I note the auther hasn't (as far as I could see) talked about anything other than wind as a renewable energy source. While it is probable that renewable energy sources are not currently up to providing the resources needed, one only has to look at California and Spain, where solar thermal power is being used to provide a very large amount of electricity, reducing the need to use coal. What is lacking by the government is investment in this sort of technology for long-term reductions in CO2 emissions.

There are already 300MW solar thermal power stations operating in the USA and Spain, and 500+MW power stations being constructed to come on line in the next few years. There is also technology available and in use, using molten salts, to retain heat and use it to return power to the grid at night.

There is really no excuse to use coal-power any more, other than short-term political imperatives that are not going to provide any long-term benefits for the wider community.

Base-load power can be produced from renewable energy sources, and in a city like Perth (where I live) which has the sunshine, has the swells from the ocean (even when flat there is energy produced from underwater movement), has the reasonably consistent wind, and has signficant geothermal potential, the continued reliance on coal for so much energy is pretty abysmal.

Tom,
An article like this should have been more widely published years ago.
To the ordinary person like me, this article brings a lot into a perspective I can follow...thank you.

The one comment I do have is that your piece is predicated on current technology and profit making intentions. At the risk of sounding like a Socialist... (Which I'm not!)...any change to either of the two assumptions would alter the outcome.
Therefore *more* research is indicated, not necessarily only in clean coal but in more efficient technology generally to aid in the reduction of power consumption generally.
Clearly there is no "magic bullet" and the solutions realistically lie in the application of a number of strategies. Lowering consumption, forcing greater product efficiency etc. Rather than allowing/encouraging cheap power inefficient production methods et al.
I understand time lags design, retooling etc but we do have to start somewhere and it should have started years ago. Governments should all be investing/aggressively encouraging heavily in load reduction technologies research i.e. both on **Demand** as well as supply in practical ways.

These conclusions must burst the bubble on some green fantasies. No affordable combination of renewable energy with extra transmission and storage can replicate the job currently done by coal and gas in Australia and nuclear overseas. Wave power, geothermal outside of volcanic areas and solar thermal have all yet to break the gigawatt barrier in any region or avoid the need for fossil fuelled backup generation. That doesn't seem to stop green utopians either claiming it is possible or from quoting incomplete cost estimates. For example wind power enthusiasts conveniently omit the high cost of the standby gas fired generator for when the wind doesn't blow.

We will need that gas to make nitrogen fertiliser and to power trucks when oil runs out, currently at 3-6% a year depletion rate. It seems ironic that the firestorms hit Victoria when their brown coal stations not far away are among the most polluting in the developed world. If nuclear power is unacceptable for Australia then we must drastically cut our lifestyles ie far less travel, bland diet, minimal hot water or air conditioning. Those who cling to green fanatasies about clean energy are prolonging the reign of coal which within a generation will start running short just as oil is now.

A couple more points after studying the graphs. Under a $25 carbon tax SA's incremental generation costs take off at about the 2GW mark whereas Vic, NSW and Qld hold good to at least 6GW. However the ETS is a cap not a tax and CO2 could hit $30,$40, $50 a tonne as the cap shrank. That would happen under Bob Brown as PM probably not Rudd. However with high immigration, new desal plants and talk of electric cars total demand will increase even if the cap barely shrinks. Those additions to energy consumption had therefore better not need more coal.

The case of SA is not just different because of abrupt capacity constraints. SA has the world's largest uranium deposit at Olympic Dam and went through a nuclear baptism with the Maralinga A-bomb tests. If any place should go nuke it is SA. I think Whyalla would be a good place to build nuclear power stations as it has good sea currents on the nearby coastline, certain transmission advantages and a desal plant already in the works. Expect 'paralysis by analysis' over such a proposal however.

I also enjoyed the clarity of the article by Tom. I would go further than Examinator and suggest that this is part of the serious debate we have yet to have. We are in “analysis paralysis” in relation to both the demand and supply sides of the equation.

Trying to understand the relationship between our real energy needs, the best options to meet those needs and our future carbon output penalties, often seems to get bogged down in ideology rather than serious debate.

As I understand it only 40% of carbon emissions are related to power generation, much of the balance is from transport. So how does renewable energy help?

One of the most committed nations to reducing emissions is Sweden, which also has some of the most ambitious greenhouse gas targets in the world. (See The Weekend Australian, Feb 7 2009). As one of the heaviest users of renewable energy, Sweden is lifting a 12 year ban on nuclear power generation. According to that same article, a “list of EU countries has chosen nuclear energy”, “Finland is building the largest reactor in the world”, the UK has reversed its opposition to nuclear power and is “to replace its ageing nuclear reactors and create new sites”.

With years of experience from the nations that first committed to the Kyoto Protocol, all of whom have done a tremendous job on the use of renewable energy. Why on earth can’t Australia get access to the real life issues that they have faced and come up with a realistic rather than emotive assessment of both our demand and supply needs?

Anecdotally, a friend in the UK recently attended an energy industry seminar where government and industry representatives attended. He sent me some quotes from speakers. “All renewable generation is Government funded because there is no return on investment for the private sector generators”. “The present day decommissioning cost for each wind turbine is $1.5m, not including the concrete foundation and contractually committed land restoration”. “Taking in to account the idle time, maintenance and decommissioning costs, wind farms are eye wateringly expensive and inefficient.”

“The Federal Government has a target of 20 per cent renewable electricity by 2020. This requires about 6,000MW of additional deliverable power for a projected total energy demand of 260,000GWh in 2020.”

Tom, I presume that this projection takes into account a continued very high level of immigration and artificially ‘enhanced’ birthrate over that timeframe.

So then, what would the projection be if we did away with immigration and concentrated on zero population growth….or even a slow reduction?

It would be a whole lot smaller.

Then if we factor in significantly improved energy use efficiency and overall greater frugality, maybe ‘green’ energy sources would be up to the task.

Can you tell us what the projected energy demand in 2020 might be if our population remains constant and we achieve something like a 20% per capita reduction in demand? Thanks.

Congratulations to Tom on raising this important issue and explaining in easy to understand terms. I agree completely, renewables are very limited because they are intermittent and very expensive, and also because we simply cannot build the capacity fast enough. This issue is now urgent. As a community, we need to understand this issue now, so that we can plan, or soon we will be faced with rolling blackouts.

Yet despite Tom’s remarkable effort at explanation, Phil Matimein has apparently metaphorically slapped his hands over his ears, and continued to chant the green mantra of renewable energy nirvana. He is so typical of the environmental movement here in Australia. He is utterly convinced that renewables are the answer.

In fact, solar thermal power like wind is also intermittent. Even when used with molten salt storage (horrendously expensive and inefficient) it only takes one day of cloudy weather and the plant will shut down. Where will the power come from then? As Tom advises it must come from stand-by electric generation based on gas turbines. This idle stand-by power adds a further cost to the infrastructure. And then there is the issue of $2M per km for new transmission lines. And this is why California and Spain have only installed 300MW of capacity, which of course is trivial, and if installed in Australia represents about 0.25% of our energy production.

Perhaps the problem is that Tom's argument is still too complex. To understand the subject, it requires the ability to quantify, a reasonable level of knowledge of engineering and economics. Maybe this issue is beyond the intellectual capability of your average Phil?

Whilst energy conservation and ZPG will help, it won't resolve the problem. Energy requirements will certainly increase dramatically as the electric vehicle inevitably gains popularity. A viable answer lies in piped gas from the NW Shelf and nuclear power. But we need to start planning now, and resolving the political barriers. We need more articles by people like Tom, and a big effort by the community to educate our peers, to get this urgent message across.

I am amazed at the pessimism in this article, and the ridiculous claims that many thousands of wind generators would be required to generate the required amount of electricity.

It seems to me that one wind generator, strategically placed on top of Parliament House, would do the job easily, as there appear to be no limits on the ability of our politicians to produce regular, consistent, unlimited amounts of hot air.

"What is lacking by the government is investment in this sort of technology for long-term reductions in CO2 emissions."

I cannot understand this line of reasoning. Surely the only reason why government 'investment' is supposed to be indicated is because it is not forthcoming from private capitalists? And the difference between the private capitalists and the government 'investors' is that the private capitalists are, by definition, personally exposed to the risk of loss? And the reason they aren't risking it, is because the investment will not cover costs. Otherwise, they'd do it, wouldn't they?

Therefore the only differences government can add to the equation is (a) to get the money under compulsion and (b) to spend it without being personally exposed to loss. How can this be any recommendation for a more economical use of natural resources?

Therefore it's not an 'investment', it's a loss-making expenditure, commonly known as a waste.

How can this conclusion be rationally avoided?

The only reason it seems to be cheaper is because of a double standard.

With private provision, you pay the cost in the price. But with government funding, you pay some of the cost in the price, and the rest is hidden in the tax bill. The consumer personally never gets an account for it. How can this conclusion be rationally avoided?

By rationally I mean, obviously if we ignore the costs, anything will seem to be better. I don't see how people can make these proposals that it's good for the environment if we use more resources, so long as we be economically incoherent about it by hiding the cost in the general tax bill. It does not seem to me to make sense but I would be interested in any explanation showing how it does.

Two reports issued last year estimated that the subsidies paid to the fossil fuel industry amounted to approximately 9-10 billion dollars per year. The notion that coal power demands a return on investment in some kind of free market is absurd. Not only is the industry heavily subsidised, we don't pay the externalities associated with coal energy - As Garnaut said, climate change is the biggest market failure ever. If we were required to pay even a small portion of the real costs of coal, there would be no arguments abour renewables at all.

"If we were required to pay even a small portion of the real costs of coal, there would be no arguments abour renewables at all."

Nonsense. As Tom's article points out, it doesn't matter how much the "externalities" (climate change) might cost. Renewables simply can't provide the energy we require. If we are to reduce emissions, we need nuclear power and CCGT from piped gas, and we need to start building now.

It is all bad news from here on; - You can forget about renewable energy, unless individual people start to do things under their own initiatives; - Government is not about funding Civilization or recourses or providing Info structure through Taxation, it is about funding Hacks- apparatchiks- Union Bosses and mates who end up as Bureaucrats or advisors to a Bureaucrat- all of a sudden, there is nothing left to buy a shovel.

The cold hard fact is , You are on your own , and when the Government is finished with finding new macro taxation and paradigms to make you feel good about being stupid , you are left stone broke and destitute -using candles ,living in caves .
You need to be a total idiot to think government is the answer to any problem- Government; it is the Problem. A very expensive and a very dangerous problem.

Thanks for including the population factor, Ludwig. The greenies and all those supposedly concerned about our environment and climate change NEVER mention our tragically increasing population.

next:
"The notion that coal power demands a return on investment in some kind of free market is absurd. Not only is the industry heavily subsidised, we don't pay the externalities associated with coal energy - As Garnaut said, climate change is the biggest market failure ever. "

The governments of the western world have just spent the last hundred years forcing their subject populations to pay them to subsidise their pick of energy options: coal-fired power stations. Now they tell us this was the worst possible thing anyone could have done in the entire history of the world. And their solution? To force their populations to pay them to subsidise their pick of energy options. What makes you think they are any more capable of identifying the correct solution now than they were then? Only sheer blind prejducie could identify this as a market failure. You have identified reasons *against* more heavy-handed, one-size-fits-all, incompetent, blundering government central planning, not in favour.

"If we were required to pay even a small portion of the real costs of coal, there would be no arguments abour renewables at all."

Prove it. Don't ignore the point, don't evade the point, spare us the usual hysteria about the world is going to end.

Just prove it. And include the figures for the externalities of the alternatives in your calculations.

The environmentalists in this thread are like the creationists in the thread on Darwin. They purport to be interested in a discussion based on evidence and reason, but as soon as you examine their arguments, they descend into inchoate religious mysticism: the anti-human belief system of the new Establish Religion and its incoherent fantasy of totalitarian control of the whole world's economy and ecology.

Thank you next for highlighting the fact that coal power is already heavily subsidized and that externalities have been ignored in the arguments against renewables put by the writer and others on this thread. Incidentally, I believe that there are no unsubsidized nuclear power generators around either - they are, I understand heavily subsidized and externalities are not accounted for in their costs either.

Household energy consumption, certainly in WA. and I'm pretty sure elsewhere in Australia is heavily subsidized too (in WA to the tune of 47%). I'm not sure if your figure included this form of subsidy or not.

Even so I tend to agree with the thrust of Tom Quirks assertion that a 20% renewable energy share of the PROJECTED demand for 2020 is probably not going to happen.

If we take seriously the threat of climate change - as I do - then we have to do a lot, lot more than invest in renewables. As Ludwig notes we simply have to do our utmost to achieve a zero population growth as painlessly as possible.

On top of this we need to drastically curb our existing per capita energy use (which, and no-one likes to admit this, probably boils down to less material consumption and a lower per capita GDP as well as of course improved energy efficiency)

"nuclear power generators [...] are, I understand heavily subsidized and externalities are not accounted for in their costs"

In the US, the largest user of nuclear energy in the world, the externalities of nuclear electricity are included in the costs by way of a 5% levy on the sale of electricity, in order to pay for the management and disposal of waste and plant decommissioning. This levy has been collected over decades and amounts to a very large sum, and is considered more than sufficient without the need for public money.

It is true that the externalities of coal are not included in this analysis, and that is because the actual cost (to the environment) of coal is not known. If the alarmist scenarios of climate change are correct, then the cost may be large. Or maybe not. We simply don't know the number.

Therefore it definitely cannot be assumed that renewables are cost effective against coal and nuclear.

Finally, the thrust in Tom's article is not that the 20% MRET cannot be implemented by 2020. He is saying that it CANNOT BE IMPLEMENTED. PERIOD.

ZPG and energy efficiency, and more frugal use of power, will help. But what about industry and commerce? The fact is ("and no-one likes to admit this") we still need to get 85-90% of our energy from reliable, non-intermittent sources. Nuclear fast breeder technology is the only reliable long-term solution.

Wah Ah Ling,

You probably know damn well that costing externalities is not possible as there is no market for them... that is unless one is artificially created. And that is what the whole idea of cap and trade is about.

If you believe the scientific consensus on climate change then you would need a pretty low cap on carbon emissions and therefore a relatively high price on GHG emissions - your externality in this case.

If you believed the vested interests and skeptics the risk/threat of climate change is not significant enough to warrant curbing emissions if it will cost anything to do so.

Now you asked next to prove... "If we were required to pay even a small portion of the real costs of coal, there would be no arguments about renewables at all."
Well perhaps not a small portion (depending on how you define small portion) but he already indicated the annual subsidies of $9-10 billion paid to fossil fuel industry. Take that away from them for three and a half years and use it to subsidize renewable power and you've got the $34 billion needed to get your 20% renewables by 2020 (per Tom Quirk). Add externalities in the form of a price on carbon whose cost should be much higher than Rudd's pathetic $5/tonne in my view but obviously not in everyones.

Now my question to you is - Is it really necessary for you to be so darn right uncivil and insulting against those who have a more left leaning view (ie who express more concern for the environment and future generations) than you do? Have you got all the facts? How can you prove that the free market is the answer to everything and that its success (if that is the case) has not come at the expense of the environment which is not an infinite provider of resources etc

“Take that away from them for three and a half years and use it to subsidize renewable power and you've got the $34 billion needed to get your 20% renewables by 2020 (per Tom Quirk).”

No kulu, that is wrong (Tom has not suggested that this is correct). You cannot take $34B away from coal subsidies, and expect no ramification in costs to consumers and the economy. And even if the money for renewable was magically made available, the renewable infrastructure could not be built by 2020, and even then, (most importantly) it wouldn’t work.

Wah Ah Ling is right, and is being rude to environmentalists like you, because you think that your “left leaning view” has a monopoly on “ more concern for the environment and future generations”. You assume that those who are not “left leaning” do not care about the environment. I have children too, and expect to sit grandchildren on my knee. People like you consider yourselves morally higher than others. And you propose ideas that would be economic suicide for Australia, and yet not consider that this might have a negative impact on future generations.

But, in my opinion more importantly, you doggedly refuse to see reason when it is thrust in your face. Tom Quirk has spelled out, chapter and verse, and fully quantified, the reason why renewable energy can’t ever provide more than a fraction of our energy needs. Ever. And he has shown why continued use of resources like gas are required until technology provides an alternative. And you refuse to acknowledge this, it just doesn’t fit in your world view. Your argument may seem reasonable to you, but to others it is irrational and incoherent nonsense. And it is dangerous, because people like you vote, and so are creating a direction in infrastructure development that is leading Australia into economic oblivion.

Investments in solar thermal, geothermal, solar voltaics, energy savings technologies are all viable ways of reducing ghg emissions.

Some like energy savings technologies have payback periods within two or three years. They all have operating lives longer than the payback period.

They all have positive energy paybacks - that is they produce or save more energy over their lifetime than they consume.

The reasons they are not implemented are
1. Inertia - it takes effort to change
2. Uncertainty
3. Finance costs of interest paid which is high because of 2

If we removed interest costs and we allowed capital costs to be paid back from profits on the sale of renewable energy then renewable energy projects would flourish.

Nobody is arguing that renewable energy can reduce GHG emissions, but otherwise Fickle Pickle is quite wrong. It is amusing to see such naivety, but also a bit concerning that renewable energy advocates have such an immature understanding of finance. Anyway, for FPs sake, I will explain:

Whilst there is an energy payback after a few years, that is very different from financial payback. There are no magical financial tricks that can make renewable energy affordable, it is typically between 2 (large-scale wind) and 10 (solar PV with storage) times more expensive than the conventional grid electricity depending on the manner of deployment.

1) It is not “uncertainty” that causes high “financial costs of interest paid”. There is always a cost on debt, and though it varies considerably due to inflation and other factors, it is never zero.
2) If the “interest costs” are removed, who would lend money for no return on investment? If the government offered interest-free loans, then that just shifts the cost of debt onto taxpayers. We end up paying anyway.
3) The profits on the sale of renewables cannot pay for the capital costs, unless the profit margin per unit is greater than 100%. Who is paying for this massive markup? Again, we (the consumer) are paying.

But as Tom Quirk points out, the big problem with renewable energy is not just financial. Renewables cannot provide much of our energy due to intermittency. With current technology, we still need to source 85-90% of our energy from non-intermittent sources. And gas and nuclear are the only answers at present.

Fickle Pickle’s post illustrates that the supporters of renewable energy apparently do not have the intellectual capacity nor practical understanding of the technical and financial implications to realize that their dream enviro-friendly energy solution won’t work.

Greig,

You like many others think that to invest you have to borrow money. In the real world we entrepreneurs find investors to give us money for a share in the investment. Investors do not charge interest.

The way we create money through fractional reserve banking means that to create money we have to create debt. In other words money = debt. Money does not have to be the same as debt as money is a representation of an asset and there are other assets we can create other than debt. Debt is a convenient way to do it but it has proved to have unfortunate side effects of creating unstable money and debt markets.

The difficulty is that we have become so used to money = debt that we accept it as the way it has to be. It doesn't and we can decouple the debt market from the money market.

We can create money by creating a productive asset first and then letting the asset we have created be represented by money. Investors do this all the time. When you invest in a new venture you give the venture some capital and get shares. Your shares are not debt and are not turned into money until the capital has produced a productive asset that pays dividends. We create more money because the initial investment has turned into more money than we put in. That is how we can create money without creating debt.

The country can do the same. It can decide to invest in asset producing projects - such as renewable energy and other ways to save ghg - without incurring debt.

Our current system is one where to get capital we borrow. We can turn this around as investors do and give people money that they must turn into productive assets.

The country may not get the best return on their investment if it invests in renewable energy compared to real estate etc. What I do argue is that we will get a positive return and that is enough.

I continue to be amazed at the way renewable energy advocates will desperately cling to their ideal. It doesn't matter that it can only produce a fraction of our energy needs. It doesn't matter that it is far more expensive than other low carbon emission solutions. They insist: "Renewable energy IS THE ANSWER. And don't argue because we KNOW IT'S TRUE.".

And Fickle Pickle, I showed your post to a friend who is an accountant, and she thinks you are joking. "Nobody is that silly" were her words, or something to that effect.

Grieg, You are wrong when you state renewable energy investments do not give positive financial returns.

Geothermal Energy from Geodynamics, Solar Thermal from Ausra have a running cost of 1 cent per kilowatt hour. The price of wholesale energy at the energy plant door is about 6 cents. Once you have the plants built the gross profit is 5 cents per kilowatt hour. The capital cost is about $5000 per continuous kw. Assuming an operating life of 30 years the capital cost is about 2 cents per kwh. Thus the net profit per kwh is 3 cents per kwh. We know that the cost of engineering systems drops by between 15% and 25% each time the capacity doubles. By the time we reach significant capacities of geothermal or solar thermal the capital costs of both will be well below the cost of fossil fuel plants.

Renewable energy plants built today will return their money within 15 years. Renewable energy plants built after we have built 8 times the current capacity will halve in cost and return the money invested within 7.5 years.

Let me now do a calculation for an investment in housing. A rule of thumb is that a $300K house returns $300 rent per week. Running costs of land tax, repairs, agent fees are at least $100 a week. Thus a house returns $200 a week or $10,000 a year. It will take 30 years to pay back the $300K investment.

Australians borrow about $22 billion per MONTH to spend on housing. If we diverted $2 billion per month from housing investment to renewable energy investment we would have zero net emissions in less than 10 years.

Our financial system is built to benefit the financiers not to advance the whole community. In Western anglo economies 25% of the GDP of the country is absorbed by the finance sector or by the book keepers whose job it is to account for the money. They have done a poor job of increasing our total wealth but a good job of getting a bigger portion of the whole pie

Fickle Pickle,

Obviously you have no practical knowledge of accounting or you would not be dissing the finance industry. And it also shows in your laughably naive analysis. You clearly have no understanding of either how to do a levelised cost analysis of a capital intensive engineering project. Nor are your numbers even remotely accurate.

I could go through it in detail, but I couldn't be bothered. But I will make some brief observations:

1) How do you imagine geothermal and solar energy sell on the open market at 6c/kWh which is double the market average for conventional electricity (solar/nuclear etc)? Where have you factored in the fact that the difference in price must be borne by public subsidies.

2) How do you arrive at a capital cost of "continuous kw" at "about 2 cents per kwh", when even the NREL and Ausra say that supplementary supply is at least 3 times this number, and with storage is about 7 times.

3) How does solar provide "continuous kw", when even with advanced molten salt storage, it only takes one cloudy day to shut down the plant.

What really worries me is your motivation to get on a website like this, and post your nonsense. You seem to have some kind of religious devotion to renewable energy.

Grieg,

I was wrong the average price of wholesale energy in 2008 from NEMMCO website was 5 cents per kwh in NSW not 6 cents. It doesn't matter what the cost is as long as the running costs of 1 cent per kwh is less than selling price be it 5 or 6 cents. It means it takes longer to repay the money.

Your capital costs include the cost of finance. My capital cost doesn't.

I have taken the capital cost of "per continuous kw" over a period of years which takes into account downtime or times when the sun does not shine. All power plants are down for periods of time and the per continuous kw takes that into account. I used a lifetime of 30 years for these plants which is an underestimate. To get the capital cost per kwh get the cost per installed "continuous kw" and divide by (years times hours) and it gives you repayment cost per kwh. It has been difficult to find the costs because these are typically commercial in confidence. However, it doesn't matter the exact figure because we know that as we build more so the cost will come down 20% each time we double capacity while the price of energy will not go down. My estimate is that we will have to double our renewable capacity at least 12 times (or 4000 increase) to replace all fossil fuels. Even if the current cost per kw is 20000 by the time we have replaced all fossil plants the cost will be 2000 per installed kw.

Investing in renewables is a reasonable investment now with a payback of 15 to 20 years and will only get better.

Fickle Pickle,

As I have said, you clearly do not know how to do a levelised cost analysis for a capital intensive project. And that is why you arrive at the incorrect conclusion that investing in renewable is profitable.

[FP] “Your capital costs include the cost of finance. My capital cost doesn't.”

And that is why your calculation is wrong from the outset. It isn’t possible to build a power plant without incurring the cost of financing the project. It is silly to assume that capital can be raised for free, that investors are willing to part with money for no return. Why would anyone do that? Power plants are not appreciating assets, they are depreciating assets … they have a limited life of around 30-40 years, and then they have zero value. Therefore, investment in power plants require a return on investment. And the cost of solar power is determined nearly entirely by the relatively high capital outlay for plant construction. When you take this into account, solar thermal electricity with storage costs around 25-35 cents/kWh.

[FP ] “I have taken the capital cost of "per continuous kw" over a period of years which takes into account downtime or times when the sun does not shine”

Actually, you are NOT taking intermittency into account. You don't factor in the significant cost of storage and/or redundant standby power which is required when the sun doesn’t shine.

[FP ] “we know that as we build more so the cost will come down 20% each time we double capacity”

Nonsense. Economy of scale is relevant, but your figure of 20% is completely wrong.

[FP ] “My estimate is that we will have to double our renewable capacity at least 12 times ... to replace all fossil fuels”

Did you read Tom Quick’s article? It explains in detail why it is technically impossible for renewable energy to replace all fossil fuels.

[FP ] “Investing in renewables is a reasonable investment now with a payback of 15 to 20 years and will only get better.”

[groan] From the sublime to ridiculous.

Greig The Intellectual,

I have not said that renewables can realistically replace all fossil fuel power at least in the short to medium term.

Gas is obviously the answer in the shorter term and nuclear should not be completely discounted either (if the plants didn’t take so long to build) but with nuclear you are swapping a dangerous waste problem (GHG's) with an even more dangerous one and run the risk of misuse of the nuclear fuel as well. There are other disadvantages to nuclear too but I'll leave that aside for now.

As to externalities and the investment in renewable energy, there is at present no financial incentive for private investors to support renewables which are a more expensive means of power generation than are coal and gas fired generators. Unless subsidies on coal powered energy are removed and externalities recognized on all fossil fuel power I don’t believe a viable renewable industry will establish itself.

Just because the externalities in the coal and nuclear industries are not easy to incorporate into their costs does not mean they are not present. The scientific evidence of human induced global warning and its likely effects is now overwhelming (but obviously not unanimous). Why would we not act on that evidence even if it will cost us something? Cap and trade schemes are a means to incorporate these externalities and have successfully been employed to tackle sulphur dioxide pollution in the past albeit on a much less global level than is now required for GHG.

Even if renewables prove incapable of solving all or most of our energy needs they should be given every chance to take up as much of the demand as possible. Taxpayers should certainly not be forced to subsidize the fossil fuel or nuclear industries in any way.

Further it would be a mistake to sit back and rely on some future technology, nuclear or otherwise, (certainly not that furphy of all furphies a clean coal miracle) to come to the rescue.

For the benefit of readers, Greig's levelised cost analysis, is a discounted cash flow analysis to bring all costs and benefits back to zero time. The idea is that a dollar today is worth more than a dollar tomorrow. The problem is that it biases projects towards short term projects that give financial returns rather than total wealth returns. It assumes that profits from investments are reinvested immediately to make more profits.

If you can get your money for zero interest and you take the long term view a more realistic method of predicting the future is to use the total undiscounted cash flow to decide between projects.

Levelised cost analysis as a means of predicting the future requires that the cost of coal and oil remains stable and interest costs are fixed. My undiscounted calculations will hold up if energy sources like geothermal and the sun have a constant output.

Grieg, and many others, do not include technology learning in their costings. Every time a technology doubles its installed capacity the cost of creating the next unit of capacity has dropped by some percentage. Moore's Law for semi conductors is an example. For the past four decades semi conductors have halved in size and price every eighteen months. This is a different phenomena than economies of scale.

The so called "Masters of the Universe" have a lot to answer for. Their methods of analysing projects to emphasise financial gains versus wealth gains have caused the financial crisis, the over emphasis on consumption and absurdities where we measure a country's wealth by how much it consumes - not by its productive assets.

We must change our sources of energy to keep the planet habitable for humans. I have shown that the total undiscounted cash flow of existing renewable energy technologies is positive.

To see how to get the money for investments at zero interest and to solve the financial crisis visit http://www.abc.net.au/rn/perspective/stories/2008/2448111.htm#transcript

Spindoc says:

"As I understand it only 40% of carbon emissions are related to power generation, much of the balance is from transport. So how does renewable energy help?"

The thing is that there is anticipated a move from petroleum-fuelled to electric powered vehicles in response to, if nothing else, the rising price of oil. These new vehicles may be hybrids or straight out electric powered. Either way, it would have to be anticipated that the equivalent of a refill of liquid or gas fuel would be a recharge either at home base, or at recharging stations connected either to the grid or a stand-alone remote area power supply (RAPS).

Some of the demand for oil required for transportation purposes would thus be effectively transferred to the 'stationary' energy usage sector, characteristically using (much cheaper, in relation to present transportation fuels) electric power. Just one of the consequences of such a shift will be an increase in demand for electricity. It is only because the mass production of electric vehicles concomittantly with a nation-wide roll-out of the necessary recharging infrastructure has not yet made available the economies of scale, that this changeover has not already happened in the absence of governmental intervention or subsidy.

To the extent that the changeover occurs, there will be massive consequences for government revenue, for instance, as it would lose the excise on the oil no longer being used. Likewise, the contribution presently made by Australian motorists and road transportation enterprises to the cost-structure and profit-line of the overseas suppliers of our liquid fuels will be similarly reduced.

But wait, there's more!

Should it be that renewable energy generated electricity can exceed the targets set , and should it be that existing coal-fired generating plants face a future actual drop in power required from them, it is not impossible that coal reserves presently dedicated to electricity generation could be progressively applied to a coal-to-liquid fuels conversion of the like of the South African enterprise SASOL.

If renewables are cost-effectively achievable, opportunity for Australia is huge.

Kulu, why should taxpayers subsidise renewables, yet not subsidise gas or nuclear? You are picking a winner, apparently because you have faith in solar and wind power being a superior energy source. You already acknowledge that renewables are not THE ANSWER. Why place so much emphasis on renewables when they simply cannot provide reliable power? Gas and nuclear are appropriate considerations and can provide all our needs, cost effectively.

You argue that nuclear takes a long time to build, yet renewables cannot be built fast either because the plants are relatively small and geographically dispersed. If we were to decide to build 10 medium sized nuclear plants today, we could have 5 GW of capacity producing reliable power by 2025. To build the equivalent in wind turbines, we would need 100 wind farms, and need to be installing at least 2-3 wind turbine per day, which is not achievable.

I have no objection to including environmental externalities in the cost of fossil or nuclear fuelled electricity. For nuclear this would simply be a 5% levy on the price of electricity, as applied in the USA and shown to be adequate to cover the cost of waste disposal and decommissioning. But for fossil fuels, how do we know the cost of GHG emissions, when we do not even know whether global warming will have a net negative impact on humans? We assume change is bad, but is it really? The IPCC scientists certainly do not conclude that climate change will necessarily be bad.

Why remove subsidies from coal? when they contribute to the well-being of Australians, building infrastructure for transporting coal to export markets, reducing emissions of toxic particulate pollution, etc. If the subsidies are removed, it would only harm people.

[Kulu] “ Further it would be a mistake to sit back and rely on some future technology … to come to the rescue.”

Yes, and since renewables can’t provide more than a fraction of our energy needs, we must start building nuclear fast breeder reactors, they are already proven and can provide the world’s energy needs for 50,000 years.

Greig, my argument is not about subsidizing renewables (although that would be a good thing in my opinion if only to kick start the industry). My argument is about costing in externalities and about NOT subsidizing polluting industries.

We are never going to see eye to eye on these things, our opinions differ on what the ultimate costs of continuing as we are will be versus those of addressing the issues. Also if the costs of encouraging renewables, discouraging increased fertility rates, reducing immigration and dampening excessive consumption prove too much we can always take a step or two backwards.

As far as nuclear energy is concerned I have searched the internet and from what I have read can only conclude that the industry is heavily subsidized. One source claims that over the past 50 years the US industry has been subsidized to the tune of $145 billion (renewables = $5 billion). The industry in the UK has also been heavily subsidized. The 5% levy in the US that you referred to in an earlier post was, from what I can make out, only for some particular decontamination and decommissioning costs and amounts in total to only $2.6 billion.

Forgetting renewables for the moment and going back to subsidies; I would be happy if they were removed, my electric bill went up but my taxes went down to compensate. And exactly how destitute are the industries that benefit from these subsidies I wonder? Are there not perhaps more worthy, say import replacement industries, to whom we can dole out these funds? Should we not rather be protecting selected secondary industries against imports through duties (forgetting GATT for the moment) as opposed to protecting selected primary product exports through subsidies? Are we backing winners by subsidizing coal?

Tom Quirk writes:

"It is difficult to imagine any carbon free technology readily deployable and able to provide [6,000MW of additional deliverable power by 2020] except for nuclear power and wind. Since the government will not consider nuclear power, wind power is the technology of choice."

At this point Tom bases his article on an incorrect premise, that of it being difficult to imagine any readily deployable carbon-free technology capable of delivering an additional 6,000Mw of electric power by 2020. Such has already been proven in concept. The concept is that of using the temperature inversion obtainable in concentrated brines in solar ponds to power conventional organic Rankine cycle engines (familiar to most as refrigeration machinery) in turn driving conventional generating plant.

Solar ponds are acknowledged as being the most cost-effective collectors of solar energy. There is still scaling-up to be done before reliable costings for electricity, ex pondage, can be offered. I wont address this issue in this post. It is complicated because solar ponds in many situations offer economies with respect to transmission costs and infrastructure, which are not necessarily being taken into account in some comparisons being made. I shall offer some numbers with respect to the physical resources required to meet this energy target from solar ponds.

Experience from the Pyramid Hill, Victoria, solar pond indicates around-the-clock generation of 60 Kw of electricity 365 days per year from a pond one third of a hectare in area. See: http://www.enersalt.com.au/Local%20Publish/html/cheap_heat__.html

There exists the possibility to scale the generation capacity installed in conjunction with solar ponds so as to permit greater output per hectare at peak demand times, provided a corresponding reduction in output occurs at off-peak times. Such amplification of generating capacity would seem relatively easy to progressively achieve, given the modularity of organic Rankine cycle engine/generator units, perhaps made in Ford's subsidised factories?

5.5 Ha of pondage would be required per Mw generated 24/7, 33,000 Ha for 6,000Mw.

I would like to interrupt my line of argument briefly for a salute to this question, worthy in a different context of leading to an award of the Geddes Gavel, that was posted by Ludwig, Thursday, 19 February 2009 1:51:33 PM , earlier in this thread:

"Can you tell us what the projected energy demand in 2020 might be if our population remains constant and we achieve something like a 20% per capita reduction in demand?"

To the best of my knowledge, it sadly remains unanswered, be it here or elsewhere.

Returning to the further exposition of solar pondage energy collection and storage as evidence for the claim that it is an incorrect premise upon which much of the article has been based, I would like to illustrate the scope for solar pondage alone to achieve, indeed exceed, the claimed 20/20 target of 6,000Mw of renewable generating capacity.

It has already been claimed that 33,000 Ha of pondage would be required to enable the generation, using organic Rankine cycle engines, of 6,000 Mw of base load 24/7. Solar ponds store enough heat such that they can cope with extended periods of cloudy weather, so the intermittency of generated output, or the complex and expensive technology otherwise required to overcome this intermittency, is not a feature of this method of collection of solar energy. Solar ponds could just as easily be managed as a peaking supply of electricity, simply by deploying more ORC engine driven generators than the ponds could sustain 24/7, such that, for example, only half the pond area could supply 6,000 Mw for 12 hours out of 24, 365 days per year.

A very flexible system, and capable of very quick response to peaking requirements.

Notionally, 165,000 Ha of pondage could provide the entire projected requirement for electricity for 2020 of 30,000 Mw. The area of the salt lake, Lake Torrens, in South Australia, is 593,200 Ha, just by way of comparison. I simply mention it because it is not all that far from the sea.

Forrest,

To get an idea of the "magnitude" of the problem ABARE in 1999 estimated that Australia would need the equivalent of about 180GW of installed capacity generating capacity by 2016. That is, all the energy needed to support our current lifestyle. This includes heating, transport, industry, agriculture etc.

The worst case to reduce net emissions to zero is given by assuming all energy is supplied by electricity. To get 180GW of installed capacity we will need to invest about $300 billion - give or take a 100 billion.

To put this in context. Australian borrow about $22 billion each month to purchase houses. Most of those are for "old houses" so a $300 billion dollar investment over 10 years is achievable. All we need to do is to divert a bit over one months housing loans per year to renewables.

Given enough investment solar ponds could become part of the solution.

[Forrest] “Experience from the Pyramid Hill, Victoria, solar pond indicates around-the-clock generation of 60 Kw of electricity 365 days per year from a pond one third of a hectare in area”

Incorrect. The plants produces 60kW OF HEAT on average. It does not produce electricity. If it was converted to electricity, then heat and Carnot efficiency losses would reduce the output to around 20kW. Amortisation of the generator capital costs plus O&M on the generators would increase the price of power to around 7-8 cents/kWh … not bad only 40% more expensive than what you pay now for grid electricity.

But what about transmission systems? At $2M/km to the remote locations where these ponds are sited, that could add considerably to the costs.

Also, when the weather is cloudy, the ponds do not heat up much. Certainly there is latent heat that will result in continuous output, but the amount of power produced reduces significantly. After a 2-3 days of cloudy weather the output reduces to a trickle. There is no magic here, solar ponds suffer intermittency just like other renewable technologies, and it is the major limitation of renewable energy. Idle backup generation capacity has to be there to handle periods of inclement weather, and that is very, very expensive. It adds 50-80% to the price of supplemental electricity produced.

I would estimate that solar ponds with the necessary backup generation capacity would be able to sell electricity on the market at around 10-15 c/kWh. This is 2-3 times the current price. It is slighty more than the price of wind power, but less than the price of solar thermal and photovoltaic. So for small scale implementation, solar ponds have some merit, but will always need to be subsidised heavily against other lower cost solutions like gas and nuclear.

[Forrest] “Solar ponds could just as easily be managed as a peaking supply of electricity, simply by deploying more ORC engine driven generators than the ponds could sustain 24/7, such that, for example, only half the pond area could supply 6,000 Mw for 12 hours out of 24, 365 days per year.”

This is ridiculous. The proposal is to place half of the generating capacity on idle stand-by for use only for peak power. The capital outlay for the idle generators would nearly double the price of electricity for the whole plant. And also, more importantly, after a few cloudy days the output for the peak load would be unavailable, so would have to come from elsewhere. The solar pond concept is definitely not suitable for peak load supply.

Finally, the obvious flaw in the concept is the need for a continuous supply of water to refresh the ponds. This would require pumping seawater through pipes over a large distance. Besides the huge cost of installing the piping (which adds further to the price of the electricity) , this will consume enormous amounts of energy too, possibly more energy that the plant can output.

In summary, solar ponds can be a small part of the supplemental supply of electricity to the grid, in favourable locations. It is too expensive and flawed conceptually to be deployed at a large scale.

Greig says, in respect to the claim of generation of 60 Kw of electricity 365 days per year from a pond one third of a hectare in area by the Pyramid Hill solar pond:

"Incorrect. The plants produces 60kW OF HEAT on average. It does not produce electricity. If it was converted to electricity, then heat and Carnot efficiency losses would reduce the output to around 20kW. Amortisation of the generator capital costs plus O&M on the generators would increase the price of power to around 7-8 cents/kWh … not bad only 40% more expensive than what you pay now for grid electricity."

It would seem Greig and I must be reading from different pages.

This one: http://209.85.173.132/search?q=cache:C0w_Jx4fpewJ:www.enersalt.com.au/Local%2520Publish/assets/integr%2520system%2520dryland%2520f%2520Article%25202003.pdf+organic+rankine+cycle+engine&hl=en&ct=clnk&cd=59&gl=au says, on its page 2, under the heading 'Energy Production' the following:

"An Israeli Company (Ormat) operated an experimental 5 MW solar heat gradient pond from 1983 to 1990 near the Dead Sea. The ponds covered 250,000m2 and operated a 5 MW turbine, which equates to around 50m2 per kW generating capacity."

and, further down,

"A typical salt-gradient solar pond can absorb around 10 kWh/m2/day and a 1-hectare (10,000m2) solar pond can absorb around 100,000 kWh of thermal energy per day. Conversion efficiencies of around 10% would realise 1.75 million kilowatt hours annually."

This claimed Israeli experience corroborates the 1 Mw per 5.5 Ha of pondage derived from the Pyramid Salt experience. The Israeli ponds actually generated electricity at the rate I had claimed for the Pyramid Hill pond.

Greig's costing for the seemingly incorrectly reduced electric power output of the Pyramid Hill pond of 7-8 cents per KwH applied to the Ormat experience indicates a cost of 2.7 cents per KwH.

An important disparity.

Forrest,

Do not take too much notice of Greig. He is unwilling to listen or consider other points of view and he is so certain of his opinion that he cannot see that there are alternatives. My advice is to ignore him.

If you take away artificial financial costs imposed on projects by the bizarre way we have organised our money system then solar ponds will produce energy that can compete with other energy sources. Maybe in a area such as the production of liquid fuels - maybe in the area of accelerated growth of marine organisms - who knows until we try it. Maybe it will prove unviable for reasons we have not thought about. All that is irrelevant. The important thing is we try these things out in a serious way and we experiment with such initiatives.

To give some inspiration to those of us battling the "Masters of the Universe" mentality please visit http://www.ted.com/talks/willie_smits_restores_a_rainforest.html

and see how something real and productive has been done without the help of spreadsheet jockeys pouring over their paper models and done by a person who only wished to save orangutans

Hi Forrest, I think I understand where the disparity lies. You are correct in saying that the Pyramid Hill and Ormat facilities provide similar power outputs per unit area. However whilst the Ormat facilty generates electricity, it does not mention the price of the electricity, ie there is no reference to Ormat producing electricity at 2.7c/KWh. Rather, the price of HEAT produced at Pyramid Hill is 2.7c/kWh. You are confusing the price to produce heat with the price to produce electricity. The latter is much more expensive because you must add the substantial cost of generators, O&M and transmission systems, not to mention backup generation.

A detailed and fully referenced discussion of the solar electricity generation costs may be found at http://web.bgu.ac.il/NR/rdonlyres/D37B2231-A023-47E4-A96D-D6ABA2F374C4/35393/costsolarelectricity.pdf which concludes with a cost of 9.3 c/kWh for solar pond electricity, as fully optimized supplemental but excluding the substantial costs of transmission and backup generation. Current price for electricity (as delivered) using current technology is:

Solar pond: 34c/kWh
Solar PV: 53c/kWh
Solar thermal: 18c/kWh

When you consider CCGT and nuclear electricity is priced at 5-7c/kWh (delivered) and unlike solar power is reliable and scalable to large-scale deployment, it would seem solar power is just not in the same league in delivering cost effective low emissions electricity.

Fickle Pickle has not produced referenced material to justify any the myriad of incredible claims about the financing of renewable energy generation, and does not seem to understand anything about how capital intensive projects are financed. I admire the optimism, but suspect that Fickle Pickle boasts an economics degree that was cut from the back of a cereal packet.

Finally, Willie Smits is talking about a reforestation program. Though a remarkable and worthy effort, the issue is a bit different to the problem of providing reliable energy for a first world industrialized economy.

One of the problems we have with economists like Greig is that they have been brought up believing that the way we organise our monetary and debt system is the way it has to be.

Just to point out a few of the problems.

We have a liquidity crisis brought on by the creation of too much debt that as a byproduct created too much money. We are now trying to solve the problem by creating more debt which brought us to the crisis.

We have a system that measures wealth by consumption. Under this scheme if I buy a packet of cigarettes I contribute as much to wealth as if invested the money in a way to produce renewable energy.

We have a system where the people who already have money are the ones who get access to more while those who have ways of creating more money have difficulty getting access.

We have a system of markets - like the share market - which is unpredictable and its behaviour cannot be understood.

We have a system that says that money markets - which are also unpredictable - are a sensible way to allocate resources. Because the behaviour of markets are essentially random they cannot be used for sensible allocation. You may as well use a casino.

It is time we examined markets and made them work. As an idea for allocation of resources they make sense - but only if they work as expected. That is they reach stable equilibrium where price acts as the governor in matching supply and demand.

Going on with the same old systems will not fix things. If Greig could take a little time to try to understand what I am saying he might see that there are alternatives. The key ideas I am promoting that will lead to stable monetary markets and sensible investments that will produce cheap renewable energy as a by product are

1. Do not lend money before you have it on deposit. (Get rid of fractional reserve banking)

2. Create new money by first creating an asset

Fickle Pickle,

I have to disagree with you: I think we all should take a lot of notice of what Greig is saying and doing. He is posting most tenaciously in this forum, and that demands respect. So too do your qualifications to post on OLO, which OLO viewers may see here in summary: http://www.onlineopinion.com.au/author.asp?id=2741 . (For those who may not know, OLO userID 'Fickle Pickle' is OLO author Kevin Cox.)

I have rechecked the Enersalt website, and Greig is correct in saying, with respect to the Pyramid Hill solar pond, that the 60Kw 24/7 is for heat, with electrical output (was electricity conversion to have been undertaken there) being projected as being 25 Kwe 24/7. This link: http://www.enersalt.com.au/Local%20Publish/html/cost___value.html states "A small pond like [the Pyramid Hill pond] will run a 25kWe generator."

The contention as to how much electricity COULD be supplied 24/7 from the Pyramid Hill pond is still unresolved. That is because the Israeli ponds actually generated electricity at the rate per Ha of pond area that I had, albeit incorrectly, claimed for the Pyramid Hill pond. I imagine that might be because Ormat, the recognised world leader in ORC energy conversion equipment, operated those Dead Sea ponds.

That most important disparity between the projected costs of 2.7 cents/KwH and 7-8 cents/Kwh, ex 'power station', for electricity from solar ponds and HDR geothermal respectively, may well remain despite what Greig has said in his post of Friday, 6 March 2009 7:27:31 AM.

In the context of efficiency of power conversion from solar pond heat, this link may prove interesting: http://www.katrix.com.au/news-events_detail.aspx?view=8 It says of the Katrix high efficiency fluid motor/expander:

"This core component of a solar thermal microCHP system, will become an enabler of such systems with power outputs of 1 – 10kW, with expected efficiencies greater than PV systems at a significantly reduced capital cost per kW."

Forrest Gump,

I am not arguing about the amount of electricity produced. I am arguing about the way the financial returns are calculated. The problem with most financiers is that the model they use is based on present value methods (PVM) for calculating returns on investment. Most people use this approach and it has distorted investment decisions. Your solar ponds will never be developed even though they may return 10 times their cost over their lifetime of say 30 years. PMV is not a good way of deciding between long term investments such as renewables versus fossil fuel burning systems.

There are other ways of calculating returns on investments than those that favour the short term.

Most of the costs in renewable energy are capital costs. These are interest costs, repayment costs, risk of capital costs, profits and taxes. For long term assets an alternative way to calculate returns is through life time income from the use of the assets minus the direct costs of producing the income and minus the cost to build the asset.

The way we do our investment calculations determines where we invest our money. If you used present value methods to calculate returns you would rarely invest in anything where most of the returns come after 10 years. For example you are unlikely to invest in early childhood education.

It means innovation is stifled because when you have a ground breaking innovative technology in the labs it takes at least 10 years under the current financial system before you see it in the shops - mainly because it is so difficult to get funding for long term projects. It is the reason why things are built to throw away when they break rather than repair them because the returns are well into the future. When we add to this the bizarre accounting practice of measuring our wealth by how much we consume rather than by how much wealth producing assets we own then we biase towards the short term in our investment decisions.