Dick Smith wrong on energy costs – renewables are cheapest

Dick Smith has got the relative costs of fossil fuels, nuclear energy and renewable power  all mixed up in his latest polemic, “Ten Bucks A Litre.”

I am from Energy security think-tank Zero Emissions and I wrote the Zero Carbon Australia Stationary Energy Plan which is briefly showcased during the film.

The stationary energy plan, the first of its kind to show that Australia could run on 100% renewable energy a combination of wind power, rooftop solar photovoltaic, and solar thermal with storage (featured in the film), along with a huge “mining” effort to find energy efficiency in housing, commerce and industry. It was a landmark that helped caused the Australian Energy Market Operator (AEMO), the organisation that runs Australia’s electricity supply, to write and publish this year its own plan and validate much of our work.

Whether you care about climate change or not, we’re moving rapidly away from coal because domestic and international banks, including the World Bank, will no longer invest in coal fired power.  And a shift to gas would involve the burning of coal seam gas, due to a massive upswing in demand in Asia especially Japan the cost of gas here is becoming prohibitive.

The anticipated three-fold increase in the cost of gas (once we’re linked to international markets) means that wind power is now already the cheapest source of new energy capacity. And it is also cheaper for householders to generate their own power during the day from rooftop solar than to buy it through the meter from the big power companies.  The only thing stopping an even faster rush for rooftop solar installs on domestic residences are discriminatory policies which prevent householders subject to a previous feed-in-tariff schemes from upgrading and adding more panels to their systems, and utilities that  unreasonably limit the size of new systems.

The cost of gas being is being driven by the building of LNG export terminals in Queensland.  Once we have a sizable link through these processing and port facilities to send gas including coal seam gas and shale out to the world’s markets, the gas market will mirror the oil market and always react to world pricing signals.  We will never go back to having a sheltered market with gas as a cheap source of energy.  What has really driven this international price up is the Nuclear disaster at Fukushima.

The Fukushima nuclear disaster two years back closed down a massive industrial manufacturing area for good, causing the abandonment of billions of dollars of factories and their robotic tooling and other plant.  The cleanup bill is estimated at $60-70 billion  and the country only has two out of 54 nuclear reactors operating.  What’s more, it turns out that the two reactors that are operating were built atop a major earthquake fault line.  So it is quite likely that they will be shut down in September, leaving Japan with no nuclear power plants at all.

Nuclear is the most expensive option when you take into account the external factors, followed by coal and coal seam gas. These external factors  include devastating effects on health, agricultural output, land degradation, acid rain and the ability for us to feed ourselves, and of course in the case of the fossil fuels, climate change.

Already, in India and China renewables are either the cheapest form of new generation, wind is beating fossil fuels in Brazil and elsewhere. Even in Australia, wind and solar are considered the cheapest option for new capacity. Further price reductions are all about economies of scale, and economies of scale is what India and China have a lot of. Only renewable energy’s flagship technologies of wind power, rooftop solar and solar thermal with storage have small footprints and superior environmental performance, with innovation improving this all the time.

Dick Smith  needs to revise his conclusion. If we want cheap power for the 21st century we need to invest much more in renewables, if we want to flounder, get sick and risk our economies then nuclear and fossil fuels will do the trick.

I look forward to a series of town hall debates with Dick Smith on the right way to a renewable future for Australia.

Comments

23 responses to “Dick Smith wrong on energy costs – renewables are cheapest”

  1. Chris Fraser Avatar
    Chris Fraser

    Nukes are not worrisome, I’m happy to give BZE $416 it wanted from my household (along with all households) to get ZCA2020 up and running. It’s been 5 years along the road. What with other companies providing some clean energy, others ‘learning by doing’, the PV explosion, and recent investment in new technologies … would a contribution need to be even this much ?

  2. derekbolton Avatar
    derekbolton

    I’ve yet to find a half way convincing analysis of the real $ cost of
    nuclear energy. The BREE report on which Dick Smith ultimately depends (http://www.bree.gov.au/documents/publications/aeta/Australian-Energy-Technology-Assessment.doc) states:

    “the LCOE … does not include disposal/storage of spent fuel or
    provision for decommissioning of plant. A report in the Journal of
    Economic Perspectives (Davis, 2012) puts the contribution of spent fuel
    storage in the order of US$1/MWh.

    … decommissioning costs have not been included for any of the
    technologies in the calculation of LCOE. … there is very little
    current experience of actual plant decommissioning. …. the
    decommissioning cost will be incurred well outside the modelled period. ”

    The $1/MWh figure is theoretical since no nuclear plant anywhere has been fully decommissioned.

    Meanwhile, the US GAO (http://www.gao.gov/assets/600/593745.pdf)
    reports that the US nuclear industry has generated about 20 trillion
    kWh to date, and the DOE’s failure to provide long-term (i.e. dry)
    storage is costing it $500m-$1b/year in compensation. Given that long
    term storage is for around 1m years, that equates to $25/kWh! Of
    course, proper long term storage should cost much less, but that
    remains, again, theoretical.

    On top of this, nowhere, except perhaps in Germany, do nuclear
    utilities pay commercial rates for full liability insurance. Most enjoy
    liability caps courtesy of the taxpayer.

    Until an independent expert study fills in these numbers, it is utterly spurious to quote a dollar cost of nuclear power.

    1. Matthew Wright Avatar
      Matthew Wright

      Hi Derek,

      Dick Smith / Simon Nasht are now quoting a recent EIA report which claims projects which are basically thought bubbles are real under construction projects.

      http://www.eia.gov/forecasts/ieo/more_highlights.cfm

      It needs to be debunked and is on my to-do list. Would love it if someone else has already done the work.

      Matt

      1. derekbolton Avatar
        derekbolton

        Hi Matt,
        You seem to be saying the report claims they are real, but that’s not how I read it. Did you mean Smith and Nasht are presuming them to be real?

        1. Matthew Wright Avatar
          Matthew Wright

          Yes that’s what I mean. And I’m trying to find the passage that refutes that. In the summary they talk about 2.5% per annum growth despite a 4% drop in annual energy from Nuclear in 2011 and a further 7% drop in 2012.

          1. derekbolton Avatar
            derekbolton

            The relevant passage in the EIA report seems to be this one:
            “the uncertainty associated with nuclear power projections for Japan and for the rest of the world has increased. Still, substantial increases in nuclear generating capacity are projected, including 149 gigawatts in China, 47 gigawatts in India, 31 gigawatts in Russia, and 27 gigawatts in South Korea (Figure 7).”
            I can’t find any reference for those numbers. Certainly the data behind Figure 2 screams out for some justification:
            Year quadBtU change
            2000 25.7
            2001 26.4 2.9%
            2002 26.7 1.1%
            2003 26.3 -1.4%
            2004 27.2 3.6%
            2005 27.5 0.8%
            2006 27.7 0.8%
            2007 27.1 -2.2%
            2008 27.1 0.1%
            2009 26.7 -1.3%
            2010 27.3 2.1%
            2011 26.2 -3.9%
            2012 25.5 -3.0%

            … and yet the predictions:
            2013 26.8 5.3%
            2014 28.5 6.3%
            2015 30.4 6.8%
            Of course, it should be pretty easy to predict a few years ahead since it takes so long for new nuclear to come online, so I’m inclined to believe those EIA numbers. Further out, the EIA figures show the annual rise in nuclear tailing off to 3% around 2020 and 2% around 2030.

            According to http://www.world-nuclear.org/info/Country-Profiles/Countries-A-F/China–Nuclear-Power/#.UgAwc6y1c40,
            “Mainland China has 17 nuclear power reactors in operation, 28 under construction, and more about to start construction.”

  3. Concerned Avatar
    Concerned

    Gees if Wright and a callculator were ever found in the same room,I would fall off my chair.

    1. Guest Avatar
      Guest

      That’s why we strap you into the chair grandpa.

      1. Concerned Avatar
        Concerned

        Gees what an intellectual riposte dear

  4. Christina Macpherson Avatar
    Christina Macpherson

    Matthew Wright merely touches on
    nuclear’s external cost factors. What is always left out, in discussions of
    financial costs, is the front-end and especially back-end costs. Considerable
    costs are involved in the uranium mining, and milling, – especially
    clean-up costs, always left to the tax-payer. The back-end costs are never
    really costed – the deep burial process, and the accompanied, and eternal,
    security costs. The latter costs are inevitably passed on to the tax-payer.

    It’s as if the subjects were sort of bad taste topics, like discussing the
    arrangements for cleaning he toilet

    It’s also not stressed that ultimately, renewable fuel is free, while fuel for
    nuclear power is not.

    1. Concerned Avatar
      Concerned

      My comment regarding Wright also pertains to yourself,with respect to all views however incorrect .

      1. wideEyedPupil Avatar
        wideEyedPupil

        That’s a great contribution, Concerned. You have a pro-forma saying essentially “I’ve got my thumbs in my ears but I try to have a discussion at the same time”. What are the Koch brothers paying sock-puppets per ‘comment’ these days?

        1. Concerned Avatar
          Concerned

          Hey,everyone is entitled to a view dear

    2. wideEyedPupil Avatar
      wideEyedPupil

      Not to mention the destruction to the environment impact at extraction point of yellow cake. The Ranger mine alone consumes as much water as the entire city of Melbourne everyday to process the ore it extracts. And that water is pumped out of the artisan basin (prob using diesel) which has seen natural oasis in the region dry up and die. These natural oases have existed for at least as long as there has been human occupation of the area (some 10s of thousands of years) and probably a whole lot longer. Draining the artesian basin is never factored in as a cost to the environment or as a lost opportunity cost to other potential users (irrigators for e.g.).

      Then there’s those settling ponds where GLs of mildly radioactive water sits and occasionally overflows into nearby watercourses and makes it’s way to national treasures like Kakado. We don’t know how often they overflow because there’s a self reporting rule which the mine operators have admitted to flagrantly breaching by not reporting overflow occurrences.

      1. Chris Fraser Avatar
        Chris Fraser

        Those nasty little externalities … Who can we trust to include them in a thorough analysis of all energy sources ?

  5. brendan Avatar
    brendan

    It’s really obvious that nuclear power generation is favoured by the science types, and renewable electricity by the drama types. It is also abundantly clear that the drama types have special calculators because their costing of nuclear energy is always miles higher than any one else, the costings of renewables comes in at a hefty discount to everyone else, and their idea of the benefits and coverage of renewable schemes is nothing short of biblical in it’s miraculous predictions, as they determine that energy efficiency (ie rationing to cover the unreliability of their solution) is the key!

    In the real world however, we see that France Sweden & Switzerland have among the lowest electricity costs, & lowest CO2 per KWh, between 20 & 80g. We also see Denmark has the highest penetration of wind power but emits 650g per KWh & has high electricity costs. Germany is still operating several nuclear reactors but has found that it’s aggressive expansion of solar has resulted in the highest electricity prices in the EU, and wild unplanned fluctuations in supply which have forced it’s neighbors to isolate their grids. Their nuclear generators are heavily taxed, yet still profitable, whereas their renewable generators are heavily subsidized, and must dump power at uneconomic (occasionally below zero) prices into the market when it’s both windy & sunny. Yet Germany still emits 450g+ CO2 per KWh & has actually expanded its coal burning for electricity during it renewables program and incurred huge additional grid costs.

    Then of course we get the appeals from the renewables crowd that nuclear should be illegal, presumably because that aids their ideological choice become economic.

    For the clear headed rationlists, nuclear is the obvious CO2 reducing winner. If the free market does not like it, they will not adopt it, but it’s far more likely that it will enable decent lives than some ideological fantasy from the noisy anti nuclear minority, enforcing their political preference on our energy future.

    Even if everything goes according to the renewable plan in Germany, it will take them till 2050 to equal what France achieved using nuclear before 1990, & cost Germany about 10 times as much.

    1. Giles Avatar
      Giles

      I think you’ve hit the nail on the head – “If the free market does not like it, they will not adopt it”. The free market does not like nuclear, and it will not adopt it. Don’t blame greenies. Banks won’t finance nuclear, insurers won’t insure it, constructors won’t build it unless the government stands behind them, No nuclear gets built in the western world unless the government accepts the insurance risk, financing risk, construction risk, and operating risk and the clean-up risk. And, in the case of the UK – agrees to pay three times the prevailing wholesale price for 40 years. Free market?

      As for your complaints about denmark and germany, the key is where they came from – both relied heavily on imported, very expensive gas, which is why their prices have always been high. Denmark has reduced its emissions quite dramatically since introducing wind.

      France, Sweden and Switzerland are all looking to reduce reliance on nuclear. France wants to cut to less than 50% Sweden’s centre right government refuses to subsidise it and is looking at wind and solar, http://www.reuters.com/article/2013/05/29/sweden-nuclear-idUSL5N0E927B20130529and and Switzerland is phasing out nuclear altogether.

      1. brendan Avatar
        brendan

        Hmmm, I’ve seen the price in the UK & it is lower than the price for renewables in each case.

        I dont accept that the views of the moderator in any way reflect those of the free market, but I do note the use of position to stifle the alternative view . You can sue journalistic slant to back opinions, but you cannot rewrite history. The only countries to get their CO2 emissions down to an acceptable level did it by expanding nuclear power

        1. wideEyedPupil Avatar
          wideEyedPupil

          “Hmmm, I’ve seen the price in the UK & it is lower” so what “calculator” do those numbers come out of Brendan the Valiant Anti-greenie crusader? And here are some science types who would find you pro-nuke comments as foolish as I do:

          http://theconversation.com/dick-smith-flies-planes-weighs-energy-futures-16510

          http://evcricketenergy.wordpress.com/2013/01/01/if-the-answer-is-nuclear-you-dont-understand-the-question/

          1. Matt Robinson Avatar
            Matt Robinson

            Folks, all we have to do is wait. There’s no real point parrying and thrusting with our respective views and their justification (which often amount to just more opinion).

            I suspect in both cases the environment (and we, the human race) will lose. If the renewables ‘greenies’ get the upper hand for long enough to actually do enough to make any kind of emissions difference, it will be too late to introduce nuclear to fix it.

        2. derekbolton Avatar
          derekbolton

          “I’ve seen the price in the UK & it is lower than the price for renewables in each case”
          That’s not very clear. What are you saying, exactly? Are you disputing that EDF is asking wholesale price of GBP96/MWh, index linked, for 35-40 years? That’s twice the current UK price. (only this link mentions the inflation-proofing: http://online.wsj.com/article/SB10001424127887323566804578553030018924570.html)

          “The only countries to get their CO2 emissions down to an acceptable level did it by expanding nuclear power”

          Which countries are you thinking of? Sweden is 50% hydro.

      2. Albert Sjoberg Avatar
        Albert Sjoberg

        It would be so wonderful if reasonable consideration was at least afforded Nuclear power. This head in the sand attitude is stifling research and eliminating any possibility of technological progress or break through.

        Unless we do something about the environment now, we are going to face excessive heating that will result in greater evaporation and increased humidity and cloud cover. This must have a great impact on the effectiveness of earth based Solar.

        Do not misunderstand me, I am for renewable energy and Solar in particular, but Solar, both photovoltaic and thermal relies on ultra violet radiation getting to the surface. A future with higher humidity and greater cloud cover must Impact Solar effectiveness in the coming decades.

  6. Miles Harding Avatar
    Miles Harding

    Exactly as Dick would hope!
    What is needed is a pragmatic debate on the merits of nuclear power.

    I grew up in the shadow of one of the biggest nuclear power stations, at Pickering Ontario. This was a far better neighbor what would have been a coal fueled power station. I have no philosophical objections nuclear power.

    Any nuclear power debate is largely poisoned with shrill emotive objections. We have to rise above this noise and get to the facts.

    The debate does not include some important factors, such as:

    Local geographic issues. Geologically active Japan is a particularly poor place to site reactors. Reactors should be near large bodies of water for removing reject heat from the power turbines. Inland sites present particular issues.

    Reactor design and intrinsic safety. There are many designs, some are much safer than others. Many reactors in service today are old (end of life) dodgy American and Russian designs.

    Environmental and loss of life risks. Spectacular ‘Homer Simpson’ failures are held up as the norm for nuclear power, but it is likely less risky than hydroelectric when occasional dam failures are considered.

    Fuel availability. Uranium ores are in decline with the high quality ores largely mined. It is likely that a highly nuclear world will face a fuel crisis within a few decades. Thorium is much more available… for now, but most reactors can’t process it (CANDU can).

    There is no denying that there are significant issues with Nuclear power.

    Fuel disposal. No country appears to have solved this. Canada and Australia, have ancient and stable land masses. Canada is still talking about burying waste. Fortunately, it is not a vast amount.

    Cost. We haven’t got to cost yet, but it should not be the overriding decision driver.

    City design. We have built energy hungry cities that are very dependent on consistent electric power, not to mention trucked in materials and services. I feel that this historic design is a major issue that is very difficult to solve with intermittent renewable power.

    Having said this, I believe that Australia is still best placed of any country to exploit solar and wind power and almost all of the country’s energy needs could be met with these resources if society adapts to world where the sun doesn’t always shine and nights are spent largely powered down. Maybe our ‘weekends’ should revolve around cloudy, still days.

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