Governments

ARENA debunks Coalition claims on energy storage costs

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The Australian Renewable Energy Agency has debunked the claim by the federal Coalition government that the controversial Brian Fisher on emissions reduction costs is based around ARENA modelling.

The Coalition has been running hard with the Fisher analysis using it at every opportunity to paint Labor’s 45 per cent emissions reduction target by 2030 as “economy wrecking”, even though virtually every other expert dismisses Fisher’s claims of a $1.2 trillion cost as absurd.

One of the key components of Fisher’s analysis, and his and the Coalition’s opposition of Labor’s 50 per cent renewable energy target, is energy storage costs of $200/MWh, which would be added on to the cost of renewable energy generation, making it prohibitively expensive.

Fisher said his modelling was based on a report published but ARENA, a claim repeated by energy minister Angus Taylor, who told ABC radio in March that “the  modelling is based on ARENA’s assumptions …. the point is, it’s using ARENA modelling.”

Not so, says ARENA chief executive Darren Miller, who told Senate Estimates last week that Fisher had not engaged with ARENA at any point, that ARENA could not understand where he got his numbers from, and they bear no relation whatsoever to the report cited in Fisher’s modelling.

Rather than Fisher’s estimate of $200/MWh, Miller said the report cited as a reference and source by Fisher’s BAEconomics actually put the costs of storage at much less, and even these were out of date.

“For example, utility PV plus a four-hour battery – a half-hour battery to a four-hour battery – came in at a range of $105 to $107 a megawatt hour,” Miller said. “If you paired that with pumped storage in the range of two to 10 hours of storage, that would have been $121 to $135 a megawatt hour.

“And just to be clear … it had a generation cost assumption of $65 a megawatt hour for utility-scale solar and $62 for wind. And I would just note that those prices are out of date.

“Prices have come down a lot. So, you would expect that the top line numbers that I gave you before for generation plus storage would commensurately come down.”

Indeed, the recent reports by the CSIRO and the Australian Energy Market Operator, and those by other analysts such as BloombergNEF, put the cost of wind and solar plus storage at less than that of new coal or gas generation, and in some cases less than existing generation.

The government’s own utility, Snowy Hydro, for instance, says that the cost of “firming” is minimal and together with the price of wind and solar is less than the current cost of “baseload” power, and likely around $60/MWh, or a maximum $70/MW.

On top of that, most analysis – including that of AEMO, the Australian College of Learned Academies, the CSIRO, and the networks lobby – say that only minimal amounts of storage are needed until the level of variable renewables reaches 40 to 50 per cent.

As the former head of ARENA, Ivor Frischknecht, told RenewEconomy last December: “Until you get to 50 per cent renewables, bugger-all is required.”  (You can hear the Energy Insiders podcast interview with Frischknecht here).

Miller said any suggestion that ARENA collaborated with Fisher’s BAEconomics was false, and despite attempts to talk to Fisher about his methodology,  ARENA was still none the wiser.

“We had no input into it,” Miller said on the Fisher report. “While we sought to understand the figures in the BAE report by even talking to the report’s author, we still are unclear how those numbers came about or how.”

This is important because the $200/MWh cost cited by Fisher for “back-up” is one of the very few actual numbers released in his “modelling”. The Coalition says that his report, released by the right-wing think tank The Menzies Institute, has been “peer reviewed”

But as RenewEconomy revealed at the time, the only academic to “review” the modelling was a Stanford University professor John Weyant, who is currently being paid $US650 an hour ($A916) to testify for the Trump government against a climate action case brought by activists.

The Fisher modelling also includes a $74 billion cost of the Coalition’s own 26 per cent emissions reduction target. The Coalition doesn’t like to talk about that and acting minister Simon Birmingham danced around the issue when pressed by senators last week.

 

 

Giles Parkinson

Giles Parkinson is founder and editor of Renew Economy, and is also the founder of One Step Off The Grid and founder/editor of the EV-focused The Driven. He is the co-host of the weekly Energy Insiders Podcast. Giles has been a journalist for 40 years and is a former business and deputy editor of the Australian Financial Review.

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