Broken Hill solar plant

Renewable energy makes business sense

The opposition to climate action continually morphs. Once the argument was about the fact of warming, then the causes, then possible remedial actions. More recently, it is argued that we cannot afford to take action, especially since it won’t achieve much while destroying our economy.

But that argument is starting to crumble just like the others did …..

Quick summary

  1. Australia’s coal-fired power stations are becoming less efficient as they age, and will reach the end of their economic life over the next 3 decades.
  2. Coal-fired electricity generation kills an estimated 800 Australians a year because of the particulates they discharge into the air.
  3. Renewable energy (principally solar and wind) plus storage is now cheaper than any other form of electricity generation (including gas and nuclear), and is growing in use around the world.
  4. Nuclear power is relatively safe, but much more expensive than solar and wind.
  5. Thus renewable energy makes economic sense as well as environmental and climate sense, and will almost certainly be the only form of large scale energy generation in Australia in the future.

The argument

This 2019 article by Chris Kenny in The Australian is a good example. Mr Kenny, who “takes an unashamedly rationalist approach to national affairs” says it all in its title: “Won’t save planet but we will destroy our own economy”.

Chris argues that Australia is punching above its weight in reducing carbon emissions, at a great cost: “Power prices have doubled, coal-fired power stations have closed and carbon dioxide emissions have been reduced, taking jobs and economic growth with them.” He calls this “serious economic pain“.

He cites the US pulling out of the Paris Accord under President Trump, but still reducing its fixed power carbon emissions. The Paris Accord is therefore, he suggests, “clearly better at signalling virtue than reducing emissions”.

He’s probably correct about this last point, but there is one glaring omission from his argument.

Renewables – cheaper and better

Burning coal, oil and gas contributes 70% of the world’s greenhouse gases and a similar amount in Australia. Electricity generation is a significant part of this. If emissions from power generation could be reduced, Australia would have taken a giant step in meeting the target of net zero by 2050.

The good news is that it’s highly likely that electricity generation in Australia will be entirely from renewable sources by 2050.

Coal-fired power stations are dinosaurs

The 19 current coal-fired power stations in Australia’s National Electricity Market were built between 1971 and 2009. Their design life is 40-50 years, meaning almost all will be decommissioned by 2050. The older plants are generally becoming more prone to breakdowns. Some will be re-furbished and their life extended, but economics may force some to close earlier.

Energy experts, including power generation companies, don’t expect any new coal-fired power stations to be constructed because of their enormous capital cost, increasing pollution control requirements and the advantages of renewable power generation. They are less flexible to operate and are already proving sometimes to be too costly to run.

They have served us well, but they are fast becoming dinosaurs.

Renewable power generation is better

Renewable power sources, predominantly wind and solar have many advantages.

Small and flexible

Because they are smaller, they can be built with smaller capital outlay and in a wide variety of locations.

Greenhouse gases

Renewables emit far less greenhouse gases. Other sources require regulation and amelioration via Carbon offsets.

Energy sourceOur World in Data
(2019)
IPCC (Wikipedia)
(2014)
Ostfold Research
(Denmark, 2019)
Coal820820949
Oil720
Natural gas490490446
Biofuel/biomass78-230230
Solar (rooftop)344150.9
Wind31114.4
Hydro42421.4
Nuclear512
Greenhouses gases emitted by the various forms of power generation (measured as CO2 equivalents in tonnes per gigawatthour). Figures vary with the date of estimation, location and assumptions about what is included and excluded, but the relativities are clear.
Environment and health

Their impact on the environment and health is much lower than other forms of power generation. Coal-fired power stations cause far more deaths per year than other forms of power generation, mainly through particulates in the air. The figures I have seen are not fully consistent, especially because of large differences between environmental and health standards in different countries. But it is fair to say that:

Coal-fired power stations cause at least 1-2 million premature deaths each year worldwide, and in Australia at least 800 deaths plus asthma symptoms in thousands of children. The mortality rate per terawatt-hour is somewhere between a hundred and a thousand times greater than for solar, wind and nuclear power generation.

Gas power stations are not as deadly, but are still estimated to cause about 60,000 to 80,000 deaths per year worldwide, with a mortality rate about a tenth that of coal.

In contrast, solar, wind and nuclear power have very low mortality rates.

Lifecycle cost

While renewable energy plants may be expensive to build, their operation requires no fuel and is relatively cheap. Their levelised cost of energy (LCOE) – the cost of supplying electricity over their entire life – has become lower than coal, gas or nuclear.

Changes in energy production prices in a decade, in $US per MWhour (Our World in Data)
The bottom line

Thus it is clear that renewables are better for health and the environment, they are now generally cheaper than fossil-fuel generation, and their price will continue to drop as more efficient technologies are developed and economies of scale take effect.

Transmission, storage and environmental costs

The raw energy production costs are not the only costs associated with power generation. Other factors must be taken into account.

  1. Most forms of renewable power generation are dependent on natural conditions such as weather, and so supply cannot be guaranteed at all times. This is overcome by storing electricity when supply exceeds demand, and then drawing on the stored energy during peak loads. The two main storage methods are pumped hydro (water is pumped uphill when there is excess power and the used to generate power during peak periods) and large batteries.
  2. Some generation is located further from where the power is needed than others, and hence the transmission costs are greater.
  3. Environmental standards are generally becoming more stringent, and it is likely that the more polluting generation (coal, oil and gas) will face further, and costly, requirements in the future.

These additional costs are quite variable. But generally, it is clear that storage for renewables will increase costs, as will environmental requirements for fossil fuels. It is expected that renewables will remain significantly cheaper into the future.

Renewables are already taking over

In Australia, renewable sources of electricity already supply more than 20% of our electricity. By 2030, it is estimated that the most efficient generation mix would be 90% renewables and 10% traditional. Power generation companies are not planning any new coal or gas generation, but are moving to renewables on cost grounds.

Overseas, it is the same story, although many countries are much further down the track than Australia. Iceland, Paraguay, Costa Rica and Norway are close to 100% renewable power. Austria, Brazil and Denmark are all above 50% renewable. Australia is somewhere around 90th in the world for its usage of renewable energy generation.

Wind turbines

Business leaders recognise it

Australia’s government may be well behind in its commitment to renewable energy because of lobbying by the fossil fuel industry, but globally and here, business and other government leaders are already convinced.

  • “The way we generate, deliver and use energy has to change. As a big emitter of carbon, it’s up to us to lead the transition to cleaner energy in a way that maintains that same reliable and affordable access to energy for everyone.” Electricity generator, Energy Australia.
  • “Building renewable generation has become the cheapest source of new electricity supply.” The Demise of Coal, Energy Networks Australia.
  • Former investment banker and Prime Minister, Malcolm Turnbull, recently tweeted “renewables + storage are cheaper than new coal”.
  • UK Prime Minister Boris Johnson is committed to a $21 billion plan to support a quarter of a million jobs through his “Green Industrial Revolution”, which includes money spent on wind, nuclear and hydrogen technologies. He said: “We long ago proved that green and growth can go hand-in-hand.”
  • The Australian Climate Roundtable, which includes business, power generation, environmental, farmer, investor, union and social welfare groups, urges the government to adopt a policy of net zero emissions by 2050 to avoid great economic costs.

References

Photos: Solar farm near Broken Hill, by Jeremy Buckingham on Wikipedia. Wind turbines by CSIRO.

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