It turns out it’s all about timelines. For years we have heard from the naysayers that Australia’s 2020 renewable energy target would be impossible to meet in the given timeframes, yet it turned out to be done with ease.
Will the more ambitious target of 82 per cent renewables be met by 2030, as insisted by Labor in its policy position and modelled by the Australian Energy Market Operator? Time will tell.
Most analysts predict it will fall short, pointing to the pace of the transmission build out, planning hurdles, grid access and the availability of wind turbines and labour. But if not’s done by 2030, it will still likely to be met by 2031 or 2032. In the great scheme of things, this would still be a remarkable achievement.
But what of other generation technologies? The Coalition is pushing nuclear, insisting that the first nuclear power generator can be up and running in the mid 2030s. Energy experts say the Coalition are kidding themselves, and suggest the mid 2040s as a more likely date.
Both parties, however, are counting on gas. The Coalition wants more gas because they will have to burn something if they are to wait for nuclear and they want to stop the rollout of wind and solar, and if the ageing coal fired power stations keep blowing their gaskets, as they are prone to do.
And Labor wants more gas generation because that is what AEMO models – more capacity is said to be needed to provide the deep firming power, and a lot of the current fleet is also getting old and struggling to stay online when it is needed.
But how feasible is that? Gas fired power stations are considered relatively easy to build, as energy infrastructure goes, unless you happen to be Snowy Hydro, which is struggling on timelines and costs at its Kurri Kurri gas project (pictured above).
But, as David Scaysbrook, the co-founder and managing partner of Australian energy investor Quinbrook Infrastructure notes, it is almost impossible to get your hands on a gas turbine anytime soon because the industry has largely de-tooled, and demand is high.
“If you think you’re going to wake up next year and all of a sudden gas is, you know, tripling its contribution to the US power mix, that’s not going to happen,” Scaysbrook says in the latest episode of Renew Economy’s weekly Energy Insiders podcast.
“The other reality that everyone’s starting to appreciate …. and it is now a matter of public record …. is that you can’t buy a gas turbine for the next four to five years.
“They’re all sold out. People don’t appreciate the gas turbine industry de-tooled significantly over the last four or five years, so everything that they had in their existing production inventory has already been sold.”
The other problem is that while technologies such as solar and battery storage have plunged in costs – the price of a gas turbine has surged in the other direction. And this applies just as much to Australia as it does to the US. Forget about the “gas-led” recovery.
“In 2022, the last turbine installed by (US utility giant) NextEra was $US740 a kilowatt. The quoted price today is $US2,400/kW for that same turbine,” Scaysbrook tells Energy Insiders.
“You have to put 50% down today, and you get it in 2028/29 right? That’s nearly four times the cost of what it was two years ago. Now add to that what you think gas prices might then do in the US, because now everyone’s wanting to buy more gas from those producers. None of this is not inflationary.”
Scaysbrook’s assessment is borne out by the biggest utility in the US, NextEra, which on a recent earnings call said new gas projects will not be available at scale in 2030, and even then only in certain pockets of the US.
“This is an industry that really hasn’t seen any active development or construction in years,” CEO John Ketchum said. “All of that puts pressure on cost.”
To listen to the full interview with David Scaysbrook, please go to the latest episode of the Energy Insiders podcast.
Note: If you wish to support independent media, and accurate information in this age of misinformation, please consider making a one off donation or becoming a regular supporter of Renew Economy. Your support is invaluable.
