Coal: Game over

The RBA was out last night discussing climate change and posted the following chart of energy costs which confirms our view that it is game over for coal:

 

These numbers are largely in line with our numbers on electricity costs from various sources and since it has been over a year since I last posted my numbers on electricity costs and so I thought it worth updating.

The headline: costs keep falling and energy parity is here. Electricity prices are coming down over the medium term from here.

Our basic investment thesis is that coal, gas, oil, all have economics based on a “scarcity curve” – the more we use them, the deeper we need to dig to find more and more expensive they become to extract. Solar and battery power is on a “technology curve” the more the world produces, the cheaper it becomes.

Our view is we will reach an energy parity where technology curve become an upper bound for the scarcity curve – the price of energy won’t exceed the cost of Solar+Batteries. Solar+Batteries are the “killer app” – extremely scalable once they reach an acceptable cost. And we are basically there.

I separate the technology costs from the fuel costs to show the sensitivity to gas and coal costs (note that the below numbers are in USD for international comparability vs AUD in the RBA’s chart above). A partial battery below is enough to cover most of the evening load, a full battery is for round the clock power. All numbers are approximate, with lots of assumptions:

Costs have been falling at 20% per annum, but even if the cost improvements slowed to 10% per annum, coal is cooked as an option – in 5 years time even a full battery beats coal on cost:

And just to remind you of the longer term picture:

 

Rooftop Solar

I have deliberately left Rooftop Solar out of the above tables, as they are less comparable than you would think. Roof-top solar has costs of around $0.13 which is much higher than the costs above.

But that is not important. Rooftop solar is not competing with a coal plant, or even with utility solar.

Rooftop solar is competing with grid power + grid infrastructure. It is an important distinction.

I don’t care whether my rooftop solar produces cheaper than the local coal-fired power station, I care whether it produces at a cheaper rate than I pay for power – and it does:

 

The issue is that my panels produce power during the day when everyone else’s panels are also producing power, and so unless I use it myself to offset the above charge, I get paid a fraction of what the power company will charge my neighbour for using my spare electricity. Also, the peak rate (in the evening) for time of day pricing is much higher than during the day.

At $0.31 for partial shifting (which is basically generating enough power to get you through the evening peak), having some batteries is profitable for anyone on time of day charges. A lot of this price comes from the discount rate, so if you are prepared to accept a lower return (and lock in electricity prices) then partial shifting can be worth it at current prices.

But batteries aren’t quite a “no brainer” cheaper option.

Looking at the 10% cost reduction scenario again:

There are lots of questions that the above table raises. If everyone starts going off-grid who pays for the poles and wire, do we end up in a death spiral where more people leave the grid, raising the cost for those who remain which means more people leave and so on.

All valid questions.

My best bet is that it is going to be a battle of vested interests.  Richer people will leave the grid when it becomes economic (as they can afford the upfront cost), leaving renters and the poor left paying higher bills to account for the transmission assets. Governments will have three options:

  1. Prevent retail electricity price rises, stand up for the poor and make the asset owners pay the cost of their mistaken investment
  2. Socialise the losses and bail out the transmission asset owners
  3. Let the asset owners raise prices, shift the cost of adjustment onto the poor

While option 1 would be my preferred choice, I have a sinking feeling that option 3 will be the path of least resistance. The lobbyists will no doubt be hard at work on option 2 in case any government have the fortitude to explore option 1.

————————————-

Damien Klassen is Head of Investments at the Macrobusiness Fund, which is powered by Nucleus Wealth.

The information on this blog contains general information and does not take into account your personal objectives, financial situation or needs. Past performance is not an indication of future performance. Damien Klassen is an authorised representative of Nucleus Wealth Management, a Corporate Authorised Representative of Integrity Private Wealth Pty Ltd, AFSL 436298.

Comments

  1. Great stuff, Damien. Why we, as a nation, aren’t charging down the solar+wind+pumped hydro road as fast as we can muster the resources to do so is beyond me. It’s now all proven and widely available tech; let’s get on it!

    • Caus they want to turn on those pumped hydro plants when the spot price is high so to maximize the return. The specification for Snowy Hydro wanted the water turbine generators operational generating electricity in around eight seconds. One major Japanese and one European equipment supplier were skeptical that the specification was achievable , The successful contractor from Italy seems to have gone along with it and won the tender. It’s a bit like the submarines promise anything to win the job.

      • Don’t worry. If the Italian contractor fails to deliver on spec or on time, we can just not pay them pay them $4b more to try again.

      • I suspect you see it in every major contract that is won these days, cut price, do and or say anything to win the contract.
        Once won hire the best “variation” “legal” team you can to then eventually try and make a profit.
        New Uni course “Master of/in Variation” , you will want MV in your CV.

      • They can include a battery in the mix for the startup time and to smooth the transitions.

    • Because “We, as a nation” sold off all controlling interests in the power grid. The current private owners of the power grid are charging down the path of maximising profits, as anyone with half a brain would expect them to.

    • I agree and why the alp is slamming the pumped hydro is not clear to me. We need not just one, but many if we are going to kill off coal which I think we have to do asap. We should also stop exporting coal as shifting the pollution is no solution at all.. China needs to be called out on all the coal fired power they are building globally. How this is solved is a global move not just Oz. Also, how many debt slaves can afford RTS + battery? Vic is do a subsidy for some, but still expensive, and what of the refurb cost is say 10 years? Does the RBA now have a mandate for green power. I wish they’d just do their job.

      • FL
        A billion dollar expansion has been approved for Ackland coal mine, in the last coupla days
        right under your nose!

  2. Damien KlassenMEMBER

    Maybe the charts and numbers aren’t showing for you?
    Try refreshing your browser and then check the numbers again.
    I’d be interested in any source you have that shows that the numbers from the RBA, Lazard, Open EI and Bloomberg (which all tell the same story) are wrong.

    • Are you saying that battery storage has an actual economical benefit? All the stuff I have read has said that it doesn’t pay off befor the warrantey expires so it’s not really economical. Or even just being on the grid? If not, I have mistaken your writing and you might want to rephrase it, because what you wrote came across to me that you think batteries on a grid connected household is a viable economic proposition.

    • Are you actually saying that buying, say, a tesla battery is actually more beneficial to a household than using the grid? If they have solar, and a tesla battery, you think they will save money? (more than the outlay over the 10 year warrantey?) I’d like to see your figures on that.

    • Damien KlassenMEMBER

      Hi Timmeh – I stand by the numbers above.
      If your sole argument is “everyone knows” without any numbers or source to back you up then we can’t help each other.

    • I work with a Utility, Damien’s numbers are correct at this time and would be better if latest advances had been taken into account. Solar + storage with batteries which can cycle 20,000+ times are coming quickly. You can’t look at all this in discrete sections. All generation will have its place. Domestic solar has to beat the retail rate, Utility needs to beat coal’s price, and not the price they are willing to sell at just to get cashflow, I’m talking about the true long term price with expected returns priced into it. Coal is going to headline a low p/mw price but that isn’t economical.

    • Solar Is Toxic:
      Where do you get this stuff from??
      There were some solar cells (10 years ago) that were made from some very toxic substances like Cadmium (I’m not sure that any of these were installed in Australia) but your typical Monocrystaline Solar Cell is made from Silicon (the main component in Sand) and really are no more toxic than sand especially since it is typically encased in Silicon Dioxide (glass) (or as it is called in the trade Passivation layer). The impurities like Boron and Arsenic are implanted into the silicon lattice so they’re not freely able to leach and in such small amounts as to be ignored. A part from this all you have that is toxic is the lead solder and copper wire that is used to solder electrical interconnect and a little Iridium and Tin (neither of which is particularly Toxic as used in a a solar cell) I guess if you want to include it than the Aluminum frames are an environmental toxin but they’re also a valuable highly recyclable metal so much for that toxin.

    • @Researchtime
      first you need to get difference between MW and MWh (one is measure of power and the other of energy).
      Sydney maximum demand (summer) is around 10GW with maximum energy consumption per day at around 200GWh
      To generate that much energy 200GWh from solar during summer (long days with on average 8h of sunshine a day) we need around 100 million sqm of solar panels (each 1sqm panel can generate around 1kWh a day) that is 10 sqkm (not 30sqkm) – total roof area in Sydney Metro is over 1000 sqkm (we would need to cover less than 1% of existing roof area)

      The cost of panels (just panels) required to generate 200GWh in summer would be around $20b add installation cost and inverters so let say double – $40b
      now compare that to alternatives:
      – coal plants would cost around $5b per 1GW in Australia – we would need 9 of those to generate 200GWh so $45b plus cost of fuel, operation and maintenance that is way more expensive than solar
      – nuclear plants would cost around $20b per 1GW reactor – we would need 9 of those to generate 200GWh so $180b (no need to mention other costs)
      Total land required for coal power plants that generate 9GW would be greater than 10sqkm – Eraring power plant with capacity under 3GW uses over 6sqkm of land (plant, ash ponds, water supply, coal storage), not including mines, rail, … not to mention quality of land around the plant

      to work, solar would need storage, but for the price difference of $5b plus cost of fuel, etc we can easily build enough pumped hydro storage – If we put panels further west where sun is more abundant we need even less storage (for $2b officially but lets say $4b Snowy 2.0 added storage capacity of 350GWh (more than three days worth of Sydney energy consumption on rainy days)

  3. We should by all rights prohibit the export of coal during the term of the next government. It’s the vast tonnage of coal we export which is doing the global damage, and not the coal we burn here. As coal is Australia’s second largest export I welcome ideas on how to mitigate the economic and social calamity during the process.

  4. ErmingtonPlumbing

    Solar+Batteries aren’t going to do FA for the plebs renting and living in high rise Appartment blocks.
    Those left relying on the grid are gunna be fked.

    • When Labor win the March 23 state election,
      NSW Labor will install 7 gigawatts of renewables within 10 years,
      including 4 GW in the first 4 years.
      Some 2200 megawatts of utility-scale solar PV capacity is set to be built and brought online in the next 9 months, plus 2400 MW of wind and 100 MW of storage.
      Labor is targeting a 50% share for renewables in the energy mix in the next 10 years.
      ?????????????????????

    • You can’t look at the retail offerings. They are for people who are off grid or want to feel good about green energy.

      The real changes that are coming and the ones that are in the money are at Utility level.

  5. You are looking at a Domestic or consumer option. The killer is at a Utility level. We are now looking at $400 – 500 per Le/h for utility storage. This is the killer that I think is referred to by the author.

  6. Don’t slander Timmeh. He is a good bloke. Rj2k000 seems to be a YouTube bot of some sort.

    • The problems start when they make articles open to non-members. Thats a cue for all the shills and mouth breathers to jump in and go wild. The real wild west is the end of the day wrap up….boy there seems to be a lot of people on mood stabilisers in those threads.

  7. reusachtigeMEMBER

    Coal will always be the best option for power as it is manly and we have a competitive advantage in coal. The prices would come down if we just built more local small scale coal plants and if people chose to install a houshold coal plant instead of homo style solar panels and [email protected] batteries.

    • We need to make micro coal power stations. Put one in each suburb and save on transmission costs.

      • Now there’s a great idea; let’s start in your neighborhood, right next door perhaps? Let your kids breath soot and pollution. And you can deal with the missus when she bitches about the washing on the line getting dirtier than it was before it was washed. (Hey, we could bring back those old copper hand wash machines my grandma used to use.) Bugger it, let’s just retro London 1950’s.

  8. Serious question on those costs/KWh.
    How do they change for a 90% utilisation, or 80% or 50%? I assume that solar+battery is much more capital intensive and coal has a higher running cost. The fact is most power stations don’t run at 100% capacity year round and this will be a significant factor in what is actually most cost effective.

    • A coal plant is extremely capital intensive and has a long gestation, hence the private sectors reluctance to invest.

      • The private sector can make ever increasing profits by simply getting paid more for using existing assets as shortages develop. There is no rational reason to invest in any power generation at this point. This is the logical end point of a privatised network, as has been proven many times over.
        How many power stations have actually been built privately in Australia rather than bought from the government for cents on the dollar?

      • Gas, solar, wind and pumped hydro all have private sector investment in new generation. You’re right though, can’t think of one example of coal. Strange.
        Yeah it is strange. Tax coal power to donate to the Turnbulls, foreign entities et al for producing alternative sources. Give the alternative total priority on the grid and force the coal generators to massively under-use their expensive resource. Every politician, in tune with city passed puritan religion, wants to knock down all coal fired power stations. It is really really strange why few think building a coal fired power station in Australia is a good idea. It’s a really good business proposition in nearly every other country in the world but not Australia. Everything is different here.

        Just to make sure our religion stays purre we have to continue to deindustrialise as fast as possible. Get rid of all the fertiliser factoris and smelters and all the rest of those damned dirty factories. Make the world beautiful.

      • @bwj, Genex Power – Kidston project

        @Flawse, not sure I agree with you on this one. Coal power generation as a share of global energy production has fallen from 36.8% in 2007 down to 27.3% in 2017 (remembering that coal plants have a long lifespan, and so only slowly faze out). The trend is clear, coal is being replaced by gas & renewables, largely due to economics.

      • You asked for an example of private investment in pumped hydro, I’ve given one.

        Saying that this project won’t replace Liddell is a strawman argument, I wasn’t saying it would. A mixture of gas, solar, wind and hydro will though.

      • Any large plant is capital intensive. You seem to be missing my point. Private investors are unwilling to invest on that scale. If the system was still government owned there is no doubt new large scale generation using these technologies will be undertaken.
        The question is why would the current players in the market make the massive investment for marginal returns when they can make no investment for ever increasing returns from existing assets. This is the reality of the situation and no amount of dithering about which technology we should build will change the fact that the energy oligopoly is going to bend us over a barrel without lube and not build the infrastructure that would have been considered essential 50 years ago.
        Addressing that issue is far more important than what technology would be best to make power stations out of.

      • So the private sector is only investing in gas & renewable because coal is too expensive and risky?

        This argument about purposefully restricting supply to drive up prices is not an argument for coal, it is an argument against privisation of essential services (monopolistic by nature).

        Also, this phenomenon of moving away from coal dependence is not unique to Australia.

        I agree that electricity should be state driven, but we should not waste our money on coal. Go for more economically and environmentally sound sources.

      • I never argued against coal, I merely asked for accurate realistic costings. No one has supplied them but I bet they aren’t as rosy as the picture provided in the article.

        Also a quick peruse of https://en.wikipedia.org/wiki/List_of_power_stations_in_New_South_Wales puts maybe 80% of power generation from legacy government power stations, maybe more given a lot of the newer ones are intermittent. What happens when all the government built ones close?

      • The Government will have to start building more power generation; see the debunking of the false belief that privately held Telstra + government funding = ‘efficient’ investment in longterm infrastructure. It didn’t happen and the Government had to build the NBN. Same will happen with energy.

    • That seems plausible, from a global perspective.

      But in Australia, with 26m people we could easily afford the space needed to park the turbines and panels.

      I wouldn’t mind some nuclear plants either. They’d be a bit pricy upfront, but a far better deal, economically than those stupid submarines.

      • Without that elusive high Tc superconductivity, transmission loss rapidly piles up with the distance between the point of generation and the point of consumption.

        In fact, if high Tc superconductivity somehow came along you would no longer need any batteries. You can transmit electricity from where the sun is shining to where it is not, with any excess being stored in strategically located superconducting loops.

    • I changed my mind on nuclear a few days ago.

      Batteries are too expensive for the foreseeable future. Solar power is very cheap but only when the sun is up and AUS has not conducted a solar power auction yet – so we do not know how cheap solar power in AUS is.

      • drsmithyMEMBER

        Batteries are too expensive for the foreseeable future.

        What is the foreseeable future ?

        Nuclear at scale in Australia is a decade away at best, even if you were able to start tomorrow without having to worry about environmental concerns, legal challenges, political obstructions, etc.

        Nuclear’s time was half a century ago.

  9. Good stuff Damian BUT wrt Residential Electricity I suspect you’re missing Option4 where the Government forces anyone that has access to electricity Pole&Wires to pay a connection availability cost (likely to be priced at between $300 and $500 pa). It is what happens today wrt water and sewer costs in most parts of the world so it’s not unprecedented And it’s something that the Power distributors are actively lobbying for. There have been several opportunities over the last 5 years for Electricity Regulators to clarify the rights of Residences to simply disconnect from the Grid and thereby avoid all grid connection charges yet they’ve dodged the question on each occasion…I think we all know what that means.
    Just for completeness your Partial Battery setup is typically just enough storage to get a typical household through a typical night (something like 5 to 10 Kwh ) but that’s a long way short of the amount of storage needed to get a typical household through a worst case wet week (which requires something in the range 40 to 70 Kwh) most off-griders decide to go for Hybrid setups with a Petrol or Diesel Genset that can synch to the local grid (your PV power gen) These setups are significantly more expensive than a Bunnings camping generator. As a result almost all available solutions will cost you more per year than a grid connection meaning atm there is really no good reason to actually disconnect from the grid and the fact that you don’t disconnect is actually costing the Electricity Distributors money because you feed them electricity when they don’t need it and maintain the capability to fully load the grid at precisely the same peak moment (really hot day) that everyone else switches their AC to the max.

      • What is the average price paid for power by smelters? I think you will find very low as aluminium is solidified electricity.

        Sending power from the Latrobe Valley to Portland is madness. Alcoa closed down their own coal fired power station at Anglesea 5-60 km from the Henry Point smelter they closed down.

        Aluminium smelting needs low cost hydro power (or politicians prepared to subsidize other power sources).

      • That’s a stupid comment Flawse.
        I’ve never been an advocate for Heavy Industry using Renewable power (at least not in its present form)
        Heavy Industry like Smelters need to be co-located with Generators which is why you find pairings like Tamago and Bayswater so close together and often so interlocked from a business perspective.
        these industries could be retooled to work with Solar Thermal + Solar PV but we’re a long way from that being economically viable or even necessary from a production perspective given that Hydro sourced power is the future of all Aluminum smelters. This change has nothing to do with Solar electricity and everything to do with comparative large scale production costs.

      • What Smelters? We dont have many left, it appears that is cheaper to send the ore overseas and ship it back….

        Solar and batteries are well and truly capable of delivering the power required for a smelter, just need to invest into it as part of your business plan…instead of externalising that cost on to the general public by asking the government to build it for you…

      • Solar and batteries are well and truly capable of delivering the power required for a smelter,
        At what cost? seriously as what cost?
        Sure it’s technically possible but so is exporting ore to countries with excess low cost Hydro (or geo thermal) electricity and letting them do the energy intensive process of Aluminium smeltering. If someone can do this cost effectively with left over Solar than more power to them, because they’ll make a fortune. It’s just not anything that we need to legislate because they’ll willingly make the investment and pocket their well earned profits.

  10. Ronin8317MEMBER

    Closing off coal power plants allow the power company to make billions of dollars more through their gas power plants. The problem is the government no longer has any say in how much power we should produce, so the electricity companies get to gouge the consumer under the cover of ‘environmentalism’.

  11. MountainGuinMEMBER

    Thanks for the update. I’d like to challange the assumption thatvut will be the rich that get solar and batteries and disconnect from the grid. Currently it is the mid income postcodes that are installing the most solar pv. The richer postcides dont install much even though the rate of return on investment are great.
    In my opinion the first to disconect will be retured engineers and green motivated individuals followed by mid income earners. Apartment dwellers and those in townhouses with small roof space may not be able to fully disconnect

  12. Thickie McBigot

    An excellent, calm, logical and investment grade article by DK.

    The comment section of MB is truly one of the worst places on the internet.

      • Thickie McBigot

        Posts by Pig ignorant mouth breathers and pro coal astroturfers do nothing to enhance the discussion. Flaming, trolling and slack jawed drooling just waste everyone’s time and distract and antagonise what should be an interesting discussion around evolving how we support our lifestyle without torching our home in the process.

      • “what should be an interesting discussion around evolving how we support our lifestyle without torching our home in the process.”
        Pity it’s an irrelevant discussion as we privatised the whole thing years ago and no longer have any say in the matter with profit the only factor of any significance.

    • drsmithyMEMBER

      The comment section of MB is truly one of the worst places on the internet.

      The downturn over the last couple of years is obvious, but it’s still quite reasonable, so far as internet forums go.

  13. Intended as a reply to Researchtime’s post but quite valid for general discussion

    first you need to get difference between MW and MWh (one is measure of power and the other of energy).
    Sydney maximum demand (summer) is around 10GW with maximum energy consumption per day at around 200GWh
    To generate that much energy 200GWh from solar during summer (long days with on average 8h of sunshine a day) we need around 100 million sqm of solar panels (each 1sqm panel can generate around 1kWh a day) that is 10 sqkm (not 30sqkm) – total roof area in Sydney Metro is over 1000 sqkm (we would need to cover less than 1% of existing roof area)

    The cost of panels (just panels) required to generate 200GWh in summer would be around $20b add installation cost and inverters so let say double – $40b
    now compare that to alternatives:
    – coal plants would cost at least $5b per 1GW in Australia – we would need 9 of those to generate 200GWh per day so $45b plus cost of fuel, operation and maintenance that is way more expensive than solar
    – nuclear plants would cost over $10b per 1GW reactor – we would need 9 of those to generate 200GWh so $90b (no need to mention other costs)
    Total land required for coal power plants that generate 9GW would be greater than 10sqkm – Eraring power plant with capacity under 3GW uses over 6sqkm of land (plant, ash ponds, water supply, coal storage), not including mines, rail, … not to mention quality of land around the plant

    to work, solar would need storage, but for the price difference of plus cost of fuel, etc we can easily build enough pumped hydro storage –
    If we put panels further west where sun is more abundant we need even less storage (for $2b officially but lets say $4b or even $6b Snowy 2.0 will add storage capacity of 350GWh (more than three days worth of Sydney energy consumption on rainy days)

    • Nice work, mate.

      For those missing the whole pumped hydro side of the equation, here are the relevant links:
      http://www.anu.edu.au/news/all-news/anu-finds-22000-potential-pumped-hydro-sites-in-australia
      https://www.csiro.au/~/media/Major-initiatives/Northern-Australia/NAWRA-technical-reports/NAWRA-Technical-Report—Hydropower_LO-RES.pdf?la=en&hash=A08015FA8FDEEA6DC1D1C0D9935C4B514B13BBD2
      https://www.abc.net.au/news/2017-09-21/pumped-hydro-renewable-energy-sites-australia-anu-research/8966530

      An Engineers Australia forum has an excellent summary of the nations potential:

      Pumped storage hydropower has the potential to unlock the vast potential of renewable energy in Australia and bring sweeping, positive change to power generation in this country. Based on research undertaken by Professor Andrew Blakers of the ANU, using this method of generation “Australia could transition to 100% renewable power within two decades”. Acting as a ‘battery’ for wind and solar generation, pumped hydro facilities can generate quick and sustainable power by using the earth’s natural formations – along with a little bit of engineering ingenuity.

      Typically constructed in remote locations, and requiring a large and multidiscipline array of technical skills, pumped hydro projects have the potential to drive economic opportunity for regional Australia across all states. Once completed, new operations and maintenance jobs are created, along with new tourism opportunities showcasing both the engineering aspects of the project and the sustainability credentials of this clean, green power generation method.

      Jobs and green growth, anyone?

    • If I understand you correctly then, yep, renewables plus storage (pumped hydro, compressed air, etc) is a no-brainer.

      We really just have to stop farting around and just do it.

      • compressed air is not a particularly efficient way to store energy recovered electrical power is usually less than 30% vs 60% for medium sized Hydro systems and upto 80% (I’m told) for very large scale Hydro.
        If we’re happy with 30% return of electrical power than storing excess power in chemical forms such as Ammonia makes more sense than storing it as compressed air. BTW most internal combustion engines will run really well using Ammonia as a fuel. There’s actually very little change needed to a modern fuel injected engine to run off Ammonia.

      • We don’t know what will win the storage race yet, but we do know that pumped hydro is proven tech and does the job in a cost effective manner. Start there, but expect to move to other technologies (particularly small scale dispersed storage solutions, check out https://youtu.be/Q9qJbNmAf2s for example).

      • Is that 60% figure on the hydro part of the equation or including the pump side as well…

        Pumping water up hill is particularly inefficient, add that to the generation of power on the return side being inefficient I would be surprised if it overall was even that efficient.

        I dont know, would like to see the figures and how its calculated…

      • I have personally built small scale pumped Hydro that achieved 50% returned energy (if you ignored longer term losses like evaporation and leakage) however I can only go by what others say wrt 80% returned energy for large scale hydro. I must also admit that I’m skeptical because I spent a long time looking at all the loss mechanisms and I’m not convinced that they simply disappear with scale.
        It is also worth mentioning that centralized large scale hydro measures it’s efficiency at the pump so if large costs or transport losses happen between source or power and location of the load than these costs are all sort of system efficiency losses and they can easily add up to 10% of the cost of the electricity. provided. there’s also some monopolized assets involved in the transport of wholesale electricity and these assets may or may not be operated to benefit those with excess Renewable electricity available which is another factor in the overall large scale Hydro Efficiency equation.

      • In addition to a conventional (two reservoirs) pumped storage Australia has extreme potential for seawater pumped storage. There are so many high cliffs near the coast that could be used to built upper reservoirs and use the ocean as lower reservoirs. One such plant has been operational for 25 years in japan without any major issues. https://en.wikipedia.org/wiki/Okinawa_Yanbaru_Seawater_Pumped_Storage_Power_Station

        Building relatively small lakes or embankment reservoirs (few sqkm) on cliffs few hundred meters above sea level could store plenty of energy. For example, a reservoir size 4km2 (smaller area than Prospect Reservoir) and 50m deep located at Maddens Plains (above Coalcliff near Wollongong) could store around 150GWh of energy – enough to power Sydney for almost 3 nights.

        there are also some other “pumped”storage options currently underway like offshore underwater storage (a sphere 30m diameter submerged at few hundred meters deep water offshore near big cities or big wind farms) that pump water out of sphere to be able to generate by letting water in with fixed head. pump/turbine would be mounted onto the sphere and only connected by cable to the coast. Each sphere could store 20MWh is submerged to 700m deep
        https://arstechnica.com/science/2017/03/german-institute-successfully-tests-underwater-energy-storage-sphere/

        BTW. round efficiency of large pumped storage can easily be over 80% when large water tunnels are used (viscous drag in tunnels is small when large diameter is used >10m)

      • I agree with DrX there’s enormous potential for Sea water storage on cliff tops and plenty of areas where structures below the sea surface could be used to store energy. and with such a large portion of our population living within 50km of the coast it’s also a very efficient mechanism for providing local power backup and thereby reduce the loads on long distance transmission lines.
        Lots of potential …but not much political interest in these solutions and a very vocal Green sector that is dead against any such solutions.

    • Thanks for the maths etc. and I can’t understand why why all the parties are not supporting it. As I said on another MB post today we need many PH and I’m sure if people see the benefit they’d support it 100% and leave the fake greens and left behind. I’m not sure we’ll ever get there with all the disinformation and it’s almost impossible to have any political discussion on energy.

      • I’m with you there, I hate fake greens and their pseudo backdoor Socialist solutions.
        Most technical problems are understandable until the Greens get involved at which point all logic leaves the room.

  14. What I think they did in Florida when too many people disconnected off grid was to charge electricity connection rates as part of council rates so no matter if you were on or off grid you still paid a connection charge.

  15. MathenomicMEMBER

    Hi Damien,

    Have you included in the battery cost equation / curve scarcity of relative materials with increasing demand ie rare earth metals, lithium, and cobalt (from memory)?

    • Damien KlassenMEMBER

      No I haven’t. There are a huge range of competing technologies in batteries. I’m assuming that if prices are forced up in one technology then people simply switch to a competing technology.
      Also there is not a shortage of Lithium on Earth, just a shortage of production. There is <50,000 tonnes production per year and 50m+ in the ground as identified resources (about 1,000 years at current production). Cobalt is not as extreme, but still in the 100s of years of identified resources.
      Most of the cost gains we are seeing are scale gains in manufacturing/installation - i.e. when factories produce 1,000 units of something it is cheaper per unit than when they produced 800 units the year before.

    • I love it.
      I actually met with Kodak’s CEO and many senior managers in a secret meeting inside an Airplane hanger…I kid you not
      Our corporate jet landed and taxied to this hanger their hired jet landed and taxied in the other side of the hanger and we held our meeting inside a F’ing airplane hanger.
      They were a bunch of complete a-holes and useless @#$% trust me the world is better off without them, they quite honestly couldn’t organize a pi55up at a brewery.

      • Photo or it didn’t happen.

        And don’t tell me that there is no photo at a Kodak meeting!

      • Australia’s currently fighting the guy in the CFO’s office who’s insisting we go back to flying commercial.

  16. scottb1978MEMBER

    The observation that solar + batteries is on a tech curve is a key point. As data storage & transfer became cheaper our behavior changed as well. Creating new exponential demand and continuing to drive the costs down.

    I think that as green energy gets cheaper we will change to be using more energy hungry tech and which will drive exponential demand for green energy while driving the costs down.

    From an investment pov that would mean we wouldn’t just reach parity and stop it would be the start of a huge growth market.

  17. For all the people complaining in here the government should do something, the fact is the government sold off all responsibility for the power grid decades ago. If it really is such a no brainer to go solar, put your money where your mouth is and start your own solar power plant. MBFund electricity anyone?

  18. If any of any of these idiots in grubmint had half a brain, we’d be burning local coals in new power stations for cheap abundant power.

    The coal is cheap and if the same amount was subtracted from exports, emissions would be no higher overall.

    What these idiot commentators fail to see is that a carbon emissions tax penalizes australians whilst we generate hardly any emissions compared to the amount of hydrocarbons exported to countries where it’s burnt.

    They benefit from cheap carbon-tax-free power and sell back to us cheap products made from it we can’t compete with.

    I would be unsurprised if the Greentards and Labor were taking money from places like china to promote carbon-tax and general greeny policies to de-industralize australia and get the exports cheap.

    If we built our own power stations to run on the cheap coal and supported a local heavy industry of R&D and manufacturing, there would be numerous valuable spinoffs such as advanced know-how in cleaner coal burning such as heavy metal extraction and using the CO2 as feedstock for other processes.

    • And no, renewables just don’t cut it when it comes to heavy industry like running an aluminium smelter or 100MW electric arc furnace. Only fair-dinkum dial-on-demand baseload generation can do that.

      Gas turbines still generate high emissions, because buring any hydrocarbon results in the same exhaust.

      • Well basic chemistry says burning CH4 produces significantly differing percentages of CO2 and H20 as compared with burning say C12H26 or approximately pure C, but why let basic science get in the way of a perfectly good argument.

      • Only for very light molecules like CH4 is there 2x H20 for every CO2.
        For C3H8, there’s 4x H20 and 3x CO2 or nearly 1:1 and that’s still a small hydrocarbon.
        For longer hydrocarbons, it approaches 1:1 H2O/CO2, which is the general case.
        CH4 is only an anomaly, and if fuel was restricted to that, there’d be huge problems.

      • Ideally, wind/solar would be used to form more energy dense hydrocarbons from lighter hydrocarbons such as CH4 or CO2.
        The convenient storage would allow for dial-on-demand power usage.

      • So Natural gas is 33% C02, propane is 43% Co2, octane is approaching 50%. And for coal? 80% maybe?

      • 50% CO2 would be around a fundamental limit of hydrocarbon chemistry.
        If the fuel was inefficient/wet, then more H2O/CO2 is emitted for the energy released.

        The point of the post was to promote industry to develop more efficient ways to extract the energy and harness the byproducts.

        Better use of tax payer research dollars than funding some study of the yellow belly bug-eyed parrot or whatever, which is just a work for the dole scheme for greentards.

  19. Denis413MEMBER

    So is your point that batteries to be used to replace current base load power generation?

  20. Deleted my comments because they disagreed that batteries are economically viable right now…. Bit over the top.