Antinuclear

Here we go again. The Australian public and the Coalition party room are being told that allowing coal-fired generators to continue beyond their 50 year life offers the cheapest path to a transition to a low carbon economy.

But they are being misled. This conclusion is only reached through modelling prepared by a private consultancy for the Finkel Review that deliberately ignores certain new technologies such as battery storage that can provide grid security and replace coal-fired generation at a much cheaper cost than gas.

The detailed modelling – prepared by consultancy Jacobs for the panel led by chief scientist Dr Alan Finkel – also ignores recent big falls in the costs of wind and solar, and over-estimates the cost to build new wind and solar plants.

The Australian public – and the Coalition party room – are being told that the cheapest and most effective way to address emissions is to allow coal-fired power stations to remain in the system beyond their 50-year asset life.

But this is only justified by excluding renewables and associated “firming” technologies – such as storage and synchronous condensers – that the review itself admits could provide a much cheaper option than gas-fired generation to replace coal fired generation.

Many in the industry are happy to go along with that, reasoning it best, or good enough, to get a mechanism in place now, and tweak it later.

But that plan is not working out well. Even with the promise of longer life for coal plants, and falling bills for consumers over “business as usual”, the Coalition party room is being torn apart by disagreements between the moderates and the mostly climate science-denying hard right rump.

The details of the modelling, which were only published on the environment ministry website on Wednesday, show that Australia can be a whole lot more ambitious than the targets laid out under the central Finkel Review’s conclusions, and could save even more money if some realistic cost assumptions were made and some technology answers dialled in.

The report’s recommended policy mechanism, the Clean Energy Target, has caused controversy because it allows for coal-fired generation to still support 25 per cent of total generation by 2050, albeit in a scenario where climate targets reflect the Coalition’s modest down-payment and not the “well below” 2°C scenario signed up to in Paris.

But there appears to be confusion in the modelling. Finkel himself acknowledges that the cost of wind and solar is cheaper than both coal and gas-fired generation, even with storage and “firming” capacity added, and carbon emissions and environmental impacts of the fossil fuel plant ignored. (See graph above)

Those estimates, Finkel noted, took into account some of the latest contracts, including the stunning $55/MWh deal for a wind farm in Victoria, and recent estimates by Origin Energy and AGL on the contracting costs of solar.

ARENA’s Ian Kay said on Wednesday that wind was being built in Australia at costs in the “low to mid” $50s/MWh, while solar was in the low to mid $70s/MWh, and falling.

The acknowledgement of these cost falls is critically important for considerations on how to address Australia’s energy future, but the detailed work conducted by Jacobs appears to roll back on those estimates and distorts the impacts of various policy paths.

More alarmingly, when considering scenarios where coal generators were managed out of the grid after 50 years, the Jacobs modelling deliberately ignores certain technologies such as synchronous condensers, and “synthetic inertia batteries”, that could be used instead of more expensive new gas generation.

Instead, it says that coal plant would have to be replaced only by thermal generators, meaning gas, and this would put the prices up sharply compared to the “unlimited” life coal scenario included in the preferred Clean Energy Target mechanism.

“Jacobs understands that new technology developments (i.e. synchronous condensers, synthetic inertia batteries with power conversion electronics etc.) will potentially allow renewable technologies to provide these ancillary services (or at least a portion of these services) but a more conservative approach was chosen for that sensitivity in order to examine the full impact of the constraint,” it says.

Frankly, this is outrageous. As one competing industry consultant noted:

“I’m afraid I find a lot of this so-called modelling is pretty low-grade stuff. Turning the handle and get what you want. The track record of this stuff is laughable and it’s boring and worthless to keep on talking of it as if it means something.”