Risk, renewables and inconsistencies

Introduction

It is now well-understood that the energy absorbed by the 15 micron absorption band of carbon dioxide in the atmosphere with increasing anthropogenic emissions (from fossil fuels) is heating the surface of the planet. The world is largely dependent on fossil fuels for energy. Transitioning away from fossil fuels (the way to reduce emissions) will be difficult given the low cost and reliability of them. Over 70% of Australia's energy is currently from fossil fuels.

An old adage for investment management is: do not put all your eggs in one basket, ie diversification reduces risk. This applies equally in regards to the options available for replacement of fossil fuels.

Renewables (essentially wind and solar), hydro and nuclear are stand outs. For Australia hydro is limited by water availability and potential head of water. It would seem sensible, given the unknowns associated with partly developed technologies for large scale operation, to diversify the risk by developing a mix of generators including nuclear. Australia has chosen to put all its eggs in one basket, opting only for renewables and rejecting nuclear out of hand. Given the upfront costs and subsequent risk in constructing large scale projects this is an unnecessarily risky approach and could adversely affect our economy and living standards for decades to come.

We are told that renewables are cheap. Well, their operating costs are low, but we cannot forget that the construction costs are huge and merely saying they are cheap forms of energy do not make them so. Both nuclear and renewable have high initial construction costs and relatively low operating costs. Reliance on renewables requires expensive battery storage, not needed with nuclear. Nuclear has the big disadvantage in disposal of waste. This is a major reason why nuclear is shunned in Australia. However, the manageable risk of nuclear is a lesser risk than the inevitability of harmful heating effects if we continue to emit carbon dioxide in large quantities.

Issues and Risks Associated with Large Scale Solar Power

Location

Large Scale Solar requires a large essentially flat area with no flood risk or a number of smaller areas with the same characteristics. Competing land use issues will arise involving costs for the developer.

Construction

Solar panels have a low voltage DC output which must be converted to much higher voltage AC for efficient long distance transmission purposes. Coal and nuclear generate high voltage electricity, obviating the need for expensive transformers and inverters. Solar farms are likely to be situated far from population centres. It is easy to underestimate the costs of these nuts and bolts issues. Just recall the number of major government projects that have great cost overruns.

Strategic Risk

Most solar panels are made in China. This is a country which is, or can easily be, an existential risk to us. Relying on China for our energy infrastructure is a far bigger strategic risk than we saw with not allowing Huawei to contribute to our 5G network. This alone should prompt a rethink of looking at nuclear. Sure, we can buy solar panels elsewhere, but at a significantly greater cost which inevitably leads to higher electricity costs. The capital costs cannot be forgotten. Someone has to pay, most likely the Australian taxpayer.

Weather Dependence

Solar farms, however large, do not produce electricity when the sun does not shine. Large scale battery storage leads to significantly higher energy costs. Nuclear is way ahead on reliability and non-reliance on batteries whether we like it or not.

Inconsistency

We are promised by our present leadership a clean, green cheap energy future. Have they done a cost/benefit study on this? All they have is a bruised credit card after Covid to use. At the same time a lot of the huge amount of money being poured into making this happen comes from selling coal and gas to other countries. It is abundantly obvious that the fuel is bought for energy production by combustion. It cannot be argued that carbon dioxide emitted in China or wherever else, will have a lesser effect on carbon dioxide accumulation in the atmosphere than if emitted over Australia. Australia represents some 0.3% of the world's population and although it is true that our per capita emission are high, whatever we do is insignificant to what happens in far more populous countries who are not pinning all their hopes on renewables.

However, the above observations clearly show that Australia is very dependent on fossil fuels. Whether we use renewables or not we are still dependent on fossil fuels and what we dig out of the ground and export is making a significant contribution to carbon dioxide accumulation in the atmosphere. If our exports of mined commodities (particularly coal, gas and iron ore) ceased we would have a third world standard of living. Our attempts to be clean and green can be seen through the lens of hypocrisy. We flog coal to other countries and spend some of the proceeds pretending what good global citizens we are. Furthermore, we shun nuclear but welcome owning nuclear-powered submarines. How more inconsistent or hypocritical can you get?

Conclusions

Australia is giving itself a very risky future, by shunning assessment of nuclear, without making a real contribution to the abatement of anthropogenic carbon dioxide emissions, in fact Australia is making a real contribution to the problem itself, despite its attempts to appear clean and green.