Can cheapest reliable energy help Australia achieve climate goals

If you have been reading or watching any media that is associated with the right in the recent past, you have probably come across some astounding assertions that have been made about the price of renewable energy and the process of moving away from fossil fuels.

Ted O’Brien, the energy spokesperson for the opposition, said that the Labor administration may be “willfully lying” about the “true cost” of the energy transition. Other people, meanwhile, have questioned the evidence that solar and wind are the most cost-effective kinds of power.

Two pieces in the Australian newspaper claimed to have found a catastrophic fault in the way that the cost of solar and wind energy is compared with the cost of coal, gas, and nuclear power, which is now banned.

There is a great deal to dissect, but this is not because any genuine scandal has been found.

Many of the allegations are based on two reports, neither of which will be familiar to the vast majority of Australians, and even fewer will have taken the time to read them.

GenCost is a report that is produced annually by a small team at CSIRO. This research covers changes in the costs of various energy generation technologies and also ways to store energy, such as in batteries or dams. GenCost is titled after the acronym for “generation cost.”

One of the metrics that is generated in the GenCost report is referred to as the Levelized Cost of Energy (LCOE), and it has been criticized by Claire Lehmann in two pieces that were published in the Australian.

It is a statistic that is used to indicate how competitive various technologies are, and it takes into consideration factors such as fuel (the cost of which is zero for solar and wind, but it is not for coal and gas) and how much power is generated.

The levelized cost of energy metric makes it abundantly evident that solar and onshore wind power are by far the most cost-effective sources of electricity at the moment. On the other hand, Lehmann and the other critics that she cites argue that it is deceptive since it does not take into account the expense of installing transmission lines and storage to the grid in order to accommodate the renewable energy sources.

This is mostly accurate, although it is not a well guarded secret.

At this very moment, installation of renewable energy sources is taking place on a system that was conceptualized, constructed, and continues to be maintained with the intention of accommodating coal. This system consists of expensive transmission towers and wires.

The GenCost study considers the money that is going to be spent on major transmission and storage projects, such as Snowy 2.0, up until 2030 as having already been committed for the purpose of calculating LCOE.

According to Lehmann and other opponents, categorizing these projects as “sunk costs” is a “creative accounting method” that disguises the actual cost of renewable energy.

However, Lehmann fails to highlight that the same GenCost report provides a detailed justification for why this procedure is carried out.

To summarize, a stakeholder in the year 2030 who is interested in gaining an understanding of how much it will cost to construct additional renewable energy generation is unconcerned with previous investments that have been put into the infrastructure to accommodate renewables.

In addition, the GenCost analysis demonstrates that the levelized cost of energy (LCOE) for solar and wind will be significantly less expensive than that of any other technology in 2030. This includes the cost of any additional expenditures that will be required to support high levels of renewable energy.

According to Lehmann, GenCost is “probably the most important document in Australia’s energy transition.” However, multiple energy system analysts have warned the Guardian that this assertion is not accurate. Lehmann’s description of GenCost as “probably the most important document in Australia’s energy transition”

This monstrous document is the Integrated System Plan created by the Australian Energy Market Operator. It consists of a dozen supporting studies and appendices and has a total page count of 100.

This plan’s raison d’être is to consult with industry and then lay out how to develop the electricity system for the coming decades in a way that achieves reliability (the lights need to stay on), affordability (what is the lowest cost mix of generation technologies, transmission, and storage), and is in line with climate targets. The lights need to stay on.

The task for Australia is not simply to implement the form of electricity that is the least expensive. The question that needs to be answered is “what’s the cheapest electricity system that’s reliable and will meet climate targets?”

The Internet Service Provider believes the solution to that conundrum lies in the utilization of wind and solar power, supported by various forms of storage. In addition, energy specialists explained to the Guardian that the ISP does not make use of the LCOE estimations provided by GenCost.

An article that was published in the Australian the week before claimed that Labor’s energy strategy contained a “$62 billion black hole,” and that this “black hole” had been “exposed by industry experts and the Coalition.”

In all honesty, the account hinged on the assertion made by a single specialist named David Carland. However, O’Brien’s “black hole” is nothing more than a fabrication.

Temperature Check was able to obtain a copy of Carland’s analysis, in which the latter outlines a number of known projects that Aemo had previously taken into consideration when it developed its most recent ISP.

Carland contends that several of these projects will end up costing more than was first intended, and although this is certainly the case with Snowy 2.0, it is important to note that this is significantly different from the situation in which a project is not being taken into consideration at all in Aemo’s plans.

Carland, who has in the past advocated for Aemo to model a future electricity grid that continues to rely on coal, also lists some other “costs” that should be addressed before GenCost calculates LCOE for renewables. This is because Carland has previously pushed for Aemo to model a future electricity grid that continues to rely on coal.

Tennant Reed, who is a specialist in energy systems, looked over Carland’s proposal and questioned several of the assumptions that were made. Reed is the climate and energy director of Ai Group, and he is also a climate scientist.

Reed expressed his disagreement with Carland’s research to Guardian Australia in a lengthy email, stating that he believed it contained exaggerated statistics and double counting.

For instance, Reed mentioned that the research takes into account a “cost” of $1.6 billion from state-based programs that contract the provision of renewable energy.

Even if the number was accurate, he argued, included it was a mistake for the following reason: “these contracts do not add to the underlying cost of renewables; rather, they are a part of how that underlying cost is paid for.”

Reed said that Carland’s research “fundamentally misses the point that ISP, not GenCost, is the relevant exercise for considering the optimal system development path to 2030 and beyond.” Carland’s analysis was based on the assumption that ISP is more important than GenCost.

Anyone who suggests that the ISP ignores the cost of developing an electricity system that is centered on renewable energy compared with the cost of constructing an electricity system that is centered on any other technology that is available has probably not looked at the mountains of information that is accessible.

The ISP consists of five main transmission projects that are included in its “optimal development path” and will cost a total of $12.7 billion to construct (these projects are known as HumeLink, VNI West, Marinus Link, Sydney Ring, and New England REZ Transmission Link).

However, it is also stated in the research that the benefits gained from the construction of these projects will more than treble their costs.

According to the paper, if they were not present, the NEM would be forced to rely on more pricey gas and offshore wind, which would lead to an increase in costs and create a hole in the carbon budget.

The GenCost report and the more pertinent ISP aren’t the only pieces of research that imply the cheapest approach to establish a dependable and zero emission energy system is to employ renewables that are backed up by storage, but they are two of the most relevant pieces of research.

The “Go for Net Zero” research was issued by the Grattan Institute in 2019, and it found that it was possible to stop using coal and achieve very high levels of renewable energy without sacrificing reliability.

According to Tony Wood, the director of the energy as well as climate change program at Grattan Institute, they discovered that renewable energy sources that were supported by storage and had gas-fired power as a back-up produced a dependable system that “costs probably about the same as it is today, but you now have a system with very low emissions.” And the reduction in emissions is yours at no additional cost.”

The University of Melbourne, the University of Queensland, Princeton University, and the multinational management consulting Nous Group collaborated on a significant project called Net Zero Australia. The goal of this project was to model the most economically viable approach to decarbonize the grid.

This modeling, which was made public earlier this year, arrived at the same results as the ISP, which is to say that wind and solar energy with storage such as batteries and hydro, and backed up by tiny amounts of gas-fired power, was the approach that would be the most cost-effective.

In addition, the whole cost of everything was factored into the calculations, including the price of adding more transmission lines.

A significant portion of the comments in media outlets affiliated with the right is laced with the exasperation of certain individuals who support nuclear energy because they believe their emissions-free technology has been ignored.

The so-called small modular reactors, which are a collection of technologies that are not yet commercially viable and, like other forms of nuclear generating, are not allowed in Australia, are going to be the focal point of the energy policy that the Coalition is proposing.

According to statements made by Aemo, the company “does not model technologies that are not allowable under existing laws,” which includes the generation of nuclear power.

In a statement, the company made reference to a paper by GenCost that “shows that nuclear generation is more expensive and has a longer lead time than renewables backed by storage and transmission.”

The modeling done by Net Zero Australia investigated the potential roles that nuclear power could play if it were to become permissible in Australia after the year 2035.

The modeling suggested that nuclear would only become economically viable if the cost of the currently cheapest nuclear generation were to fall by an additional thirty percent while, at the same time, the supply of renewables was constrained (meaning, for example, significant problems in the supply of materials needed for renewables or a scenario in which significant community pushback results in renewables losing their social license).

Even under these circumstances, nuclear power plays just a supporting role in the development of a clean, dependable, and cost-effective electrical system. Instead, wind and solar power are responsible for the vast bulk of the work.

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