Australian Energy Minister Chris Bowen has exposed the weakness of his government’s energy position in a misjudged political haymaker aimed at the Leader of the Opposition Peter Dutton.
Mr. Dutton has said that a Liberal government would remove the impediments to nuclear power in Australia and suggested reactors could be sited where the soon-to-be-decommissioned existing coal-fired power stations stand.
Mr. Bowen claimed that this would cost the country $387 billion (US$250 billion). But what does he mean by cost and compared to what?
The Opposition’s position isn’t that they will pay for nuclear power stations and give the electricity away for free. Their position is that nuclear ought to be in the mix; it will be left up to operators as to whether nuclear power stations are built.
In which case, the stations would have to be more economical than the alternatives and the proposal would actually save the taxpayer money.
What Minister Bowen has done is estimate the total cost of replacing 21.3 GW (gigawatt) with small modular reactors, but that would be an investment, and the cost would be repaid by consumers over the life of the plant out of their (lower) power bills.
It’s not as though there is a source of electricity standing by ready to tap which is free.
Several Issues With the Figures
Mr. Bowen is relying on the government science agency CSIRO’s GenCost report. But there are serious problems with this report, and indeed the credibility of the agency, on energy matters.No one I know in the industry can make sense of their costs, particularly when it comes to nuclear.
Mr. Bowen is using a capital cost of $18,167 per kW (kilowatt). This is what CSIRO calls their “High Assumption,” which also uses a capacity factor of 60 percent.
CSIRO also has a “Low Assumption,” which is $14,586 per kW with an 89 percent capacity factor.
The EIA figures are derived from detailed costings, which they list and include a substantial figure for the construction of powerlines that would not be required if the reactor were replacing an already existing power station, making Australian SMRs potentially even cheaper again.
EIA also expects costs to come down, acknowledging that an SMR built now would be a first-of-a-kind.
Added to that, the minister’s capacity factors are all lower than that for conventional nuclear, which is around 93 percent. Because of their modular design, the manufacturers of SMRs expect to achieve 96 percent capacity utilisation.
This matters, because the lower capacity factor will be feeding into the CSIRO estimate of the cost of the electricity nuclear reactors will produce.
Climate Groups Says Renewable Transition Will Cost $1.5 Trillion
Things get worse for the energy minister’s argument.There is an organisation called Net Zero Australia, which is a consortium of researchers from Melbourne, Queensland, and Princeton universities, along with consultancy firms NOUS and Evolved Energy Research.
It is also advised by the Australian Conservation Foundation and the Climate Council.
So this is a government climate-agenda-friendly organisation with good left-wing cred. Yet it predicts that the capital cost to meet net zero will be $9 trillion by 2050, and $1.5 trillion by the end of the decade.
That $1.5 trillion is essentially to hit the government’s 82 percent by 2030 goal, and it excludes the use of nuclear.
Net Zero Australia’s estimate makes the $387 billion figure look like an absolute bargain, and it was quickly seized on by the federal opposition, although I think I had posted on Twitter even before they were onto it.
Their other figures are also different from CSIRO’s, and this is because they more accurately take into account the storage and redundancies that are needed for “renewables” (I put the word in quotes because while there is an endless supply of wind and sunshine, the materials that go into capturing their energy are in short supply, and often can’t be recycled).
To properly back up wind and solar for periods of low wind and sun, you need a lot of cables to connect one part of the country to another, plus a lot of generating capacity that will sit idle most of the time, as well as storage.
Even then, you also need fossil fuel electricity generation on standby because the cost of backing up a renewable grid rises exponentially the closer you get to using renewables for 100 percent of the backup. This makes the cost of 100 percent renewable backup astronomical.
CSIRO downplays these costs and treats the hydro Snowy 2.0 and the network as sunk costs out to 2030, so they come up with ludicrously low figures for the Levelised Cost of Electricity (LCOE) of renewables.
Even their pricing on the capital cost of storage would appear to be wrong.
In the case of the batteries, the Queensland costs are between 21 percent and 33 percent higher than those CSIRO uses, while the pumped hydro is 61 percent more expensive (and that’s before the inevitable cost overruns). The pumped hydro will also not be ready until the next decade.
Could This Impact Labor’s Future Election Chances?
We have a serious problem in this country. The minister is either innumerate or has zero interest in interrogating his advice and advisors. Meanwhile, government agencies seem to have been captured by vested interests; in this case, renewable energy firms.A decade ago, I wouldn’t have believed this level of incompetence and capture could exist. But having just seen the mess our agencies made of COVID, it seems this might be the new normal.
Or maybe not.
Now, anyone with a computer, basic primary school arithmetic, an internet connection, and a couple of hours can fact-check the minister’s office. And as there is still a deep well of commonsense spread through the suburbs of Australia, there is the potential for a revolt.
Our electricity supply is heading for serious disruption, possibly even before the next election. It wouldn’t take more than a close overall result and a handful of wins in strategic positions in the Senate and House of Representatives for truth, common sense, and numerical reality to reassert themselves.
It’s arguable Mr. Bowen cost Labor a close election in 2019 when he said, “If you don’t like our policies, don’t vote for us.”
If he doesn’t change direction on energy, he may well repeat the feat.
