It was insightful to say the least, and slightly distressing to say the most. I was fortunate to attend a Committee for Economic Development of Australia (CEDA) forum recently on South Australia’s energy future.
Sadly, the scheduled speaker on nuclear energy, Eric Smyth from Toro Resources, was prevented from attending by a certain ash cloud. I took some careful notes from the day though. Here’s what I learned.
From SA’s energy Minister Michael O’Brien I learned “we must replace the coal generation assets, carbon price or not”. He added that the Leigh Creek coal reserve will run out at 2020 at the latest. It was mentioned that the resource could be expanded by “shandying” the coal. This means bringing in other coal by boat and mixing it together with the Leigh Creek reserves to prolong the life of the assets. If ever there was proof of our addiction to fossil fuels, surely that is it: burning one fossil fuel to ship in another fossil fuel to top up reserves of a third fossil fuel, in the year 2011 when we know full well we need to stop using fossil fuels.
I then learned that South Australians can expect dramatic rises in the price of electricity, in the order of around 30%, quite rapidly. The expected carbon price is in fact the lesser contributor to this anticipated rise. The main culprits are:
- Required investments in upgrading/replacing aging transmission and distribution infrastructure
- Strong upward price pressure on gas, of which SA consumes a lot
- The looming need to replace our coal plants due to both the age of the plants, and the dwindling coal resource
- Only then, the additional pressure from a carbon price comes into play
In the very same speech, the Minister then very casually, as if the result were perfectly obvious, made it clear that the expected pathway for South Australia is to transition from coal to more gas and keep investing heavily in renewable energy.
Pardon? I am concerned that I may have been the only person in the room who noticed that this assumption is in direct defiance of all of the pressures on power prices the Minister had just nominated, i.e. a portfolio of generation that will embed:
- Significant additional investment needs in poles and wires to connect renewable generation sources, and possibly upgrades to gas transmission infrastructure
- Greater dependence on a fuel with sky-rocketing global demand, where the price of fuel strongly impacts the price of the electricity
- Locking in massive exposure to the carbon price for the 40-60 year life of this very expensive infrastructure
The Minister is hardly unique in running on this assumption of moving to gas, such is its dominance in forecasts and scenarios of Australian and world energy trends. We seem on track to do this in preference to an introduction of nuclear power which would embed:
- Virtually nil additional transmission and distribution infrastructure investments because nuclear plants can be readily sited near the existing network, even to the extent of using the exact same sites as to-be-decommissioned coal
- Virtually nil exposure to fuel prices, since the price of uranium makes little difference to the price of nuclear electricity (because it requires so little fuel)
- Virtually nil exposure to the carbon price because it is zero carbon
The refusal to even talk about this power source and instead punish South Australians with even higher power prices defies common sense and responsible economic leadership. I felt like I was sitting in some sort of logical twilight zone. I had better harden up as its early days for me on this issue yet.
After slapping myself in the face a few times to recover, I enjoyed several interesting presentations on SA’s energy future. In the absence of Toro, much of the discussion centred on renewables, which is reasonable given SA’s huge share of Australian wind power and great solar resource.
What I liked about this day is that I wasn’t hearing from activists of any kind. I was hearing from the people and organisations who are out there working damn hard to actually get renewables up and running at scale in Australia. From that point of view I weight their feedback very heavily since they are operating from a less emotional and frankly more honest motivator: their own success, financially and professionally speaking. They are also operating from a vantage point where platitudes are meaningless, and practicalities are everything. The people I am talking about are:
- Mark Headland from Investec, who has been responsible for securing project financing for a large wind farm in Western Australia
- Craig Chambers from Parsons Brinkerhoff, who has obviously poured a lot of blood, sweat and tears into preparing a comprehensive project plan for a large Concentrating Solar Thermal power plant, in the hope of securing funding under Solar Flagships.
- Professor Mary O’Kane, Chairperson for the Australian Centre for Renewable Energy. She knows a thing or two about renewable energy as you would expect, and spoke a lot about the prospects of geothermal power for South Australia.
So what did they say? Well, as the title of the post suggests, while they all remained appropriately positive about these ventures and the prospects for renewable generation in general, it was one reality check after another in terms of how much renewables can be expected to contribute in the coming decades. Here are a few direct quotes from my notes of the day (NB I was not recording, so no doubt some paraphrasing has crept in):
Professor Mary O’Kane
“We talk about them (renewables) as if they are ready…they are actually often inefficient and involve long timeframes, high technology risk and high financing”. (ACRE is heavily involved in supporting geothermal, and this quote and much of Professor O’Kane’s presentation was relevant to discussion of geothermal).
“Efficiency improvements in solar technology can be expected in the order of percentages, not jumps and revolutions.”
“Australia has a long, skinny grid. It is hierarchical, and not designed to pick up renewables.”
“Meeting the existing renewable energy target will require an 8-fold increase in wind generating capacity in Australia”.
“Windy land isn’t a scarce resource; the scarce resource is windy land with a connection”.
“Quarantining the necessary area of land for the proposed solar development is a big challenge”.
“It’s difficult to get a commitment for a small quantity of gas to be delivered for the times the plant will require back-up”.
The presentations gave me confidence that I have not inadvertently become a renewable energy knocker over time. My approach through Decarbonise SA is a realistic one. In a goal of rapid decarbonisation, there is simply no way of glossing over these significant constraints to the expansion of renewable energy. I am more than happy to see intelligent and driven people, such as those I have quoted above, throw themselves at the challenge of overcoming these constraints. But I would be eternally grateful if we might enable open discussions on nuclear power to take place at the same time without the objections, tacit or otherwise, of the supporters of renewable energy. That is no direct reference to any of these speakers, but rather to the generalised attitude of renewable-or-nothing that pervades environmentalism in South Australia.
So when question time arrived, it felt like the room had had half a conversation about energy. Now, I sat on my hands at the Garnaut presentation, but if you can’t talk nuclear at CEDA… so up went the hand.
“We’ve just heard Michael O’Brien tell us to expect huge price rises on the back of transmission and distribution costs, rising fuel costs, and a carbon price. But everyone seems to automatically assume that we will be changing coal for gas and more renewable, which will increase our exposure to all of these things. Surely it’s time to consider nuclear power, with nearly no exposure to changes in fuel price, no exposure to carbon price, and no need to build new infrastructure. Shouldn’t we look at nuclear?”
Imagine my delight when MC Hamilton Calder chimed in to say that I had asked, to the exact points, the question that Erica Smyth from Toro Resources had wanted asked. Result!
Jason Kuchel from SACOME gave clear support for considering Small Modular Reactors to enable remote mining exploration without the constraint of power supply. The next supportive answer came from a surprising source in Professor Mary O’Kane, who said “Of course we should be considering it… but we should also be considering geothermal”.
Had I been a member of the panel, I would have challenged this to be sure she was not suggesting that the two technologies were somehow comparable in terms of their ready deployment, having just heard in some detail the challenges that are being experienced in identifying and proving the geothermal resource and actually getting power from it. I decided it was the better part of valour not to duke it out from the floor.
To complete the session, a question from an Adelaide University professor hit the nail on the head: “Nothing I have heard today is going to enable us to hit the targets we need to meet in cutting greenhouse gases”. Professor, I couldn’t have said it better myself. We must always keep a clear head around what we are actually doing; building renewable energy or cutting greenhouse gas emissions. While related, the two are not the same thing.
Just days later, the first two winners of funding under the Federal Government Solar Flagships program were released. As I have repeatedly stated I am not anti-renewables, and nor am I anti these specific projects. My congratulations to the successful bidders, and no doubt we will learn much from the implementation of these projects. However I do hope that the numbers I am about to run by you will begin to put paid to the persistent suggestion that nuclear power is somehow a comparatively expensive way to generate zero carbon electricity in Australia, even with our superior solar resource.
The first successful project is the Moree Solar Farm. Here are the vital statistics:
- 150 MW of photo voltaic technology mounted on single axis trackers
- 650,000 solar panels
- 1,200 hectares (12 km2)
- Anticipated annual generation of 404,000 MWh, giving a capacity factor of 31%
- Cost of $923 million, with funding of $306.5 million
- These figures suggest a cost of $6,150 per kW installed capacity
The second successful project is the Solar Dawn solar thermal gas hybrid plant. Here are the vital statistics:
- 250 MW of concentrating solar thermal
- Total cost of $1.2 billion, with funding of $464 million plus an extra $75 million from the Queensland State Government
- Using a bit of reverse number crunching based on the “number of households” they say it will supply (70,000, versus 45,000 for the Moree Solar Farm), I get a capacity factor of just under 30%.
- These figures suggest a cost of around $4,800 per kW of installed capacity
The World Nuclear Association quotes a world median price of $4,100 per kW installed for nuclear, suggesting it is comfortably cheaper than both Solar Dawn and Moree Solar Farm. But of course, lest we forget the capacity factor. Where the above projects sit at around 30% (which is about typical for this intermittent power source), nuclear can deliver at above 90% capacity factor. In South Australia, were nuclear to do the current job of our coal baseload, our peaky demand profile means we could expect it to deliver at 60% capacity factor: fully double the output of electricity per installed MW, available on demand 24 hours a day. In both financial and reliability terms there is clear daylight between nuclear power and solar. Land and resource requirements are other serious considerations where nuclear comes out way ahead.
Let’s not be coy. With over $500 million available to a single project, the consortia applying for this funding have not held anything back. These projects are the best examples of what solar can deliver in Australia in 2011. Furthermore, we are not talking about Government support in the form of loan guarantees or special insurance schemes, as the enemies of nuclear power like to constantly harp on about. Three quarters of a billion dollars has just been committed to transfer from the Australian Government to the private sector. These projects are not run by Mum and Dad community collectives. We are talking the likes of BP here people.
It’s time to face facts. We have tricked ourselves into having expectations of technologies like wind, solar and geothermal that far exceed their capacity to deliver. We can’t go on ignoring the fact that there is gross mismatch of timing between the current urgency of the climate crisis and the likely future ability of these technologies to deliver on our energy needs, cost effectively and at scale. That’s nobody’s fault. It’s not a conspiracy. It’s not lack of funding, research or support. It’s the challenge of taking energy that is dispersed, dilute, intermittent and location-specific and then capturing, storing, moving and dispatching it to where we need it, when we need it. It’s bloody hard, and so far we are not that good at it.
Good luck to these renewable initiatives. But in the serious fight against climate change, it’s not going to be enough. To urgently expel coal from the energy supply and give ourselves a fighting chance of wresting back control of the climate, we need to deploy the most affordable, zero-carbon, baseload suitable energy source available right now. That’s nuclear power.