Paper flags new power scenarios

An independently developed paper on Australia’s power generation mix and the challenges it faces has been circulated to members of Parliament[i]. The paper[ii] described as “a public service by a small group of professional engineers and scientists experienced in various aspects of electricity and distribution”, includes several recommendations and models six different National Electricity Market (NEM) scenarios[iii].

The paper’s authors argue “poorly informed choices on the NEM can lead to expensive mistakes that could bedevil our prosperity as a nation for many years to come”.

So what did they find and what options do they suggest to address the challenges of costs, availability and reliability in the NEM?

Power System Model

The assessment of generation mix in the paper is based on a computerised model (known as the Power System Generation Mix Model) that allows the comparative economics of a wide range of alternative electricity supply scenarios to be tested under load conditions.

Technologies in the model include solar PV, wind, open-cycle gas turbine (OCGT), combined-cycle gas turbine (CCGT), black coal, brown coal, hydro, nuclear, pumped storage and some battery storage. It also includes any additional transmission spending required to deliver electricity to users. Full details of the modelling for each scenario and costs can be found online.

The Outputs

In summary the modelling shows:

• Base Case 1 (existing NEM approximation) has an average base load of 18,368 MW of constant electricity demand. At present this is done using a system of 78 per cent coal, plus CCGT, OCGT, wind, solar PV, and hydro. Some battery storage is available.
• Case 2 shows the effect of introducing 3,000 MW of nuclear power capacity into the Case 1 mix to replace brown coal. This adds + $ 3.61 / MWh (0.36 cents / kWh) to the System Levelised Cost of Energy (SLCOE), making a total of $ 72.48 / MWh while reducing emissions by around 23 per cent.
• Case 3 shows the effect of replacing all coal in Case 1 with nuclear power. Emissions fall by some 93 per cent, with SLCOE increasing to $ 90.23 / MWh.
• Case 4 shows the effect of the combination of generation technologies projected by the Australian Energy Market Operator (AEMO) to 2040, as shown in its Integrated System Plan (ISP)[iv].
• Case 5 shows the effect of replacing all coal in Case 1 with CCGT. This shows an increase in SLCOE of + $ 6.49 / MWh versus Case 3 above, plus a substantial increase in emissions.
• Case 6 shows a 100 per cent renewable mix comprising solar PV, wind and hydro with support from pumped storage and some battery storage. Because of low capacity factors, solar PV and wind require a combined total of 110,000 MW of capacity. There is also a need for 30,000 MW of pumped storage capacity for three days. To this must be added the “high-cost additional transmission to get the power to points of high consumption where it is needed”. This pushes the total SLCOE to $ 415.50 / MWh.

The paper notes that the scenarios highlight that there are no easy answers in trying to contain costs while maintaining reliability and cutting emissions.

Conclusion

The paper recommends that renewable subsidies be wound up, that a capacity component be added to the NEM and that the ban on nuclear power be removed.

It also argues that the National Energy Guarantee, which is now effectively in limbo should be supported, but that it could benefit from a capacity market component. And it’s authors also call for the expansion of renewable generation and storage flagged by AEMO to be carefully examined for its “practicability and cost”.

While the paper seems unlikely to shift the political focus in energy, it does provide an interesting insight into alternative NEM generation mixes.

[i] The Australian, Engineers warn of bill shock under green energy surge, 5 September 2018

[ii] Reliable and Affordable Electric Power Generation – Contributing authors are: Dr Robert Barr, Director Electric Power Consulting, Barry Murphy, former chairman and CEO Caltex Aust., Dr Mark Ho, President of the Australian Nuclear Association, Martin Thomas and Barrie Hill. (https://epc.com.au/index.php/nem-model/)

[iii] Costing behind the modelling – the Power System Generation Mix Model - can be found here: https://epc.com.au/index.php/nem-model/

[iv] https://www.aemo.com.au/-/media/Files/Electricity/NEM/Planning_and_Forecasting/ISP/2018/Integrated-System-Plan-2018_final.pdf