Finkel modelling ignores new technologies, cheaper renewables | RenewEconomy

Finkel modelling ignores new technologies, cheaper renewables

The modelling prepared by private consultancy for Finkel Review deliberately ignores certain technologies that can provide grid security and replace coal fired generation at a much cheaper cost than gas. It also uses inflated costs for wind and solar.


Here we go again. The Australian public and the Coalition party room are being told that allowing coal-fired generators to continue beyond their 50 year life offers the cheapest path to a transition to a low carbon economy.

But they are being misled. This conclusion is only reached through modelling prepared by a private consultancy for the Finkel Review that deliberately ignores certain new technologies such as battery storage that can provide grid security and replace coal-fired generation at a much cheaper cost than gas.

The detailed modelling – prepared by consultancy Jacobs for the panel led by chief scientist Dr Alan Finkel – also ignores recent big falls in the costs of wind and solar, and over-estimates the cost to build new wind and solar plants.

The Australian public – and the Coalition party room – are being told that the cheapest and most effective way to address emissions is to allow coal-fired power stations to remain in the system beyond their 50-year asset life.

But this is only justified by excluding renewables and associated “firming” technologies – such as storage and synchronous condensers – that the review itself admits could provide a much cheaper option than gas-fired generation to replace coal fired generation.

It lends ammunition to the belief that the Finkel report has been deliberately constructed to achieve a “political” outcome that might just pave the way for some agreement within the Coalition party room.

Many in the industry are happy to go along with that, reasoning it best, or good enough, to get a mechanism in place now, and tweak it later.

But that plan is not working out well. Even with the promise of longer life for coal plants, and falling bills for consumers over “business as usual”, the Coalition party room is being torn apart by disagreements between the moderates and the mostly climate science-denying hard right rump.

The details of the modelling, which were only published on the environment ministry website on Wednesday, show that Australia can be a whole lot more ambitious than the targets laid out under the central Finkel Review’s conclusions, and could save even more money if some realistic cost assumptions were made and some technology answers dialled in.

The report’s recommended policy mechanism, the Clean Energy Target, has caused controversy because it allows for coal-fired generation to still support 25 per cent of total generation by 2050, albeit in a scenario where climate targets reflect the Coalition’s modest down-payment and not the “well below” 2°C scenario signed up to in Paris.


But there appears to be confusion in the modelling. Finkel himself acknowledges that the cost of wind and solar is cheaper than both coal and gas-fired generation, even with storage and “firming” capacity added, and carbon emissions and environmental impacts of the fossil fuel plant ignored. (See graph above)

Those estimates, Finkel noted, took into account some of the latest contracts, including the stunning $55/MWh deal for a wind farm in Victoria, and recent estimates by Origin Energy and AGL on the contracting costs of solar.

ARENA’s Ian Kay said on Wednesday that wind was being built in Australia at costs in the “low to mid” $50s/MWh, while solar was in the low to mid $70s/MWh, and falling.

The acknowledgement of these cost falls is critically important for considerations on how to address Australia’s energy future, but the detailed work conducted by Jacobs appears to roll back on those estimates and distorts the impacts of various policy paths.

More alarmingly, when considering scenarios where coal generators were managed out of the grid after 50 years, the Jacobs modelling deliberately ignores certain technologies such as synchronous condensers, and “synthetic inertia batteries”, that could be used instead of more expensive new gas generation.

Instead, it says that coal plant would have to be replaced only by thermal generators, meaning gas, and this would put the prices up sharply compared to the “unlimited” life coal scenario included in the preferred Clean Energy Target mechanism.

“Jacobs understands that new technology developments (i.e. synchronous condensers, synthetic inertia batteries with power conversion electronics etc.) will potentially allow renewable technologies to provide these ancillary services (or at least a portion of these services) but a more conservative approach was chosen for that sensitivity in order to examine the full impact of the constraint,” it says.

Frankly, this is outrageous. As one competing industry consultant noted:

“I’m afraid I find a lot of this so-called modelling is pretty low-grade stuff. Turning the handle and get what you want. The track record of this stuff is laughable and it’s boring and worthless to keep on talking of it as if it means something.”
Sadly, though, it does mean something, particularly because what are evidently more expensive and more polluting options have become front and centre proposals. And even these are likely to be rejected and compromised by the push by the coal industry, and their proxies in the Coalition, to slow down the transformation of the markets.
According to some reports, about 20 MPs argued strongly against the CET. One of them, the environment committee chairman Craig Kelly ,was on Radio National on Wednesday morning arguing that it was not clear that prices would fall, or how coal-fired generation would be protected.

It was not clear whether he was disputing the Finkel Review’s conclusions, or simply wasn’t aware of them.

The cost estimates for wind and solar used by the Jacobs modelling are also faulty. It has not reduced its capital cost estimates for wind energy below the much criticised capital costs used in its report for the Climate Change Authority last year.

Wind capital costs are still estimated at $2,400/kW, while solar PV and solar PV with single axis tracking are lowered but put between $2,200kW and $2,300/kW. (In the graph above, the left column represents life span of asset, the fourth column the capital costs per kW, and the next column the learning rate).

Solar farm and wind farm developers have told RenewEconomy that these estimates are out of the ball-park. “We think it is closer to $,1500/kw for single axis solar, and $1,800 for wind,” said the head of one firm currently constructing both wind farms and solar farms in Australia.

Also, he pointed out that solar farms have a life of at least 25 years. Only 20 years is factored in to the Jacobs modelling. The capacity factors adopted by Jacobs (Maximum of 29 per cent for tracking solar) also appear to short-change solar technology, in particular, by around 10 per cent.

This is not the first time we have taken issue with Jacobs over its modelling – most notably for a report it did for the CCA and various different policy scenarios, including the suggestion that an ambitious renewable energy target would result in a more coal-fired power stations built after 2040.

The upshot of this is that the cost estimates for consumers and emissions abatement for the scenarios that limit coal generation are painted as being significantly higher than allowing coal to continue.

This is important because, as the International Energy Agency has pointed out, and numerous others, if there is any chance of reaching the Paris climate goal, the electricity grid needs to reach zero net emissions well below 2050.

But the result is to completely distort the result, as occurred in the modelling that was used by AEMC and CCA to justify and emissions intensity scheme over alternatives such as a high renewable energy target.

 This graph below shows Jacobs outlook in the central CET scenario, which shows brown and black coal still in the system by 2050, providing the “thermal” synchronous generation and “baseload”. Solar with storage actually provides a small amount.
The scenario of the CET and “limited lifetime” for coal generators is about the same, except for the fact that the coal generation is largely replaced by gas, pushing up prices and still keeping a limit on solar and storage.
The graph below shows what the CET combined with limited lifespan looks like. Still some black coal, but gas taking up the gap, and even less wind and solar.
Jacobs has previously had issues with large-scale solar. In one report it prepared for Energy Networks Australia last year it suggested that no large-scale solar would be built between 2020 and 2040 and only around 400MW-600MW before then.
The result of all this modelling produces this graph, claiming that if you put limits on coal fired generation (their 50year life), then abatement costs and consumers bills surge.
But as discussed above, it is an absurdity and a manufactured result. The public, or the Coalition, are being misled.
Jacobs has previously had issues with large-scale solar. In one report it prepared for Energy Networks Australia last year it suggested that no large-scale solar would be built between 2020 and 2040 and only around 400MW-600MW before then.
In 2017, there is some 2,000MW of large-scale solar already under construction, and thousands more megawatts in the pipeline. Not everyone’s abacus is spinning inertia.
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  1. Ray Miller 3 years ago

    The book “Power Play”

    The fight for control of the world’s electricity by Sharon Beder 2003

    is still being played out over a decade later. “Following the money” will lead to more answers than trying understand the latest way information and thought is being distorted. With so much money being made in the NEM it is little wonder so much influence is being bought which shuts down any progress in common sense, lowering emissions, reducing consumption and costs to consumers.

    • Patrick Comerford 3 years ago

      Is this a conspiracy to defraud the consumer. Surely there are laws against such behavior

      • MaxG 3 years ago

        First sentence: yes.
        Second sentence: you wish

      • solarguy 3 years ago

        There is, but try to match their legal budget.

    • Alastair Leith 3 years ago

      The question of whether he’s been bought or not is not as relevant as the question ‘has/can he be in any way effective in reigning in this planet wrecking cabal of ignorance?’

      As Chief Scientist I’d suggest that be his chief priority; if he cannot be effective on that question, his job is to at least inform the public as to the threats of CC and the urgency of the need to decarbonise our grid in advance of the entire economy (by 2035 at latest). Not bury the urgency in modelling FF use out to 2050 and beyond. And not say ridiculous things like that more ambition than that ‘would cause problems’. Engineering is by definition about problems and solving them! Finkel’s version of the Moonshot would have been something like ‘let’s get a helium filled balloon into the stratosphere’.

      • Ray Miller 3 years ago

        I largely agree with the report and the “engineering” contained in it, many overdue changes to the NEM and governance need to be urgently made.
        A lot of the NEM planning and operation urgently needs 21st century quality engineering which has been missing, to guide us into the future.
        It is beyond disappointing that many assumptions made in the modeling have been corrupted, I would like to see the report 2.0 released which corrects the wrong assumptions.
        Finkel has hand balled to the government the targets which I share you disappointment is not even in the ball park of zero emissions by 2030. What planet do they think we are on!
        Every day examples of what is possible with RE projects are happening which is great but all the projects in future will need increasingly strategies which complement other RE projects and high levels of management including the loads. This is the new world we are entering, requiring high flexibility, efficiency and prediction.

  2. Alastair Leith 3 years ago

    FIGURE 66
    Will you look at all the generation in 2050 that is CCGT?! Combined cycle gas is as excellent at ramping to power balance between cheaper variable renewable generation and changing demand as coal is. WTAF are these guys on about?! There’s almost no peaking OCGT in their model, no new hydro and only a small amount of new solar with storage, which will be doing the lions share of peak market dispatch for demand following it seems — even though they talk PV and storage down?!

    Also the assumption that burning gas is better for carbon abatement makes a very large assumption about fugitive emissions of methane (104x as potent a GHG as CO2 over 20 years) being much lower than evidence suggests that they are, especially (but not only) in the case of fracked fossil gas.

    Needs to be stated that this model is equivalent to ~5-8º C of global warming if the whole world took this approach, And 2.0ºC is considered a guardrail for civilisation itself as we know it and most natural ecosystems in existence today.

    • George Darroch 3 years ago

      Brown coal will die soon, and black coal and gas (they’re almost as bad as each other) shortly after.

      • Alastair Leith 3 years ago

        Not according to the Chief Scientist of Australia and his team of experts. Nor the coalition whom seemed to have pulled his strings.

    • Andy Saunders 3 years ago

      Although I agree with much of what you say the part about fracking is not correct – there is almost none in Australia. Different story in North America, where the frac capacity is roughly 200x that of Australia.

      • Alastair Leith 3 years ago

        Southern QLD has seen a lot of fracking and the Federal Government is putting enormous pressure on the states to not ban fracking. And in Victoria’s case to reverse the Ban the Andrews govt *just* brought in, even though State Liberal Party was obliged to support the moratorium (and I think the ban) due to overwhelming opposition in the regions to fracking (typically 90% of people and higher opposed when surveyed in prospective regions). Frydenberg has been particularly vocal on this, an obviously is ignorant on the issues of climate and F.E. or just doesn’t care at all because he thinks his job is to work for FF interests. Sure USA is a worse situation by a long margin, but that’s no recommendation for further fracking in Australia.

        • Andy Saunders 3 years ago

          I believe in Qld the number of fracked wells is around 10%. Meaning 90% aren’t.

          The Qld CSG wells are qualitatively different. Coal seams have a dramatically different fracture toughness than the surrounding formation, so coal-seam fracs are well contained within the seam. They are also quantitatively different. Given the low fracture toughness (coal is brittle – and it already contains fractures in most cases – called cleats) the fracture pressures and horsepower required are quite modest, making Qld fracs remarkably low-risk.

          • Alastair Leith 3 years ago

            Studies have shown that up to 50% of leaked gas can occur in the first hours of any drilling instance and before capping and fracking have occurred. CSG leaks. Let’s call it unconventional gas, as over in WA it’s likely to be shale gas, more like USA fields.

          • Andy Saunders 3 years ago

            50% of what? Knowing drilling quite thoroughly, your comment doesn’t make sense. What is a “drilling instance”?

            I believe at present there are exactly zero shale gas wells producing in Australia. The shales are different – lacustrine instead of marine origin, which makes them unsuitable for fracturing.

          • Alastair Leith 3 years ago

            50% of F.E. over the lifetime of well can occur in the first 24 hours. Will chase a up reference for you. Drill instance => one well, fracked one or more times.

          • Andy Saunders 3 years ago

            Ah! You mean a well.

            Sure, 50% of GHG emissions can occur in the first 24 hours of a well. It can also be close to zero, or maybe much more. Generalising is foolish, and I’m not sure it either makes sense or any difference.

    • Tim Forcey 3 years ago

      Australian coal seam gas, fracked or not, has unaccounted-for methane emissions. See:

  3. riley222 3 years ago

    This whole discussion assumes that some sort of dogs breakfast compromise is going to be reached between the players , based on false premises. To me it’s starting to look unlikely any agreement will be reached. The Coalition is wracked by division and is looking to get ammunition to use on the Opposition rather than actually coming up with solutions, so we are likely to go to the next election in pretty much in the same shape as now. Labor won’t be doing the Libs any favours, thats for sure.
    As plenty are aware the next election may be not much more than a year away, so the clock ticks down and as Tony the wrecker and his mates have their way, the country pauses for another wasted year.

    • wideEyedPupil 3 years ago

      But at least shovel ready wind and solar developments are turning sods now, which didn’t happen under Tony. Agree, a policy dog’s breakfast and libs and nats looking to politicise everything as a way avoiding attention turning to their own morally bankrupt positions protecting donor’s interests. Being using such tactics since the year dot. Wish I could say ALP was much better, they can’t even agree on continuing the RET out to 2030, and their MPs are also in on the revolving door, brown paper bags and life after politics game…Combet and Ferguson to the two most obvious examples.

    • Joe 3 years ago

      Tony 2.0…new election slogan…”COAL NOW AND FOREVER”.

  4. Analitik 3 years ago

    Do you understand what a synchronous condenser is and does?

    It’s basically a generator unit that is spun by the grid with the rotor current controlled so that it consumes leading current to offset the lagging current load of induction motors. So in normal operation, it consumes real power due to parasitic losses (friction, windage, resistance) as it is essentially an unloaded motor.

    Any support that synchronous condensers can provide to the grid (in addition to it’s normal usage to limit lagging current transmission) is very short term with a recovery period required afterwards where the rotating assembly will consume power as it is accelerated along with the grid frequency (synchronous remember) back to the normal 50Hz.

    There is no way that even thousands more of these will make an appreciable difference to the intermittency issue from wind and PV farms. It is no more a solution than fitting synthetic inertia systems to wind turbines.

    • Cooma Doug 3 years ago

      Syncons in a large base load system are essential. Without the ability to generate and absorb lagging vars there will be voltage collapse in high load periods if a larger coal generator trips.
      For example, the link between NSW and VIC in the snowy region indures net high consumption and var generation at various times. Without the syncons in that location there would be systrm black events.
      Transgrid also has stationary capacitors and reactors in key locations that do the same job much cheaper.
      The new technology will manage this when the battery systems are in place
      and will also manage frequency stability when the largre synchronous gens and syn cons are vanishing.

      I expect that as the new technologies are brought in large base load ancilliary service will be hard to justify and of no value to business and will not fit into the system from an ecconomic or technical aspect.

      This all depends on a market rule set that is appropriate.

    • Mike Westerman 3 years ago

      Most hydro can be operated in “synch con” with minor modification so if is usually made available in the design. Adding the 10GW or so of pumped hydro that is readily implemented and economic in SA, Tas, northern NSW and variously in Qld would add not only the needed storage, load shifting and reserve needed, but also all the FCAS thru synch con that is needed as well.

      The Qld government looks like it is acting to free Wivenhoe to start doing its job again, and with some investment in transmission constraints Vic-NSW and NSW-Qld, along with the needed NEM rule reform, most of the other PHES would get built.

    • Geoff James 3 years ago

      You’re right – but they’re not intended to solve that problem. Both synchronous condensers and “synthetic” inertia from wind turbines (funny phrase because it actually uses the real inertia of turning blades) solve the problem of rapid change of frequency. This happens when there is only a small amount of synchronous generation in a grid, as at the time of the September blackout in SA. The technical name for this problem is “system security”.

      Intermittency, on the other hand, is solved by a suitable mix of generation technologies (which can be a 100% renewable mix) and energy storage of various kinds. The technical name for this problem is “system adequacy”. Both adequacy and security are needed for a reliable grid.

      • neroden 3 years ago

        Thanks for the technical terms. So security is the frequency problem and adequacy is the load matching problem.

  5. Robin_Harrison 3 years ago

    It looks like the people who own Jacobs are the same people who own our politicians. If this is our chief scientist, science in Australia is in a sorry state.

  6. Richard 3 years ago

    It’s all just political bullshit. Meanwhile the incumbents and new entrants have plans to role out massive amounts of renewable across the country
    I doubt any of this will mean anything

  7. Radbug 3 years ago

    Another headache for coal. Dirt cheap ethane & propane out of the US oil fracking wells. Cheaper to liquefy than methane, there’s lots of it & it’s looking for markets. A powerful competitor fuel in the Australian “baseload” power generation debate.

    • neroden 3 years ago

      Ethane often gets converted to ethylene for plastics, and propane is often a plastics feedstock too.

  8. John Herbst 3 years ago


  9. BushAxe 3 years ago

    The grossly low projection of solar/ solar+storage by Jacobs is just laughable. Anyone with realistic views of future generation will acknowledge solar will be the main contributor given our solar resources.

    • Alastair Leith 3 years ago

      Looks like he never heard that the deployed capacity of PV doubles every two years and has done for two to three decades globally.

      • Calamity_Jean 3 years ago

        “Looks like he never heard….”

        If someone tries to tell him, does he stick his fingers in his ears and shout, “La,la,la, I can’t hear you!”?

  10. Alastair Leith 3 years ago

    Also demand grows out to 2050 in Fig 37 and yet falls then plateaus around 2038 in Fig. 66. Different assumptions about energy growth, DSM, EE, electrification of transport, space and water heating and industrial processes, or just careless?

  11. neroden 3 years ago

    Solar farm lifespan is minimum 40 years. The warranties are 25 years because the lifespan of the *companies* is shorter than that of their products!

    Just to add to the list of egregious errors in this “report” designed to sandbag renewables.

  12. hugh grant 3 years ago

    I expect that history will judge Finkel’s attempt at brokering a pragmatic political solution (no matter how well intentioned) as yet another low point in the politicisation of “independent advice”.

  13. Trevor Powell 3 years ago

    I found it fascinating to note, way back at Sect 8.3 “Energy storage technologies” (on page 193 in case you missed it) – well after such proven and credible generation technologies (sic) as carbon capture and storage, Nuclear and hydrogen, and just before Flywheels and Compressed air energy systems – we see a bare half page mention of Concentrated solar power and thermal storage…

    Well Bless me! It seems our company has spent ten years developing technology that the enlightened souls in Jacobs (and by extension the Finkel Report itself), believe will likely only appear as “…fossil fuel…hybrid systems with renewable energy … as an option for transition of existing generation assets…” Really???

    The report has missed the point completely. “Advanced turbine systems, such as those utilising supercritical CO2 as the operating fluid, offer pathways for step change improvements in cost and efficiency for solar thermal generation”.

    Supercritical CO2 turbines are years away from commercial maturity. What the report fails to recognise is that, whilst efficiency in any generating plant is a major consideration, the cost of the solar field represents between 30-40% of the total cost of a Concentrated Solar Power (CSP) project. Slashing the cost of the solar field (including the cost of the receiver receiver), whilst retaining existing turbine technology, delivers massive cost benefits.

    A quick look at Wikipedia reveals that, as at June 2016, there were 70 Operational Solar Thermal Power Stations ranging in size from around 1 to 400MW, with a total operational capacity of 4.9GW. Another 24 projects are under construction with total 1.4GW capacity, and a further 15 announced, with 7.5GW generating capacity.
    This penetration is MINISCULE compared with total global power demand however, apart from noting that “The power storage capacity of thermal storage systems can be very large…”, the report mentions almost nothing about storage and effectively dismisses the potential of CSP out of hand.
    Impacts ( is an Australian Solar Thermal technology company. With our storage partner SaltX Technology (, we recently made submission to ARENA in response to their RFI on The Commercialisation of Concentrated Solar Thermal (CST) Energy in Australia.

    ARENA CEO Ivor Frischknecht said that “while CST could provide reliable renewable energy on demand, further investigation and funding was needed for the technology to achieve commercialisation in Australia.”

    “The benefits of CST will become increasingly important as more renewables enter our grid, particularly in regions like South Australia that already have high levels of wind and solar PV generation… Solar thermal plants operate more like traditional fossil fuel power plants than wind turbines or solar PV farms. They can contribute to network stability and reliability through built-in storage and inertia provided by a conventional turbine.”

    Mr Frischknecht went on to say that ARENA played a key role in supporting the commercialisation of emerging technologies such as CST.

    Impacts’ patented Solar Thermal Collector, now being manufactured in Malaysia, provides a 40% SAVING against the installed cost of a comparable parabolic trough plant. SaltX’s patented nano-coated salt technology offers the real potential of true baseload, dispatchable solar energy, at a fraction of the cost of battery storage. And together we expect to play a big part in future generation capacity both domestically and internationally.

    In our RFI response we noted that the value proposition for CST is driven around cost, and the simplification of manufacture, installation and logistics. And like PV, CST is a volume model that will see significant cost reductions with volume production. We also noted that Long-term thermo-chemical storage is a viable solution for power levelling and appropriate sizing of the entire solar field, in order to
    achieve significant financial rationalisation.

    I’m glad to see that ARENA (and CEFC) understand the critical contribution that CSP can make to achieving the Four Key Outcomes of the Finkel Report – increased security, future reliability, reward(ing) consumers and lower emissions – because regrettably it appears the report’s authors do not.

    Trevor Powell
    Chief Executive
    Impacts Solar

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