This week the CSIRO released yet another report about the comparative costs of different electricity types.
The first line on the CSIRO’s web page announcing the report said that “For the seventh year in a row, renewables have the lowest cost range of any new electricity generation.”
Even the boy who cried wolf only got three goes before he was found out.
The CSIRO’s seventh year of outlandish claims is testing people’s patience.
Before the CSIRO began these reports, the average wholesale electricity price was just over $40 per megawatt hour in eastern Australia.
Most of the electricity we used was from coal and while there was some solar and wind it was not at a level that substantially impacted the system.
Fast forward after seven years of the CSIRO telling us that “renewables are the cheapest form of energy”, and lots of that said energy being installed, the strange thing is that our energy prices have skyrocketed.
Over the past decade the share of our electricity generated by the “cheap” solar and wind has risen from about 10 per cent of our power to over a quarter.
Yet, electricity prices have ballooned from $40 per megawatt hour to over $100 per megawatt hour.
What explains this glaring inconsistency between the CSIRO’s findings and the reality of life with renewable energy?
Maybe, just maybe the CSIRO has made some mistakes.
To start with the fine print of this year’s edition doesn’t quite say what the CSIRO says it says.
On the basis of the CSIRO’s numbers, the low estimate for a new coal fired power station is $102 per megawatt hour.
The low estimate for a renewable energy dominated grid is $106 per megawatt hour.
So coal seems cheaper?
The CSIRO seem to dismiss this anomaly by cherry-picking estimates for a lower share of renewable energy but these lower prices are the consequence of more coal and gas fired power being allowed to co-exist with the so-called cheap renewable energy!
There are even bigger problems with the CSIRO’s figures.
To estimate the costs of a new coal fired power station, the CSIRO assume that one would have to be built far from any existing infrastructure.
So the CSIRO add in hundreds of millions of cost associated with new rail and transmission lines to serve their hypothetical coal fired power station.
This is absurd because any new coal fired power station would be built at or near existing ones where there is already rail and power line infrastructure ready to go.
Further, the CSIRO takes, as an estimate of the cost of coal, a bizarre range of the average of all coal prices and the maximum of all coal prices.
The CSIRO refuses to use the minimum of all coal prices because they claim such low costs would not be available to a new plant.
This ignores the fact that some coal plants get coal from mines that are not connected to export markets and hence could still deliver relatively low mine mouth costs to a power plant.
The CSIRO also ignores the potential to refurbish existing coal plants which would deliver even lower energy costs.
The Centre for Independent Studies has recalculated the CSIRO’s numbers adjusting for their anti-coal bias.
They find that coal could instead deliver power for as low as $35 per megawatt (for refurbishments) and $51 per megawatt an hour for a new build.
Those figures are much closer to what we paid before we began installing the “cheapest” form of electricity.
Back in 2008, before they began forecasting electricity prices, the CSIRO warned that we could pay $8 per litre for petrol by 2018.
The predictions of the CSIRO should probably not be given any great weight.
We perhaps should not be too hard on them.
As Yogi Berra once remarked, predictions are very difficult, especially when they are about the future.
