Thread by @flexibledragnet

@dmichie66 @simonahac OK, I've watched the whole thing and I've been following Jesse on twitter for a while, so I feel I understand where he is heading. Let's start with a couple of framing remarks.

1. He makes a point about "mental models". Here I am in complete agreement with him. 1/n

@dmichie66 @simonahac People's mental models (ie, their framework to tackle a problem) are significantly influenced by their education/training/upbringing. My own early career in biotech, particularly genome sequencing influences how I think about problems in the energy space. 2/n

@dmichie66 @simonahac Jesse spent 4 years at the BTI. It would be completely unreasonable of me to expect him not to have a strong focus on nuclear technologies. So my guess is that his a priori mental model includes an instinctive desire to include baseload style generation. 3/n

@dmichie66 @simonahac 2. Value destruction. This is the first time I have listened in detail to the explanation behind the graphs I see on twitter. I understand that as you push more and more RE into the grid, prices get lower. But this is true of all generation. 4/n

@dmichie66 @simonahac But I disagree with his contextualization of value being in displacing FF generation and FF capacity. In Australia, the market does not provide a payment for either of those "values". The market provides a payment for generation. 5/n

@dmichie66 @simonahac It provides the same payment to every generator at a particular time for each MWh. So all boats rise and fall with the tide. Hence I disagree with this "value destruction" mental model as it doesn't reflect what takes place in the market. 6/n

@dmichie66 @simonahac I note that including nuclear in his model didn't reduce peak FF capacity demand, so in that respect, nuclear has no value either. The right mental model might identify generators that will survive when there is an abundance of generation that pushes prices to zero/negative 7/n

@dmichie66 @simonahac Is the grid going to change? Yes it is. Will we need adapt business models to low price events? Yes we will. Does this limit the penetration of new RE? I don't think so. All players are effected equally, not just the new entrants. 8/n

@dmichie66 @simonahac 3. Then we moved on to the "firm base" concept.

Most important thing that came out of this for me was that Jesse doesn't think this will be supplied by existing large build nuclear. So for everyone who is saying that nuclear is the answer because we have done it before.. 9/n

@dmichie66 @simonahac It isn't. Because he postulates that firm base will need to come from SMRs, FF/CCS, enhanced geothermal or something else. So now we are in completely new territory. Firm base will be something that we haven't seen before. 10/n

@dmichie66 @simonahac The other point to make is that we don't know how large the "firm base" wedge is. Mentally it looks like a third because that makes a nice diagram. But actually the amount of firm base required could be 5% or it could be 50%. Who knows. 11/n

@dmichie66 @simonahac My mental model is that we are in uncharted territory for the technologies to fill in the firm base wedge. It could be an SMR, or it could be a physical solar/battery package, or even a virtual RE/storage/DR solution. So long as it is the functional equivalent to firm base. 12/n

@dmichie66 @simonahac So @JesseJenkins and I agree on:
a) Firm base won't be old style nuclear
b) We should have a range of technological options
c) Nuclear is not technically required, but his modelling shows that systems with some level of nuclear firm base have a lower overall cost. 13/n

@dmichie66 @simonahac @JesseJenkins Where we probably differ is that (based on my previous experiences) I am confident that we will be able to innovate/optimise the system to take a lot more variable RE at lower cost than his model suggests. Ends.