Purpose. To provide a more accurate estimate of comparative costs than the CSIRO GenCost study that is being used as a basis for energy policy and planning.
Background.
The aim of energy policy is to provide affordable and reliable electricity with reduced emissions. We have been assured that this can be achieved by replacing coal and perhaps gas with wind and solar power.
The people of Australia will pay a bitter price if these assurances are based on false assumptions and wishfull thinking.
The CSIRO GenCost study supports the push for intermittent energy because it concludes that wind and solar power are now cheaper than coal, even taking into account the cost of providing reliable power to bridge the valleys (the windless nights) between the hills of wind and solar generation on sunny and windy days.

The cost issue. Our briefing paper 21.1 challenged the accuracy of the GenCost study.

In November 2020 a group of consultants tabled a report in the NSW Parliament with the results of some elaborate modelling work to generate the total System Levelised Cost of Energy (SLCOE) which is defined as:

“…the average cost of producing electric energy from the combination of generation technologies chosen for the system over its entire lifetime, discounted back to today at 6% per annum.“

The models include additional transmission costs for various options including replacing brown coal with nuclear energy, replacing coal with gas and 100% RE with hydro and storage.

RESULTS OF THE STUDY     Barry_Mur__Reliable_and_Affordable_Electric_Power_generation.pdf

Comparative power costs

The best policy option to control costs and minimise emissions would appear to be to replace coal generation with nuclear power.

Case 1. This is the current situation, with over 70% of power generated by coal the estimated cost is $68.87/MWh.

Case 2 shows the effect of introducing 3,000 MW of nuclear power capacity into the Case 1 mix to replace brown coal. This raises the cost to $72.48/MWh while reducing emissions by around 23%.

Case 3 shows the effect of replacing all coal in Case 1 with nuclear power. Emissions fall by some 93%, with the cost increasing to $90.23/MWh.

Case 4 shows the effect of the combination of generation technologies projected by the Australian Energy Market Operator (AEMO) to 2040, as shown in its Integrated System Plan (ISP) of July 2018. The cost is in the order of $250/MWh.

Case 5 shows the effect of replacing all coal in Case 1 with CCGT. This shows an increase in cost to approach $100/MWh.

Case 6 shows a 100% renewable mix comprising solar PV, wind and hydro with support from pumped storage and some battery storage. Because of low capacity factors, solar PV and wind require a combined total of 110,000 MW of capacity. There is also a need for 30,000 MW of pumped storage capacity for 3 days. To this must be added high-cost additional transmission to get the power to points of high consumption where it is needed, making a total SLCOE of $415.50 I MWh.

*SUPPORTING INFORMATION*
All key technology performance data, costs, and other relevant information are listed in the Power System Generation Mix Model website .

Recommendation. That an independent expert committee be convened to compare the assumptions, the methods and the results of the GenCost study and this alternative cost study.

 

21.8 SUPPLEMENTARY INFORMATION & COMMENTS FROM THE AUTHORS OF THE ALTERNATIVE COST STUDY

1. Wind-up subsidies for intermittent power generation
2. Add a capacity market component to the National Electricity Market
The current NEM is an energy-only market, which does not give clear signals when more or replacement dispatchable generation investment is needed. This weakness has been a key factor in the current absence of new dispatchable investment, i.e. power which can be delivered at the time it is needed by customers.

3. Remove the ban on nuclear power
This ban is the result of a political deal done 20 years ago. It has no scientific merit, and is now an obstacle to much-needed decisions for the longer-term future. It prohibits by law the development of emissions-free, reliable, affordable nuclear power for Australia . The removal of the ban would allow more competition between various technologies to supply our future electricity needs.

Summary

This modelling shows that Base Case 1 (existing NEM approximation) has an average base load of 18,368 MW of constant electricity demand. This load plus daily peaks must be reliably supplied at all times. At present this is done using a system of 78% coal, plus combined-cycle gas turbine (CCGT), open-cycle gas turbine (OCGT), wind, solar PV, and hydro. Some battery storage is available for the provision of ancillary and other services as needed. The estimated cost is $68.87 /MWh.

Case 2 shows the effect of introducing 3,000 MW of nuclear power capacity into the Case 1 mix to replace brown coal. As expected, this adds+$ 3.61 / MWh (0.36 cents/ kWh) to the System Levelised Cost of Energy (SLCOE), making a total of $72.48/ MWh while reducing emissions by around 23%.

Case 3 shows the effect of replacing all coal in Case 1 with nuclear power. Emissions fall by some 93%, with SLCOE increasing to $90.23/MWh.

Case 4 shows the effect of the combination of generation technologies projected by the Australian Energy Market Operator (AEMO) to 2040, as shown in its Integrated System Plan (ISP) of July 2018.

Case 5 shows the effect of replacing all coal in Case 1 with CCGT. Note that this shows an increase in SLCOE of + $ 6.49/MWh versus Case 3 above, plus a substantial increase in emissions.

Case 6 shows a 100% renewable mix comprising solar PV, wind and hydro with support from pumped storage and some battery storage. Because of low capacity factors, solar PV and wind require a combined total of 110,000 MW of capacity. There is also a need for 30,000 MW of pumped storage capacity for 3 days. To this must be added high-cost additional transmission to get the power to points of high consumption where it is needed, making a total SLCOE of $415.50I MWh.

Conclusion

For the longer-term, the existing ban on nuclear power development for Australia must be lifted. Given our role as an important supplier of uranium to the world, current national policy in this area appears confused. A bipartisan agreement in the Australian Parliament to lift this ban is now a matter of urgency, so that proper examination of this option can be undertaken.