Solving Australia’s power pricing and supply calamity means killing subsidies for wind and solar and kickstarting nuclear power, by removing the ban that prohibits it.
As Rafe Champion details below, there are three easy steps that would resolve the current debacle: killing off the subsidies for intermittent power generation; adding a capacity market to the National Electricity Market to encourage the appropriate deployment of capital; and removing Australia’s ludicrous ban on nuclear power generation.
Comparative costs of power
13 September 2020
In November last year 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.“
This includes additional transmission costs for various options and the resultant carbon intensity is also shown. All key technology performance data, costs, and other relevant information are listed in the Power System Generation Mix Model website .
There is a short report as well in PDF form is available on the website.
Cutting to the chase, they recommended:
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.
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 $415.50 I MWh.
Did anyone ever say it was going to be inexpensive to save the planet?
The suggested that for the moment the (then) proposed National Energy Guarantee (NEG) should be supported, but the expansion of intermittent generation and storage as projected by AEMO should be examined for practicability and cost. They also wanted to see a capacity market component to provide clear signals for investment in dispatchable generation when needed.
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.