Cooking the books on Liddell and energy policy

“Here’s one I prepared earlier.” It’s a line that has largely disappeared from TV as cooking shows have become competitive rather than informative.

Energy policy has made a similar shift away from information and towards political competition, but it can still be useful to check what the cooks might have had in the oven.

A good example is last week’s announcement that the government could build and own a gas-fired power station in the Hunter Valley. The announcement came on the back of a report from the government’s Liddell Task Force, a body comprised of senior public servants, that outsourced its modelling of energy markets to well-known consultancy Frontier Economics.

The Frontier Economics report was mysteriously missing from the task force’s final report, despite appearing as an appendix in the contents page. Making big claims without releasing the modelling that supposedly supports them is becoming depressingly common in Australian energy and climate debate.

Missing modelling is always a sign that something is fishy. Even without the Frontier Report RenewEconomy’s Giles Parkinson spotted that government claims in the press release did not match up with the Frontier results mentioned in the report.

I asked Minister Taylor’s office for the Frontier Report and was informed that “it may take several weeks” for my request to receive a reply.

So, as they say in the classics, here’s some modelling that Frontier prepared earlier. Dated December 2018, this modelling was finished just eight months before the Liddell Task Force was established. Does it support the Prime Minister’s claim of a “huge hit to families, businesses and job creating industries in NSW if the energy generated by Liddell wasn’t replaced”?

Drumroll please.

The red circle shows the “huge hit” to NSW households, small business and commercial and industrial users expected by Frontier in their base case model. Wholesale prices make a similar small change:

Frontier’s modelling sees NSW wholesale prices increasing to $60 per megawatt hour before plateauing for many years. So much for Angus Taylor’s claims of prices “per megawatt hour [increasing] to $80 in 2024 and up to $105 per MWH by 2030.”

To be clear, Morrison and Taylor are justifying major government intervention in the gas and electricity sectors based on unreleased modelling that apparently shows major price increases. The same modeler, modelling the same thing just months earlier found nothing of the sort.

Not only was the same modeler modelling the same thing, but they were doing it for almost the same client. The modelling above was commissioned by Coal Innovation NSW, the NSW Government body that oversees a $76 million dollar fund to “to advance low emissions coal technologies research and development”. The NSW Deputy Chief Scientist & Engineer, Chris Armstrong, even sat on the advisory groups for both studies.

Despite so much crossover, the Liddell Task Force made no mention of the Coal Innovation NSW study. Surprisingly, it did refer to a 2016 Frontier report on Hazelwood to demonstrate that “modelling exercises have not always accurately predicted the impact of generator closures.” (page 6)

The Coal Innovation NSW study was no back-of-the-envelope estimate. It is 239 pages long and models 13 different scenarios. It is the final report of the Future of NSW Coal Fired Electricity Generation Study, an exercise which cost NSW taxpayers a staggering $1.13 million over four years.

It involved not just Frontier – even though they did all the published work, they were paid only $359,880. International firm EY produced nothing that has been published, yet trousered $386,711, and Imperial College London was paid $186,355 for reviewing drafts. Various other consultants picked up the scraps.

Despite having produced such a comprehensive and expensive report, Coal Innovation NSW did not release Frontier’s report until at least late October 2019, when The Australia Institute asked for it. No media release was issued and no media appear to have covered the report.

The reason Coal Innovation NSW’s report from Frontier has been soft pedaled may lie in its results. In brief, “a mix of generation and storage technologies can replace [NSW] coal-fired generators so that demand for electricity in NSW continues to be met.”

This generation is primarily solar, although, presumably to the relief of the client, “new coal-fired generation may have a place in NSW”. However, that’s under the current (inadequate) emissions reduction targets. With more ambition no new coal generation is built.

Certainly, none of the modelled scenarios call for a large new gas-fired generator to replace Liddell.

This is energy policy in Australia in 2020. Climate science went out the window years ago, but now even commissioned economic modelling is hidden, sat on and ignored.

It’s hard to imagine a cooking show analogy for this. Forget the recipe, stick in whatever you like, as long as you cook it with gas.

Rod Campbell is research director at independent think tank The Australia Institute. Find him on Twitter at @R_o_d_C