Since 2018 the Commonwealth Scientific and Industrial Research Organisation (CSIRO) in collaboration with the Australian Energy Market Operator (AEMO) has produced an annual report updating the costs of electricity generation, energy storage and hydrogen production, titled GenCost.
The report encompasses updated current capital cost estimates commissioned by AEMO and delivered by Aurecon, a design, engineering and advisory company, with the aim of providing projections of future changes in costs consistent with updated global electricity scenarios which incorporate different levels of achievement of global climate policy ambition.
This year the 131 page 2023-24 final report was released on 22 May 2024 and its Executive Summary opened with these words:
Technological change in electricity generation is a global effort that is strongly linked to global climate change policy ambitions. While the rate of change remains uncertain, in broad terms, world leaders continue to provide their support for collective action limiting global average temperatures. At a domestic level, the Commonwealth government, together with all Australian states and territories aspire to or have legislated net zero emissions (NZE) by 2050 targets.
Globally, renewables (led by wind and solar PV) are the fastest growing energy source, and the role of electricity is expected to increase materially over the next 30 years with electricity technologies presenting some of the lowest cost abatement opportunities.
Under Outcomes of 2023‐24 consultation was this interesting observation:
GenCost received the highest volume of feedback to the consultation draft in its history with 45 written submissions and many participating for the first time. This input has led to several changes, the most significant of which being the inclusion of large‐scale nuclear in the report for the first time. GenCost has also increased wind generation costs and developed a revised approach for including solar thermal generation costs on a common basis with other bulk supply technologies.
Consultation continues to be a valuable way of improving the quality of the report given that no single organisation can cover the breadth of technologies explored. Feedback can take the form of suggestions and questions. Given the volume of feedback it has not been possible to individually address every question raised in the body of this report. However, we have now added Appendix D which addresses the major common questions and answers.
The report noted: A majority of submissions to the 2023‐24 consultation process requested the inclusion of large‐scale nuclear in addition to nuclear small modular reactors (SMR) that had been included in GenCost since its inception in 2018.
It would appear that the Leader of the Opposition & Liberal MP for Dickson Peter Dutton and Coalition's Shadow Minister for Agriculture & Nationals MP for Maranoa David Littleproud, may have rallied the troops in the hope of fashioning the final report into a useful tool to deploy during the next federal general election campaign due to kick-off sometime between January - April 2025 for a May election date.
Based of the report's Appendix D Frequently asked questions the likely aim of some submissions received appears to have been to create a more feasible future for nuclear energy electricity production and supply than was contained in the earlier draft report. Along with refurbishing the reputation of coal-fired electricity generation.
With admirable restraint, considered and detailed answers were given to all of the following queries:
1. Why does GenCost not immediately change its report when provided with new advice from experts?
2. Why are disruptive events and bifurcations excluded from the scenarios?
3. Why is no sensitivity analysis conducted and presented?
4. Why did you use the capital cost of a single failed project in the United States for your representative nuclear SMR cost (the UAMPS Carbon Free Power
Project)?
5. Do you assume Australia continues to rely on overseas technology suppliers or are you assuming Australia develops its own original equipment manufacturing capability?
6. Why does GenCost persist with the view that technology costs will fall over time when there are many factors that will keep technology costs high?
7. Why is the uncertainty in the data not emphasised more?
8. Why include an advanced ultra‐supercritical pulverised coal instead of cheaper, less efficient plant designs?
9. Why is the economic life used in LCOE calculations instead of the full operational life?
10. Coal and nuclear plants are capable of very high capacity factors, why do LCOE calculations not always reflect this?
11. Why do LCOE calculations not use the lowest historical capacity factors for the low range assumptions?
12. Why were all potential cost factors not included in the LCOE calculations?
13. What is the boundary of development costs? Is it only costs from the point of contracting a developer before commencing construction?
14. How is interest lost during construction included in GenCost?
15. Why do other studies find higher costs than GenCost for integrating variable renewables in the electricity system?
16. Why are integration costs not increasing with VRE share in 2023 but increase in the 2030 results?
17. Why do other studies show the cost of storage increasing more rapidly with higher VRE share?
18. Why are the cost of government renewable subsidies not included in the LCOE calculations for variable renewables with integration costs?
19. Why is a value of 100% applied to the fuel efficiency of renewables in the LCOE formula?
20. Why do you apply only one discount rate or weighted average cost of capital to all technologies?
21. Why did you take the maximum and average of existing generator prices to create the high and low range greenfield coal prices?
22. Why do you not include high and low ranges for economic life?
23. Why are your low range capacity factors for coal and renewables closer to the historical average capacity factor?
24. Why use historical 2023 coal and gas prices that are impacted by the Ukraine War for 2023 LCOE estimates instead of a longer time series?
25. Why does GenCost only conduct LCOE analysis instead of system cost to society analysis?
26. If GenCost shows renewables are cheaper, why are electricity prices higher in Australia and in countries transitioning to renewables?
The completed final report would not have been to Messrs. Dutton and Littlerpoud's liking as, although there are no known technical constraints to deploying large-scale nuclear generation units, it would require that Australia commits to a continuous building program and only after an initial higher cost unit is constructed would capital cost of a large‐scale nuclear plant come in at $8,655/kW, based on 2023 pricing.
While an estimated electricity cost range for large‐scale nuclear generation under current capital costs and a continuous building program is $155/MWh to $252/MWh
None of which could begin to be put in place in the estimated timeline before 2040.
The Financial Review's political editor observed on 22 May 2024:
Peter Dutton’s nuclear energy plans have suffered a setback with the CSIRO estimating the nation’s first large-scale nuclear power plant could cost as much as $17 billion in today’s dollars, and would not be operational until at least 2040.
This is the current reality of Australia's electricity generation mix. Click on the images below to enlarge the graphs.
Comparative Capital Costs of Current Generation Technology
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Key Changes In Capital Costs In The Past Year
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The GenCost 2023-24 final report can be downloaded at
https://www.csiro.au/-/media/Energy/GenCost/GenCost2023-24Final_20240522.pdf
