Politicians keep telling Australia that “wind and solar are the cheapest form of energy” while they force Net-Zero down our throats. As proof, they point to a CSIRO document called GenCost, which supposedly estimates the cost of different types of electricity. Yet, it doesn’t estimate the costs of electricity today.
GenCost uses a whole bunch of assumptions that are favorable to wind and solar to claim they will be the cheapest… in 2030. GenCost doesn’t even include the cost of transmission, one of the largest expenses for wind and solar. Huge transmission costs are the reason wind and solar projects are sitting stranded in the outback connected to nothing. This is the same CSIRO that seemingly knows nothing about Snowy 2.0, which has blown out from $2 billion to over $20 billion for the project and associated infrastructure. They forecast the cost of pumped hydro storage will average less than a quarter of the current estimates for Snowy, the pumped hydro that’s actually being built.
To say I don’t trust CSIRO have the right answers on the actual cost of “renewables” is an understatement. The claim that wind and solar are the cheapest is simply a lie that ignores storage, transmission and intermittency. GenCost is just a fairy tale about the future, not an impartial analysis of what wind and solar costs today.
Transcript
Senator ROBERTS: Welcome, Professor Hilton. I will put some questions on notice about carbon dioxide in the atmosphere from human production. I would like to question the expert spokesman on GenCost.
Prof. Hilton: We are delighted you are asking questions about GenCost. One of the greatest challenges facing Australia is the transition of our energy sector. I am proud of the contribution that the GenCost report makes in this area. The report has been generated annually since 2018. It has evolved over time to take account of the changing technology landscape and the availability of new data. I anticipate that the report will continue to evolve.
Senator ROBERTS: I want to get to the heart of some of the issues that I see with GenCost. What was the cost first budgeted for pumped hydro energy storage Snowy 2?
Mr Graham: I might take that on notice. I am aware of the recent update to the cost, but I don’t have the original figure on me.
Senator ROBERTS: The original figure was $2 billion. What is it currently budgeted at?
Mr Graham: It is in the order of $12 billion.
Senator ROBERTS: That’s correct. How long are the tunnels for it?
Mr Graham: I don’t have that on hand.
Senator ROBERTS: It is 27 kilometres. How much of the tunnel have they bored so far in the last year, or just over a year?
Mr Graham: I am not tracking that measurement.
Senator ROBERTS: It is 150 metres. It has been bogged for about a year. When was it initially scheduled for completion?
Mr Graham: I don’t have that on me.
Senator ROBERTS: It was 2021. What has that blown out to now?
Mr Graham: Around 2029.
Senator ROBERTS: Earlier; 2028.
Senator McAllister: Senator Roberts, the official is indicating to you that he is happy to accommodate your line of questioning. However, detailed questions about the project details for Snowy Hydro are best dealt with in the environment estimates. I know you addressed these kinds of questions to Mr Barnes, the CEO of Snowy. You might direct questions to CSIRO which they can assist with. You mentioned your interest in the GenCost report— you might get better answers about that from the official.
Senator ROBERTS: Sure. They are now estimating the cost of the transmission infrastructure—which was left out of the original package—at $10 billion for it to be connected to the grid and be useful. That now makes it up to $22 billion for 2,200 megawatts of pumped hydro energy storage, which is $10 million per megawatt, or $10,000 per kilowatt. We won’t even get into the fact that it is only forecast to put out that capacity for an average of 26 minutes a day. What is the cost per kilowatt of pumped hydro you provided in GenCost?
Mr Graham: The Snowy 2.0 project is incredibly unique. It was approximately 170 hours duration for 2 gigawatts originally, but it is higher than that now: 2.2 to 2.5.
Senator ROBERTS: It is 2.2.
Mr Graham: No other project on the books in Australia that we are looking at has that type of profile. In GenCost we report pumped hydro projects more in the order of 12 to 48 hours, that kind of duration, which is
nowhere near the 170 hours for Snowy 2.0.
Senator ROBERTS: What is your capacity?
Mr Graham: We have a table in GenCost with a series of figures on the cost of pumped hydro. I’ll get the exact data for you.
Senator McAllister: Are you asking what role Mr Graham performs—
Senator ROBERTS: No: what is the cost per kilowatt-hour of pumped hydro you have provided in GenCost?
Mr Graham: I didn’t bring that table with me. I’ll have to get back to you with that on notice. That cost isn’t related to Snowy 2.0. It is related to other projects, which are much smaller.
Senator ROBERTS: That’s what I understand. In GenCost, what would it be, roughly? I won’t hold you to it.
Mr Graham: It is of the order of $2,500 a kilowatt.
Senator ROBERTS: Snowy 2, which is a real-life project that is not even finished yet, is $10,000. GenCost is built on modelling based on assumptions projected out to the future; is that correct, broadly?
Mr Graham: That’s correct.
Senator ROBERTS: We don’t know from GenCost what it would cost to replace our coal-fired fleet with solar and wind today, and all the transmission lines and back-up storage. How useful is GenCost?
Mr Graham: We made the decision to focus GenCost on new-build generation and storage and some hydrogen technologies. There are other processes for, and reports that deal with, transmission. We don’t deal with
transmission. GenCost is designed for people to calculate the cost of building and replacing existing generation. But you can’t go to GenCost necessarily to look at issues around transmission.
Senator ROBERTS: Some of your opponents argue that GenCost is detached from reality. If we look at Snowy 2—I am not implying that you have anything to do with Snowy 2—right from the start, Minister, the
decision to build Snowy 2 was made without a cost-benefit analysis, and with a heavily redacted business case that could not be scrutinised. You have acknowledged that you are basically building models based on
assumptions and projecting them into the future. I don’t think the government has anything on what is going on right now. Is that right, Minister?
Senator McAllister: Senator Roberts, I might get the official to revisit the evidence he has just provided about the way the calculations are developed for understanding the cost of hydro because I don’t think it is as you have described.
Senator ROBERTS: Minister, we have major solar and wind installations, industrial complexes, which are not connected to the grid. This is the level of planning that is going on at state and federal. They are not connected but they have been paid for, and I think that they are earning revenue. That is the reality.
Senator McAllister: I am not aware of the particular projects you are referring to, but they are certainly not things this agency can assist you with.
Senator ROBERTS: My question to you is: something that is projected into the future based on models and assumptions now is divorced from reality, and we need to know the cost now. Why are we embarking on this
journey with so much uncertainty?
Senator McAllister: Senator Roberts, you are asking me about energy policy. We have talked about it earlier in the week. We consistently have advice from a very wide range of sources—
Senator ROBERTS: Can you name some of them?
Senator McAllister: about firmed renewables being the lowest cost form of new energy in the Australian context. When AEMO looks at what is required to replace all of thermal generation that is coming to the end of its life over the next decade, they try to model—because they need to—the transmission that will optimally connect the optimal configuration of new generation. That AEMO work is not principally led by CSIRO. CSIRO have a capacity to contribute; I think the official can speak to the ways they do. I don’t wish to frustrate your efforts to have this discussion, but it is not in this portfolio.
Senator ROBERTS: Thanks, Minister. Thank you, Chair.
The government really needs to stop distorting energy markets so private enterprise can make wise decisions and knowledgeable investments where they are needed. That means all subsidies need to be stopped. The billions of dollars of fossil fuel subsidies, the billions of dollars in “clean” energy subsidies, it ALL has to stop. Let the market sort things out when real price discovery happens.