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.