Dick Smith conclusion wrong on energy costs Renewables are the cheapest

Dick Smith - ten bucks a litre ABC

Dick Smith has got the relative costs of Fossil Fuels, Nuclear energy and Renewable power  all mixed up in his latest polemic, "Ten Bucks A Litre."

I am from Energy security think-tank Zero Emissions and I wrote the Zero Carbon Australia Stationary Energy Plan which is briefly showcased during the film.  The stationary energy plan, the first of its kind to show that Australia could run on 100% renewable energy a combination of Wind Power, Rooftop Solar Photovoltaic, and Solar Thermal with storage (featured in the film) along with a huge "mining" effort to find energy efficiency in housing, commerce and industry was a landmark that caused the Australian Energy Market Operator (AEMO) the organisation that runs Australia's electricity supply to write and publish this year its own plan and validate our work.

Whether you care about climate change or not, we're moving away from coal because domestic and international banks including the World Bank will no longer invest in coal fired power.  And a shift to gas would involve the burning of Coal Seam Gas, as mentioned in the film due to a massive upswing in demand in Asia, especially Japan, the cost of gas here is becoming prohibitive. 

The prohibitive cost of gas

The cost of gas being prohibitively high (more than three times what it used to be once we're linked to international markets) means that wind power is now already the cheapest source of energy in the wholesale market, and it is also cheaper for householders to generate their own power during the day from rooftop solar than to buy it through the meter off the big power companies.

The cost of gas being prohibitively expensive is as a consequence of the building of LNG export terminals in Queensland.  Once we have a sizable link through these processing and port facilities to send gas including coal seam gas and shale out to the world's markets, the gas market will mirror the oil market and always react to world pricing signals.  We will never go back to having a sheltered market with gas as a cheap source of energy.  What has really driven this international price up is the Nuclear disaster at Fukushima.

Two years back, the Fukushima nuclear disaster closed down a massive industrial manufacturing area for good, causing the abandonment of billions of dollars of factories and their robotic tooling and other plants.  The cleanup bill is estimated at $60-70 Billion dollars (AUD) and the country only has 2 out of 54 nuclear reactors operating.  What's more it turns out that the two reactors that are operating were built right atop a major earthquake fault line.  So it is quite likely that they will be shutdown in September leaving Japan with no nuclear power plants at all.

What does this mean?  

It means that if you invest in 54 nuclear reactors, only 2% of your nuclear fleet has a disaster and public will move so strongly against it (as there is a crisis point where common sense eventually prevails on safety) that all the nuclear reactors in the country are shuttered.

And what are the 54 reactors in Japan worth?  Well the Okinuko power plant in Finland being built by the world's biggest nuclear plant construction company Areva of France is going to cost in excess of $12 billion AUD and take over 12 years to build and that's without including commercial financing costs.   The cost of 54 reactors in Japan with those kind of build time would be well in excess of $400 Billion.

Nuclear is the most expensive option when you take into account the external factors, with Coal and Coal seam gas the external factors (apart from the obvious climate change) include devastating effects on health, agricultural output, land degradation, acid rain and the ability for us to feed ourselves.

Already in all parts of India and China renewables are either the cheapest form of new generation or are expected to be within five years.  And further price reductions are all about economies of scale, and economies of scale is what India and China have a lot of.

Only renewable energy's flagships Wind Power, Rooftop Solar and Solar Thermal with Storage have little footprints and superior environmental performance with innovation improving this all the time.

Dick Smith needs to revise his conclusion, If we want cheap power for the 21st century we need to invest much more in Renewables, if we want to flounder, get sick and risk our economies then Nuclear and Fossil fuels will do the trick.

I look forward to a series of town hall debates with Dick on the right way to a renewable future for Australia.