Coalition digs its energy hole so that it can fill it in

Here’s what Coalition brains trust, Brian Fisher, author of the Menzies Research Centre report Powering out of Pandemic: Unleashing the Potential of Gas, writes today at the AFR:

The competitive advantages of natural gas in our changing energy mix are too great to be ignored, even by its would-be detractors.

With two-thirds of Australia’s coal generators scheduled to retire by 2040, quick-start gas in combination with wind and solar is a flexible and reliable way to fill the gap. Pumped hydro will play a role in storing energy, as will batteries and possibly other technologies not yet fully developed. At present, however, gas can back up intermittent renewables on demand at the cheapest capital cost, probably at least out to 2035.

Gas not only offers the lowest capital costs but the shortest development times of any type of generation, which will be crucial in meeting the tight timetable necessary to back up the rapidly increasing share of intermittent generation in the National Energy Market.

That’s just a lie. Fossil fuel capital costs have ballooned as climate change takes center stage in capital markets:

The Coalition adopting the crash position and chanting drivel to itself doesn’t make it true. Here is the truth in plain numbers. Renewables plus partial storage is already cheaper for power than $9Gj Aussie gas:

Australian energy costs compared

In five years it will be 40% cheaper for renewables plus full storage versus Australia’s ludicrous $9Gj gas at the utility level:

Price of solar and batteries over next 5 years

If it goes the way we think it will, renewables plus full storage will be more than 60% cheaper than $9Gj gas at the utility level:

Price of solar and batteries over next 5 years

Readers will note there is an irony in these numbers even for me, who has fought so hard to make gas cheaper. But that was not because I sought to delay the transition, only to make it cheaper along the way. As it has happened, the Coalition protection racket for the gas cartel has sent it careening down the path of accelerated suicide.

Nobody is going to build new gas generators on these numbers and probably not dig up any new gas, either. Nobody, that is, except a politican with taxpayer’s money to waste on stranded assets. That will slow the transition down a little as the Coalition literally digs its energy hole so that it can fill it in again. But even that will be purely symbolic in the long run.

The age of renewables and storage is here and will govern Australia’s energy transition henceforth.

David Llewellyn-Smith
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Comments

  1. Why bother railing against gas? If someone wants to bet their own capital on a gas project then let them. The key here is that no taxpayer dollars should be committed to the project. If you’re right about gas then investors will lose their money. That’s the way a market works.

      • You should be railing against a treasonous lack of domestic reservation policy for Aussie natural gas flying out of Qld…

        Currently the storage tech to make renewables viable isn’t economic and cannot compete with gas fired generation.

        Sure it may have its day where it can compete (although sustainability questions remain over the intensive extraction required to support their mass-manufacture) but its not going to be 2020 or 2021… Its a mute point in any case, energy markets will find the cheapest way to back-fill base-load generation as coal is shuttered.
        What matters today is that out fed government is committing a horrid act of treason – the prosperity forgone over the last ten years is huge, and it continues today unabated. Its competitive advantage-squandering stuff, and it baffles me how it can be permitted to continue after so much publicity and criticism

      • boomengineeringMEMBER

        That pipe theoretically should read 300mm but it is actually is 304.8mm as 12” is still used in reference to 300mm although the bore is what’s important and that has always been nominal bore which a opposed to tube (measured from OD) . Either case the flow is dependent on the bore size which is dependent on the schedule (wall thickness).
        Ahh the pleasure’s of digression (albeit shortened version).

    • The way the market is likely to work, is nobody will fill the shortages and we will end up with rolling blackouts as supply capacity can no longer keep up with demand. This is the end result of a non centrally planned privatized power system. The private players build the cheap profitable sections of the network keeping all the profits, and the tax payer will be forced to subsidize the non profitable sections required to maintain supply. At least when government run the profitable bits subsidize the non profitable.

    • Why bother railing against gas?
      In the case of Onshore gas mining;
      Well to start with the Gas companies steal the land they operate on from the landholder( usually a farmer) without choice or recompense. Their infrastructure makes the landholders (farmers ) enterprises non functional ‘ Interconnected well pads ,roads ,pipelines ,power supplies , and holding ponds overlaying the land, Neither do they pay the rates on the aquired land.Nor can the landholder get Insurance if they have CSG infastructure on their properties. .
      The Gas extraction method (Fracking ) destroys the underground aquifer systems and uses chemicals that have never been tested for safety.These are poured down the wells to assist drilling and contaminate the water.
      The gas , methane is released into the atmosphere via leaking thru the fractured earth and ill fitted well heads and pipelines and by flaring is a potent Climate changing substance.
      The FIFO work force have deletrious effects on local communities ( see Chinchilla and Gladstone)
      In the case of the Santos Narrabri gas fields the industry is putting the best farm land in Australia ( the Liverpool Plains) and the
      greatest underground water asset ( The Great Artesean Basin ) at existential risk.
      I could go on , but you get my drift.

  2. At present, however, gas can back up intermittent renewables on demand at the cheapest capital cost, probably at least out to 2035.

    I suspect the author was paid to come to that conclusion, and he met expectations.

  3. They seem to have acknowledged that the gas price isn’t going to go down, as they are trying to focus the attention on the “lowest capital costs” diverting the debate away from the eye-watering cost of inputs.

  4. “The age of renewables and storage is here and will govern Australia’s energy transition henceforth”.

    I wouldn’t be so sure. Why, despite 5 decades of the realisation we must abandon FFs, do so-called renewables provide a tiny percentage of the massive amount of energy required to power the world? Because ‘renewables’ are an unrealisable pipe dream which can never replace oil, in particular, and if attempted, would fry the world from the sheer volume of FFs required. The additional reality is that there is simply insufficient quantities of lithium, cobalt, rare earths etc for it to be feasible. The world is being conned.

    Oil, that once-cheap, easily stored and transported, with high return on energy invested, and once-only miracle store of energy that gave rise to globalisation, and without which it could never have occurred, is in decline according to the IEA – and not due to the furphy that renewables are replacing it, but because the returns on investment make drilling for oil ever less profitable. As the article says, we’re in a tight spot:- economies crash if prices rise too high, but miners can’t make a profit if too low and so won’t search or drill..

    https://www.zerohedge.com/energy/narrative-problem-after-peak-oil

    So it appears the end for oil is nigh but we have nothing comparable to replace it with and are now out of time. I wonder if the Strayan PTB know this and it is the real reason behind their push for gas? Probably crediting them with too much intelligence and foresight, but the fact is, Australia, at the @rse end of the world, is badly positioned in a world of declining conventional energy.

    https://www.zerohedge.com/energy/narrative-problem-after-peak-oil

    • That’s a good read…. the last chart, if its range boundaries hold oil price should barely surpass $50 in the coming decade… maybe peak oil will be the real driver for the mass-reduction in human population that earth requires in order to sustain life longer-term

      • Yep. It takes 10 calories of oil to produce one calorie of food. The 60s Green Revolution staved off starvation but also fueled unsustainable population growth which merely put off the inevitable. Malthus didn’t know about oil, but will be proved right in the end.

        Plus the FFs we’ve poured into and on the ground (in the form of artificial fertilisers, pesticides and herbicides and soil-destroying machinery) has poisoned and eroded it to the point there’s little left.

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