Thread by @QuixoticQuant

This graph from @CSIRO's latest GenCost is probably the most important graph for 🇦🇺's energy transition.

It underpins the belief that wind and solar are cheap, even accounting for storage, firming, transmission etc.

And it's completely bogus. 🧵1/

Because on page 52, they descibe their 'Business As Usual' scenario. I.e. all the costs that EXCLUDED from the integration costs of those renewables.

Guess what, it's packed full of storage, transmission, and firming to support renewables. Let's unpack. 2/

First is Snowy 2.0.

Pumped Hydro storage, initially priced at $2bn, now looking like it could go up to $10bn.

EXCLUDED from the cost of supporting those renewables.
reneweconomy.com.au/snowy-2-0-rapi…

Then comes 'Battery of the Nation'.

Currently aconcept study, but it's another pumped hydro idea for Tas, similar size to Snowy 2.0. It'll be billions. You'll need two hands.

EXCLUDED from the cost of supporting those renewables. 4/
arena.gov.au/projects/batte…

And "various transmission expansion projects already flagged by the ISP process to be necessary before 2030"

So VNI West, Marinus Link, HumeLink, Sydney Ring... I'm losing count of the billions...

EXCLUDED from the cost of supporting those renewables. 5/

And the Kurri Kurri and Illawarra gas peaker plants.

Combined around a GW, and probably about another billion.

EXCLUDED from the cost of supporting those renewables. 6/
infrastructurepipeline.org/project/kurri-…

So what on earth did they actually include?
Some tiny, and constant amount of transmission within and between already-existing REZ zones.
And a minuscule bit of storage. (As anyone building a solar home knows, batteries make the panels look cheap.) 7/

But wait, this deception is so brazen and transparent, surely someone else would have raised this in an earlier draft or something??

Oh but they have.... CSIRO has to devote several pages to exactly such an objection. (Page 94, Appendix D, Section 2.3) 8/

And what they said in response will blow your mind.

Drumroll please... 🥁🥁🥁🥁🥁🥁🥁

And get ready to retweet, share, email this to every friend, journalist, politician you know...

Because it's just, freaking, insane...

🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁... 9/

They pretend that the supporting infrastructure is a private investment (generation?), requiring price-signals that penalise bad investments!
Where the market DOES NOT OWE the owner a reasonable return!
🤣🤡
Let me check how that works with big transmission/storage projects.. 10/

Lo and behold... It's the exact opposite.

Transmission projects are approved to be added to the regulated asset base by AER, based on projected economic value.

And then we guarantee a return to the owners. Funded by electricity users. Through power bills. 11/

And those economic projections for transmission, i.e. the business cases used to prove we DO OWE the owner a return on investment?

Of course, they rely directly on the assumption that they're enabling efficient use of new solar/wind for decades into the future. 12/

And the large-scale storage/firming? Snowy 2.0, Kurri Kurri?

They're just funded up-front by the government, also based on projections that they'll enable greater adoption of renewables. For decades.

Those investments are contingent future renewables too! 13/

And so completes this absolutely disastrous circular logic:
1. Politicians build transmission/storage because they think solar/wind is cheap because science says so.
2. Science (@CSIRO) says solar/wind are cheap because transmission/storage is 'sunk cost' and already built. 14/

@CSIRO This is simply crazy.
Absolutely absurd.
A government 'scientific agency' giving their authoritative scientific analysis to economists and politicians, which is actually polluted by a catastrophic error of economics/political science. 15/

@CSIRO They've literally argued that they only need to assess the cost of 'new entrants' to enable the mix.

As if the cost of owning assets built previously doesn't accumulate.

Please someone tell me how this isn't the kind of disastrous integration error it appears to be. 16/

@CSIRO Aside: why am I even inclined to consider the possibility that a government agency, so explicitly devoted to doing such analyses correctly, might have made such a simple yet catastrophic error?
I've seen it before:

https://twitter.com/QuixoticQuant/status/1678597051251302401?s=20

And I haven't really started with my other technical issues with the GenCost analysis:
- capacity factors
- cannibalization
- SMR capital costs/lifetimes
But I think I'll finish here, and just see whether anyone can better defend CSIRO's crucial 'sunk cost' assumption. 18/18