CSIRO report doctored to pretend gas cheaper than wind and solar

The CSIRO Low Emissions Technology Roadmap report has been released by the Australian Coalition government, purporting to show that the cheapest avenue to cutting emissions is by limiting wind and solar and focusing more heavily on gas-fired generation.

But in reality, it shows no such thing. Or at least, it shouldn’t.

The report relies heavily on different scenarios. Extraordinarily, the primary scenario that focuses on high amounts of gas-fired generation and limits to wind and solar is paired with high gains in energy efficiency and energy productivity across buildings, transport and industrial processes.

But the scenario for high wind and solar assumes business as usual on efficiency and productivity, meaning that the wind and solar scenario assumes 50 per cent more electricity generation is required in 2050 than in the scenarios where the amount of wind and solar is capped, or higher levels of fossil fuel generation is assumed.

Little wonder, then, that the high gas scenario comes out cheaper, albeit by not very much – in both investment costs and in consumer bills – prompting the government to declare that a “technology neutral” approach, the new buzz line for “let’s not go too hard with wind and solar”, is the preferred course of action.

In a statement issued on Friday, energy minister Josh Frydenberg said the government welcomed the release of the CSIRO Low Emissions Technology Roadmap which, he noted, “strongly reinforces the Government’s technology neutral approach to emissions reductions and our focus on energy security and energy productivity.”

CSIRO chief Larry Marshall said it was important to consider “security, affordability and sustainability”, but then suggested the coal could be used as a feedstock for hydrogen.

“We think of coal as the past, but what if we could reinvent it into the feedstock for hydrogen,” Marshall said. Most people think hydrogen is only a good idea, or at least a clean idea, if the feedstock is wind or solar.

The report continues a sad history in Australia of analysis that is shaped to fit what appears to be a predetermined outcome.

How else to explain the decision to cost the high wind and solar scenario on the basis that there would be no gains in efficiency or productivity, where in reality these are the centre of high renewable planning. Wind and solar are the obvious path, but conservative governments simply don’t want to know.

The report is particularly concerning coming out on the same day as Donald Trump pulls the US out of the Paris climate accord, and one week ahead of the release of the Finkel Review. Frydenberg suggested that both reports would be considered by the government.

The CSIRO’s estimated costs of wind and solar are also conservative, although not as bad as the modelling that had been used by the Climate Change Authority and the Australian Energy Market Commission to justify an Emissions Intensity Scheme.

It estimates, for instance, that the cost of wind energy will fall to $80/MWh by 2020. That is nearly 50 per cent more than the $55/MWh contract signed last month by Origin Energy for the Stockyard Hill wind farm.

It estimates of the cost of solar are closer to the mark, saying they will fall to $70-$85MWh by 2020. But we are probably already there, and the cost of solar plants in Queensland is already said to be below $70/MWh.

The CSIRO report offers a relatively benign view of the gas price, suggesting that it might only increase to $9/PJ by 2030 in its central scenario.

The gas price has already been trading well above this, and shows no sign of retreating, prompting AGL (Australian Gas Light) to say recently that it saw no role for gas as a transition fuel, predicting instead a jump from coal to big renewables. Sadly, the opportunity for a realistic cost assessment of this is missed.

And that’s a shame, because apart from the distorted headline conclusions, the report – 160 pages in the main section and a 290-page technical addition – provides some interesting reading.

It concedes, for instance, that high wind and solar, backed up with battery and other storage, is both feasible, cheaper than business as usual, and can deliver the abatement required. Relying on gas, it says, risks fuel price increases.

In any case, the plunging cost of wind and solar means that, in all scenarios, new electricity generation between now and  2030 is likely to comprise mainly wind and solar PV.

“In each pathway, onshore wind and large-scale and rooftop solar PV are expected to make up the majority of new generation to 2030. This is due to the low cost, low emissions and commercial maturity of these technologies,” the report says.

The high solar and wind is based around a share of variable renewable energy (90 per cent by 2050) that was identified in the CSIRO’s joint report with Energy Networks Australia.

It shows that energy reliability is enabled largely through battery storage, and energy security through means other than synchronous generators, e.g. synchronous condensers, or synthetic inertia provided by batteries with advanced inverters or by modern wind farms.

“Modelling carried out for this roadmap finds that with a mix of battery storage, excess VRE capacity and gas generation, a reliable electricity system delivering 95% abatement in 2050 compared with 2005 levels and VRE share of ~90% is possible at moderate cost (as compared to the no abatement scenario in the figure below).”

It says that batteries are only needed above VRE share of 40-50 per cent, which occurs in the mid to late 2020s. To permit 90 per cent renewables penetration, around 0.75 GW (2.6 GWh) of battery capacity is sufficient to support each 1GW of VRE capacity; this provides around 10 hours of storage at average load.

Interestingly, it says that the high renewables cost comes in 18 per cent cheaper than pathway 3, where wind and solar is limited to 45 per cent and the remaining power comes from synchronous, dispatchable low-carbon sources. And this is despite an extra $8 billion needed for transmission in the high VRE scenario.

While the report stresses that “no one pathway is recommended as preferable; rather, they are intended to serve as a tool for policy and other decision makers to conceptualise possible futures in the face of considerable uncertainty”, it’s not difficult to imagine which direction the Coalition will take.

Pathway 1, which focuses on energy productivity, new generation is restricted to technologies that have been recently deployed, namely wind, solar PV and gas, with limits placed on deployment of wind and solar PV (45 per cent). It assumes a slower rate of abatement.

Pathway 2 examines the full extent of the role variable renewable energy (VRE) technologies such as wind and solar PV can play, with particular focus on the enabling technologies required to achieve a high share of VRE. But it factors in no productivity and efficiency gains.

Pathway 3 examines the role low emissions, dispatchable technologies can play, namely concentrating solar thermal (CST) with storage, high efficiency low emissions (HELE) fossil fuel technologies with carbon capture and storage (CCS), nuclear and geothermal. Again, it factors no efficiency and producctiviety gains and is the highest cost scenario.

Pathway 4 is “unconstrained”, allowing all low emissions technologies with no limits on wind and solar, but assumes a greater role for gas, including with carbon capture and storage. Pathways 3 and 4 also investigate the role hydrogen can play as an energy storage medium across the energy sector. Pathways 4 also assumes a slower rate of abatement.