Put up or shut up
The CSIRO and AEMO (Australian Energy Market Operator) released the draft update to their annual ‘GenCost’ – cost of energy generation – report in the past week. It pointed out nuclear energy generation wasn’t particularly cheap and was hardly the ‘silver bullet’ to drive Australia’s decreasing reliance on coal energy generation into the ground. As the report is in draft, there is the provision that someone with sufficient knowledge and evidence in the area could point out to the CSIRO that they erred in the compilation or presentation of the evidence used to argue their point of view. It is also unlikely that the update would have been issued unless there was a good chance that no substantial changes would be made.
Energy generated from renewable sources is cheaper than energy generated from nuclear energy by quite a margin, the GenCost report has found. Unsurprisingly, the Energy Minister welcomed the report as it broadly aligned with the government’s publicised objective to move energy production away from coal and gas to fully renewable sources. The Opposition was less welcoming, with Energy Spokesperson Ted O’Brien claiming the government was ‘weaponising’ the report to argue that nuclear energy generation wasn’t viable in Australia.
O’Brien claims the report looks at the issue through an ‘investment’ lens rather than a ‘consumer’ lens. He is splitting hairs. Either he has forgotten simple economics or he isn’t letting the facts stand in the way of a good story. Inherently, companies exist to generate a financial return on investments made by their shareholders. It is called profit. If a company doesn’t make a profit, it will eventually use up all its financial resources and ask shareholders for more or declare bankruptcy. The investors need the consumers to purchase their product rather than similar alternatives. The purchase price typically is higher than the cost of the inputs to the product, which is returned to the investors as profit. Maybe O’Brien might like to discuss how the two ‘lenses’ are different.
As Katherine Murphy noted in The Guardian
The CSIRO’s new analysis this week noted conventional nuclear power is now cheaper than it used to be. But it also points out that some of the low-cost nuclear found overseas has either been “originally funded by governments” or was at a point where capital costs had been recovered. This allows plants to charge less for their generation because they don’t have to recover the costs of new, commercial, nuclear deployment. Given we don’t have existing generation here, this isn’t an option for Australia.
While we are on facts, here’s another one. The only company to have a small modular nuclear power plant [O’Brien’s favoured option] approved in the United States has recently cancelled its first project due to rising costs.
O’Brien isn’t the only one who should know better trying to talk down renewable energy production. Gina Rinehart is one of Australia’s wealthiest people. She provides considerable funding to the IPA (Institute of Public Affairs) which is a conservative leaning ‘think tank’ and apparently a nursery for upcoming conservative politicians.
Rinehart must be happy with her investment in the IPA as she is currently spruiking some research from the organisation that states that at least one third of Australia’s arable land will be required to generate sufficient electricity once the last coal and gas fired power stations are closed down The research was released to the world by the IPA using the well-known academic peer reviewed journal “X”, formerly “Twitter”.
The problem is the research misses a few facts. Michael Pascoe is a finance writer for The New Daily. He asked a couple of economists who work for the Australia Institute to review the IPA’s calculations and they found
The IPA assumes renewables need to replace the total primary energy from fossil fuel use instead of the actual delivered energy – the stuff that counts, what we get to use.
“Most of the energy from fossil fuels is lost as heat,” explain Messrs Saunders and Ogge. “For instance, for coal at least 60 per cent of the primary energy from coal in coal power is lost as heat, at least 40 per cent from gas.
“Renewables do not have to replace the waste heat from fossil fuels, just the delivered energy, which is significantly less than half the primary energy figure which includes waste heat.
Pascoe goes on to suggest (correctly) that the land required for renewable energy production doesn’t have to be prime arable land, although sheep apparently like the shade provided by solar panels and will in return help to keep the grass under control.
So what is it with conservatives and renewable energy? Leaving aside the discussion around conservatives views on climate change and emissions reduction for a minute, is the concern that renewable energy is far more democratic? After all, you and I can install solar panels on the roof of our house with possibly a battery in the garage and to an extent dictated by energy regulations, finance and availability we can eliminate or at worst reduce significantly our requirement to purchase commercially generated electricity. It really doesn’t help the business model of the extractors of fossil fuels who have until now had a captive market.
It isn’t only electricity generation profits that are at risk here. The increasing uptake of electric vehicles is reducing ongoing demand for petrol and diesel, as evidenced by some traditional petrol retailers installing EV charging facilities. The problem for the retailers is that EV charging can be done at home from the solar panels and batteries, so we are far less dependant on their services. The EV can, in some cases, also be used a a battery to reduce the domestic dependence on commercially generated electricity as well.
On top of conservatives being told that fossil fuel extraction will be subject to far less demand and consequently be far less profitable, it breaks the business model they know and understand. And thats the real problem here. It’s a brave new world which is far more democratic than large companies having the monopoly on the ability to generate electricity. Even though most of us have hesitation when it comes to change, most of us either embrace it because we see the possibilities or learn to live with it.
Society will adapt as demonstrated when the ‘horseless carriage’ gained supremacy over the carriage with horses. Arguably, the change made the world far more democratic as the costs of running a horseless carriage were far less than a stable of horses. We all got used to carrying a small computer that could also make phone calls around in our pockets or bags very quickly as well.
There may be really good arguments for alternatives to renewable energy – but O’Brien hasn’t given us one yet and Rinehart frankly should have pulled her funding if the IPA can’t do far better than the drivel they have presented as ‘research’ on this occasion. It’s time to put up or shut up.
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