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
Key
Changes In Capital Costs In The Past Year
The GenCost 2023-24 final report can be downloaded at
https://www.csiro.au/-/media/Energy/GenCost/GenCost2023-24Final_20240522.pdf
