Renewables cheaper than coal, says Gupta, “it’s obvious”

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For those who don’t want to take AEMO’s word for it, UK steel billionaire Sanjeev Gupta has a message on the future of energy generation in Australia: It is no longer cheaper to make power from coal than it is from renewables, “and we will prove it.”

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Sanjeev Gupta: Supplied by company.
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Even UK steel billionaires get the blues. For more than a year now, Sanjeev Gupta has been letting his actions – and investments – do the talking on renewables in Australia.

Since his GFG Alliance bought the ailing Arrium steel producer in Whyalla last July, Gupta and his team have been detailing bigger and better and clearer plans to build up to 10GW of solar, as well as storage, to power his own and other energy intensive industrial majors, and generally revitalise Australia’s manufacturing sector.

But still, the message is not getting through – at least, not to some. And the frustration is starting to show.

“It’s still everybody’s perception that it is cheaper to make power from coal than it is from renewables, and it is no longer the case,” Gupta told Guardian Australia in an interview on Monday.

“It was the case not long ago, but it’s no longer the case, and we will prove it,” he said.

“If it was cheaper to make new coal plants, I would argue you should invest in that technology… But it should just turn on what’s more competitive.

“If you can make power from the sort of things that we’re doing and it can compete against a new coal plant, then why would you not do that, right? It’s obvious.”

Obvious. But not to the Collie shire council, in Western Australia, which just voted against installing rooftop solar on local government buildings because “we should be burning more coal.”

And not to the federal government, which continues to claim that the National Energy Guarantee offers the best chance for new coal-fired generation to be built in Australia.

And not to the mainstream media, which chose to interpret the Australian Energy Market Operator’s Integrated System Plan – which last week confirmed that the cheapest and smartest replacement for the country’s ageing coal-fired generators would be in solar, wind and storage technologies – as an endorsement for coal power.

That interpretation that was, in turn, lapped up by the likes of federal resources minister Matt Canavan.

But as Simon Holmes à Court reiterates in this piece today, even AEMO’s ‘neutral’ scenario sees renewables overtake coal sometime in 2032, when coal declines from 68 per cent to 22 per cent of the NEM, and renewables grow from 24 per cent to 72 per cent.

“So much for coal reigning supreme!”

And this unstoppable shift to renewables, and away from coal, is driven by the same set of economic factors that make Gupta’s case for solar and storage powered manufacturing in Australia a no-brainer.

As Holmes a Court explains:

“It should be noted that AEMO’s modelling algorithmically determines the least cost solution that delivers a mix that meets the scenario’s reliability, security and emissions goals.

“As such, the scenario is a rigorous, dispassionate and optimal solution to the ‘trilemma’ of cost, reliability and emissions.”

And if that doesn’t make it clear, here’s Gupta, again, in The Guardian:

“Whatever can be done (politically) to help with this transition I would welcome with open arms, but even if nothing is done we will still make investments. We may make less investments, we may do it slower, but we will still do it anyway because it’s doable,” he said.

“Of course, if you have the right tailwind and don’t have a headwind then of course you can do more and you can go faster, and you can do grander and bigger, which is what we would like to do, but it’s not a real issue for us. We will do it anyway.”

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16 Comments
  1. Joe 4 months ago

    I love that last paragraph with the Sanjeev and his ‘tailwind’ and ‘headwind’ and “We will do it anyway”. Why does it take a man from the other side of the world to come here and show The Deniers what the reality is. We all know who ‘the headwind’ is but I’m guessing ( hoping hard! ) that they will run out of puff at the next election.

    • MikeLC 4 months ago

      It ultimately comes down to the Australian people to see through all of the BS and say enough, we don’t want dirty coal; we want clean, renewable energy. Voting those people out of power helps get the message across. Until then, the Australian coal lobby — along with the aide of Murdoch’s media empire — are going to milk every single campaign dollar they’ve given to politicians, and those politicians are all too happy to abide.

      Time to wake up, Australia. Vote ’em out.

      • MaxG 4 months ago

        And this is the problem! People won’t! (wake up, nor vote them out)

    • Brunel 4 months ago

      Aussies are far more interested in figuring out how to keep propping up the real estate bubble than inventing a robot that can wash a rubbish bin now that plastic bags are taxed.

      • Joe 4 months ago

        I may have missed a late development but as far as I know plastic bags are not taxed, at least not taxed here in Sydney. But if they were taxed ( can we extend a tax to other plastic products as well ) I would be the first to applaud.

  2. geraldf 4 months ago

    I’m surprised that canavan and the australian + news corp baying baskervillian hounds haven’t derided Gupta – or do they realise that if they malign someone like him then he has the “ability and will” to take them to the legal cleaners?

    funny that ex economists and the usual BCA and Murdoch column economists (who never have made any accurate economic predictions – including the GFC) think that they have more sense than business people who are voting with their own wallets

    the feral absolutists in the “free marketeers” must be having multiple conniptions when the market continues to ignore their “wisdom”

    • PLDD 4 months ago

      They are caught between a rock and a hard place with Sanjeev as it’s tricky to criticise someone who is creating and protecting real jobs in areas which have seen a lot of heavy industry shut up shop.

      He is also not a green evangelist just a smart businessman who can see a good opportunity to use the most appropriate technology to make money – a perfect LNP icon.

      Thankfully he isn’t alone as we see more and more companies signing up PPA’s or building their own RE capacity.

      A suggestion for Giles – it would be good to produce a few tables with MWh data and $$ that are kept up to date. First the names of companies, councils, hospitals, universities, etc that are installing or contracting for RE. Second the solar, wind and storage plants that are in production, under construction, or planned. Third, a consolidation of current thinking of LCOE rates. These would be a very useful resource to be able to use in various forums to rebut the arguements of the FF supporters.

      • Glynn Palmer 4 months ago

        I support your recommendation of consolidating current LCOE rates. It is difficult to get a credible handle on current LCOG, LCOB and LCOE rates of all available new build technologies in Australia. There may also be a differential between regions depending on the quality and frequency of the solar, wind, wave, PHES etc resource.

        This conundrum is demonstrated in AEMO’s ISP where they source their LCOE’s from an 18 month old CSIRO paper.

  3. Ken Dyer 4 months ago

    Mr Gupta is right, and I sympathise with his frustration. Unfortunately, Australia is in the grip of the Murdoch Media Monopoly, one of the highest concentration of media ownerships in the World. And the LNP COALition lets them get away with it, by cutting funds to the ABC, and continually harassing them.
    It is an utter disgrace. If people were truthfully informed about renewable energy, Australia would lead the way. But they are lied to by the Murdoch Media Monopoly minions, day after day after day.

  4. Alex 4 months ago

    One thing that seems to be overlooked in the commentary on the Guardian article that I found to be of interest was the promise of 30,000 electric vehicles to be manufactured in Australia. This is huge news, and will be a massive economic boon to whichever state this occurs in. The manufacturing industry has been languishing in Australia, and this is a huge story on its own.

    • Rod 4 months ago

      Agreed. He is probably playing the SA and Vic Governments off against each other.
      I recall seeing a piece about him using composite aluminium and plastic frames for the EVs. Should be an interesting car.

      • MacNordic 4 months ago

        Different company, same construction, goes onto the market this year:
        http://e-go-mobile.com/en/models/e.go-life/
        (seems as if the Germans can do clean cars, after all;-)

        • JWW 4 months ago

          I just learned about E-go the other day. The founder has previously started a company that builds electric delivery vans for the German postal services. None of the big car manufacturers were interested back in 2010. It would have been an obvious opportunity for Volkswagen or Mercedes, but they let it slip.
          Now they will see some tough competition in the small electric car market. E-go’s strategy is to use existing car parts that are already in high volume production wherever possible, from OEM suppliers like Bosch and Hella, for example. Then they build the car, and the design comes last.
          The founder said in an interview that producing an electric car is easy. Producing an inexpensive electric car is not so easy.
          At 16.000-20.000EUR this is what they have done. Tesla take note!
          BTW, servicing is done by the Bosch service centres, which are numerous in Germany. Another very clever move.

          • MacNordic 4 months ago

            Definitely!
            Some funfacts:

            – The Professor behind the car is actually a “production technology and sytematics” specialist, who designed the factory with his students – all parts are only handled twice: once at incoming quality check, second on installation in/ on the car
            – Less than 200 employees are required for a 10.000 car production per year (single shift). Production expansion can be achieved by adding a second and third shift
            – one of the most expensive productions steps, stamping the steel parts (200+ million € for the tools alone) has been eliminated through the use of plastic body panels. Cost for the tools here: 250.000€…
            – Body panels are solid coloured – no problem with scratches. A dent? Just plop it out. And fully recyclable at that.
            – The body panels are actually manufactured by a suitcase manufacturer
            – The first (and largest) order for 2,000 cars came from a mobile care for the elderly provider, the German Caritas
            – Starting price after deduction of the EV- bonus is just 11.950€ in Germany

        • Rod 4 months ago

          Thanks for that. That is the sort of EV I could warm to. Going as lightweight as possible for EVs makes so much sense.

          Gupta calls his i-Stream technology.

          “It is intended to utilise innovative i-Stream technology developed by the venture’s partner Gordon Murray
          Design, a system that uses lightweight materials and fewer parts to achieve an ultra-low vehicle weight. Mr Murray is best-known as a former chief designer at McLaren and as the man behind the grand prix company’s exclusive — and hugely expensive — Formula One road supercar.

          The technology, centred on a steel frame incorporating composite panels to produce a lightweight car, is not untested: it was used five years ago by Yamaha to create small cars aimed at cities.

          Mr Gupta said the use of composite materials allowed a car to be manufactured in smaller numbers, at lower cost and in multiple designs.
          “That’s the beauty of this,” he said. “Because it can be done as a composite car, it can be done in small batches. It doesn’t need big infrastructure, relatively speaking. So you can bespoke it everywhere.”

  5. neroden 4 months ago

    Go Gupta. If he ever listed his companies on the stock market (he’s keeping them private) I’d invest.

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