Pitching nuclear power in Australia to board rooms and investors is like “looking for unicorns in the garden,” Alinta Energy boss Jeff Dimery has said, following an address to the National Press Club that promised to deliver “some truths” about the energy transition.
Dimery on Wednesday spoke about the difficulties facing the incumbent energy industry in the race to net zero, as the urgent need to build huge amounts of new generation, storage and transmission infrastructure butts up against out-of-date investment and revenue models.
The “hard truth,” he said, is that “it’s not the greatest time to be an energy retailer… here’s the big reveal – we don’t actually make amazing returns.”
And this is bad, he says, because it means “the energy industry is not an industry flush with profits to invest in new generation; not on the scale required for the transition.”
Indeed, Alinta and other of the big gentailers in Australia have been roundly criticised for the lack of investment they have made in new renewables and the lack of climate action taken without serious prodding.
Four years ago the Clean Energy Regulator called out Alinta alongside Snowy Hydro’s Red and Lumo Energy, Engie’s Simply Energy and EnergyAustralia for being at the top of a list of companies failing to meet their renewable energy target obligations in 2018.
Last year, regular RenewEconomy contributor David Leitch described the decarbonisation efforts of Australia’s big gentailers – although with no specific mention of Alinta – as a “disgrace.”
“Utility management and boards behave like small-minded, narrowly focused, quarterly earnings-driven people; more concerned with the annual performance bonus than taking the lead or even keeping up with the pack,” he wrote.
“As a result they hold Australia back and act as a hidden but extremely large barrier to policy implementation and desire of government and consumers.”
But according to Dimery on Wednesday, the investment outlook for large-scale renewables is challenging, due to “higher costs and uncertainty about recovering those costs.” This, he argues, is what’s holding back progress.
Alinta recently sold its Pilbara-based energy business, which includes transmission lines, a big battery at Mt Newman and other solar and battery projects, to APA, and has also built a portfolio of other renewables such as the top performing Yandin wind farm in W.A., and has been pursuing offshore wind projects too.
It is reportedly in the process of buying a multi-gigawatt renewable development pipeline from Tetris Energy, but is awaiting FIRB approval for that deal. Its biggest asset is the Loy Yang B brown coal generator in Victoria.
Dimery also sounded a warning about the rising cost of energy for households and businesses from an increasingly low-carbon system.
“Australians will have to pay more for energy in the future,” he said.
Replacing one coal-fired power plant in Victoria with hydro and offshore wind would cost more than $10 billion, which was $2 billion more than two years ago, he said.
Estimates of $850 billion needed over the next 10 years to revamp the entire grid would come from consumers one way or another, he said.
“By 2050, we need to hit 126 GW. That means we need to develop more than seven times the current NEM capacity of 19 GW to phase out coal by 2050… that’s close to a doubling every decade!” Dimery said in his speech.
But he drew short of saying it couldn’t – or wouldn’t – be done.
“We don’t have time to get distracted by fringe voices anymore, or to get lost in the ‘gonnas’ – as in ‘there’s gonna be 20,000 jobs’ or ‘there’s gonna be some new technology that comes to the rescue’.
“We have to work with what we know today.”
Taking that statement literally, nuclear is nowhere to be seen in the Australian energy transition toolbox.
But in response to the inevitable “what about nuclear?” questions at the end of the speech, Dimery went only so far as saying nuclear was not something the executive team at Alinta Energy had turned its mind to.
“It’s not legislated. It’s not legal at this point. And I would imagine there’s a lengthy process to go through to get it to that point. And then there’s a lengthy process to go through the development and construction, in which time I’ll be retired,” he told the Press Club.
“But what I would say is that you could imagine our shareholders and our board wouldn’t be too impressed if the management team was sitting around contemplating building power stations that are not legal. It wouldn’t be a great use of our time.”
And time is running out – another theme of Dimery’s address – for Australia to get to net zero by 2050.
With reporting from AAP’s Marion Rae
