s remark about the 10 year guarantee for Tesla batteries. I thought that must just apply to the associated hardware. In fact you can get a 20 year guarantee which could not apply to lithium ion batteries. It seems they may be banking on shallow usage by many users and may wear it if some hard pressed units get fritzed early. See

    Note the article comes up with a similar average cost 35c per kwh as I calculated above. That’s on top of source costs. What is the Galilee Basin connection? Well maybe the people of India could use solar batteries instead of the coal fired grid. According to Wikipedia the average retail power price in India is 7c per kwh so that’s where Tesla should aim to be ‘disruptive’.

  16. So a massive mine that creates so much environmental and economic risk will create less than 500 jobs. Now that sounds like it would be worth it. I think it is time that governments of all colours stopped pushing the “jobs, jobs, jobs” line when it comes to mining and were just honest. What they really mean is “royalties, royalties, royalties”.

    I read somewhere once that each new McDonalds restaurant creates 100 new jobs, many for young workers where the youth unemployment rate is pushing 20%. Perhaps the State could have a fast-food jobs recovery strategy (restaurant jobs and increased demand for health care jobs). It would make about as much sense as some of the existing job creation strategies.

  17. In a bored moment I watched a bit of the TV show “Megastructures”. It was about building the world’s tallest building in Dubai. It was clad in glass. A desert zone building clad in glass! Think about it. To stop the interior heating up excessively (a test box went up to 98 degrees C) the glass cladding had to be silver-coated on the outside and titanium-coated on the inside to reflect all the solar energy (including infra-red) back outwards.

    All I could think was “You blithering idiots! You could have covered the building in solar panels at probably no more cost and powered the aircon and lights for that building and about 10 other lesser buildings.”

    We have to get away from this really idiotic kind of hubristic architecture which is all about looks and prestige (if it is about anything at all) and build climate-engineered buildings.

  18. @Ikonoclast
    Often had similar thoughts. Often wondered why roof covering could not be made from material that produces electricity, instead of tiles or other roof coverings. Wonder why all roof do not become generations. Why in the cities, wind tunnels produce by buildings is not fitted with ability to turn them into wind farms.

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