Renewables vs Nuclear for the NEM

On the basis that 86 GW of Solar PV and 7 GW of hydro are common to both the renewables and nuclear scenarios, 64 GW of nuclear which will supply 45 GW of dispatchable power will be required to provide a total of 66 GW of dispatchable power for the nuclear scenario at a cost of $573 billion. These numbers don’t include operating costs but since the capex gap is reasonably wide and since there are negligible fuel costs it would not be unreasonable to assume the renewables LCOE will be less than that for nuclear. So, based on this analysis renewables should be the preferred option and, burgeoning electricity costs aside, so far so good.  But that’s because there is still enough coal-fired capacity to cover for the problems that are already surfacing as new wind and solar projects are commissioned. This will only get worse as coal-fired cover recedes and the point of no return comes and goes.

As can be derived from Table 2, AEMO’s plan for net zero 2050 is for 213 GW of wind and solar backed up by 22 GW of gas and hydro, that’s 10% firm power back up and there is no big brother next door to come to the rescue when things go wrong. And they do. Capacity factors have been overestimated, transmission losses have been underestimated, and there is already output curtailment around noon each day as an oversupply of solar generated power overwhelms the fragile elements of the grid.

The conversion from ‘Rated Capacity’ to ‘Dispatch’ (dispatchable power) in Table 2 adopts the average capacity factors tabled in CSIRO’s GenCost 2023‐24 report. Accordingly, 62 GW of onshore wind, with an ‘average capacity factor’ of 39%, converts to 24 GW of dispatchable power. The first onshore wind project in eastern Australia was installed in 2011. Since then, 13.3 GW of the 62 GW of onshore wind planned for 2050 has been installed. AEMO has been monitoring performance and the achieved capacity factor for the installed assets has been oscillating around 30%, not the 39% mentioned above[3]. This means that when installed, 62 GW of onshore wind capacity will be delivering 19 not 24 GW of dispatchable power.

Offshore wind farms are yet to arrive in Australia but there is no reason to believe they will achieve the average capacity factors cited in GenCost 2023‐24 report. For the purpose of this evaluation, it will be assumed the ‘average capacity factor’ of 46% will, in practice, come down to 35% commensurately with the reduced performance of onshore wind farms.

‘Network losses’ are mentioned twice but not quantified in AEMO’s 2024 Integrated System Plan and absent altogether from CSIRO’s GenCost 2023‐24: Final report but they are real and mean not all the power generated in regional areas reaches the consumer. It is assumed, however, that the observed capacity factor of 30% for onshore wind includes network/transmission losses and ditto for the inferred offshore wind capacity factor.

In the networks connecting eastern Australia’s remote renewable energy assets to major market centres, transmission losses are a significant issue, particularly due to the long distances involved and the capacity of the lines used. These losses can account for up to 10% of the electricity generated, depending on factors such as the distance the power travels, the voltage and resistance of the transmission lines, and the amount of power flowing through the grid. Efforts to reduce these losses include building more high-voltage transmission lines (refer Table 1) but this will not completely eliminate the problem.

Then there is the “curtailment” problem. Renewable Energy Zones (REZs) in Australia’s eastern states are designed to coordinate the development of large-scale renewable energy projects (like solar, wind, and storage) with the required grid infrastructure. These zones will help concentrate renewable energy generation in areas with high-quality wind and solar resources, allowing for efficient transmission to major demand centres.

It sounds like a good idea and makes a lot of sense but on sunny days particularly around noon both solar and wind farm operators have problems getting their power to market through overloaded transmission lines and when they do there is no market for the power anyway. So, they shut down and these shutdowns can last for weeks. From the investors point of view its revenue that can never be recovered unless they install batteries which are expensive.

For the purposes of this evaluation the average capacity factor for rooftop solar and utility solar will be reduced by 10% to account for transmission losses and curtailment. Therefore, the revised capacity factors for rooftop solar and utility solar will be 15% and 23%

Table 3 recalculates the dispatchable power available  from the AEMO renewables plan adopting revised capacity factors derived above. This reduces dispatchable power from 66 GW to 57 GW for the same cost as before i.e. $482 Billion. This will produce 498 TWh in 2050 which will satisfy the anticipated demand of 410 TWh.