Australia’s Nuclear Debate

00:00:00:00 - 00:00:21:06

Aidan Morrison

That's that's that's my read of it, is the argument that kind of the renewable energy is rolling out under its own economic steam. I think it's dead now, like, because we literally have a subsidy mechanism, which is express purpose, is to just go out to market and say, tell me what we need you to to pay you, to underwrite for you, to build this amount.

00:00:21:07 - 00:00:32:05

Aidan Morrison

so the idea that this kind of renewable energy transition is running under its own steam and the economics point this way, I think, is it's just blatantly falsifiable.

00:00:32:07 - 00:00:57:06

Chris Keefer

A warm welcome back to decouple. Today I'm joined by returning guest in Morrison. Aiden. We, last catched up in October, when, you had freshly released your video. you were. I guess you still are the quixotic quant. At the time, I introduced you as the lapsed physicist turned entrepreneur blogger. you've run, restaurant, you've owned a restaurant, operated that.

00:00:57:06 - 00:01:20:06

Chris Keefer

You've had a pretty, eclectic past. and a lot's changed, since we last chatted. you are now the director of energy research at the center for Independent Studies. I try and tune into Australian media when I can, and I'm seeing your face popping up quite a bit on the big news programs. and, you've been knocking out these reports.

00:01:20:08 - 00:01:39:04

Chris Keefer

May 2nd the six fundamental flaws underpinning the energy transition on April 11th. how to build low cost nuclear, lessons from around the world. So, figured we'd get you back on and get an update. Of course. you can inform us, about the, nuclear debate in Australia, how that's developed. But first, it's good to have you back, man.

00:01:39:05 - 00:01:42:22

Aidan Morrison

Thanks, mate. Really good to really just talk again. It's an exciting time.

00:01:42:22 - 00:02:05:08

Chris Keefer

So I feel almost like. Yeah, there's been kind of more happening in Australia than than Canada. And you know, we had, you know, really rapid succession of, of announcements. last year, with the refurbishment of Pickering, with the announcements around the addition of 1400 megawatts of large nuclear, but the Bruce station, you know, not one, but four small modular reactors being planned now for, for the Darlington station.

00:02:05:08 - 00:02:25:00

Chris Keefer

We have a new energy minister who's, you know, even more bullish than the last, potentially, but, you know, the news cycles in the summer and slowed down a little bit. whereas in Australia things are things are heating up. so maybe it's because, you know, and you have a hammer, everything looks like a nail. But, you know, I pay attention to what's happening, a nuclear and, just, you know, ping, ping, ping.

00:02:25:00 - 00:02:29:06

Chris Keefer

The alerts are coming in from Australia. So, catch us up a little bit, mate.

00:02:29:08 - 00:02:48:01

Aidan Morrison

Yeah. Yeah, sure. things are heating up, but things have been, like, very live on the nuclear front for quite a while. it's been. Yeah. All this year, nuclear has been a topic that the, the coalition, which is the opposition party at the moment, have said they might probably would or they've been they've been talking about nuclear a lot.

00:02:48:01 - 00:03:02:21

Aidan Morrison

And so it's sort of been known that they would be, probably making this a policy announcement, but there's sort of a particular inflection point when they actually commit to it and make it their policy. And sort of announce what it is and in a little more detail. And that happened just a few weeks ago in Australia.

00:03:02:21 - 00:03:28:01

Aidan Morrison

So the intensity rose quite a bit, I think, after that happened. yeah. But the but I suppose that also that inflection point marked a particular choice that the, the coalition has taken, which is somewhat surprising. in my mind, because initially I suppose everyone was talking about nuclear and there's so many good reasons for, for having nuclear power.

00:03:28:03 - 00:03:54:15

Aidan Morrison

but in Australia it's, it's actually banned. And so there's a really easy step that is sort of almost unopposed able to say, well, let's just like you don't need to ban it. Right? This stuff is not dangerous. Like, you know, it's very safe. It's previously can we at least just lift the ban? and that's one particular angle that that a lot of people, including very pro-nuclear people, have taken is that, you know, maybe they'll just announce policy to lift the ban.

00:03:54:17 - 00:04:21:15

Aidan Morrison

that didn't happen. the, the coalition, decided to go for a much more bullish position and said not just they would lift the ban and see what happens and think about it later. They said they would lift the ban and they would also, commit to developing a state run corporate option to support nuclear and commit to building at least two power stations on two of seven sites.

00:04:21:17 - 00:04:41:12

Aidan Morrison

that they've announced is candidate sites. And so that's multiple steps for the for a they've announced particular sites, seven that are eligible candidates. It's been interpreted by the press widely as being one reactor at each of those seven sites. But actually they said it was seven candidates. And they'll commit to at least two stations immediately. and there could be more.

00:04:41:12 - 00:04:59:17

Aidan Morrison

And that's sort of ruled out all the other sites. I think, that were trying to basically just rule out of being anywhere and say that it would be at these places, potentially these places, but but much more bullish, kind of take a much more specific target. And the risk they've taken is that they would get a huge backlash from the places that have been named.

00:04:59:19 - 00:05:18:12

Aidan Morrison

but they just named coal power stations as the eligible sites. And that backlash appears not to have materialized. or not? Not been very strong. And, you know, I'm certainly getting requests from communities close to these sites to come and do information sessions and help to inform the local community about the advantages of nuclear. That sort of thing.

00:05:18:12 - 00:05:38:12

Aidan Morrison

So the backlash that come and also by saying it's a government run entity, I think that the the coalition to sort of immediately answered a whole bunch of other easy objections like, oh, well, how would it be insured and what private company, whatever backs such a thing. And like, those are the things that just sort of taken on all the risk and potentially a lot of potential, resistance from their own internal party.

00:05:38:12 - 00:05:59:03

Aidan Morrison

Right. Like, you know, the party of free markets and kind of, you know, trying to keep these liberal. So by saying we're going to have a state owned corporation doing it, they've they've bitten off a bit of internal kind of risk and discussion about whether it should be state run at all with its too much state intervention. But it's it's totally quashed this question of could it even happen and who would invest in it because they've said no, the government is going to do this.

00:05:59:05 - 00:06:30:17

Aidan Morrison

so, remarkable sort of uptick in the intensity of debate that, that has occurred off of that. So but the response from the other side, is kind of even more remarkable, because within the first day or so, like, what happened is that a whole host of MPs, etc., were straight back onto Simpsons memes of three eyed fish and kind of like, you know, barrels of green sludge and floating little green rods in the water of a kind of a picturesque town near a coal station or something like that.

00:06:30:17 - 00:06:52:11

Aidan Morrison

So it's kind of it went from the kind of a very serious debate immediately to kind of a very comical, farcical, kind of scare campaign. On the other side, which is, I think, surprising and I think that it's taken a few weeks now, but literally yesterday, there's an article about the opposition leader basically saying enough with the Simpsons memes.

00:06:52:11 - 00:07:13:00

Aidan Morrison

We need to have a serious debate. Now, this is potentially counterproductive. And I think it I think it largely was. I think that Australians have realized that serious debate doesn't consist of Simpsons means. And, and they can't stick at that. So it's got to a really interesting, interesting position now. And I think that the sort of the debate will hinge on what people think of the cost and the schedule.

00:07:13:00 - 00:07:30:08

Aidan Morrison

That's the last kind of the last kind of, substantial, I think, questions that have been, asked. But I'll give you a break there to kind of, to question what I sort of missed out because otherwise I'll keep going on a monologue forever.

00:07:30:10 - 00:08:06:05

Chris Keefer

I had tons of threads to, to tag on. I mean, you know, it's really hard keeping track of politics these days. you know what's left? What's right? the world is kind of turned upside down in a sense here. you know, certainly I remember catching a I can't remember what it was. It was a meeting, I think, of, labor MP with, renewables developers and, you know, comments that have been made in the past, you know, and, we're seeing this in many places around the world where there's kind of an embrace of deregulated markets by traditionally left, parties, you know, renewable subsidies, working with private

00:08:06:05 - 00:08:28:06

Chris Keefer

developers, privatizing large sections of the grid and then we have now a kind of a center right coalition, that is, again, talking about state owned enterprises, state ownership. these are not traditionally what you associate with, each of these sides of the political aisle. So, you know who the socket and you mentioned there's there's sort of some tensions within the coalition on that basis.

00:08:28:08 - 00:08:45:02

Chris Keefer

you know, it's interesting, I think you produced a really important report, looking again at this question, how to build low cost nuclear. it's filling a gap that's not there. and I think, you know, it's hard to say the timeline of it all, but I can't I can't help but think maybe I'm just think so highly of you.

00:08:45:02 - 00:08:59:23

Chris Keefer

Bet that it that it has some impact. Frankly. Because that's again it's it's not of the political instincts necessarily. And there are other models of nuclear. I don't think they're, as realistic. But, you know, the private market can take care of this. The, you know, the SMR craze that that can kind of work itself out with private entities.

00:08:59:23 - 00:09:11:23

Chris Keefer

These are just kind of like gas plants, like those sort of category errors. so definitely interested in your, your kind of take on this, upside down, topsy turvy world of, the kind of political values and how they sort of almost swap sides here.

00:09:11:23 - 00:09:33:10

Aidan Morrison

Yeah, yeah. look, I think it's, I mean, it's it's good overall, I think it's good quality win. I suppose sort of those tribal instincts and kind of, you know, philosophical alignments don't bind parties so tightly that they can't consider the merits of sort of the other side's kind of traditional position and sort of think about think about embracing the market, where that works.

00:09:33:10 - 00:09:52:00

Aidan Morrison

Well, and think about considering state interventions when the market clearly fails. but I think it's a it's a big ask. I mean, I, you know, did did sort of write that report wanting to think about kind of, you know, did want to pop this assumption that the private market has does could always will work well for nuclear.

00:09:52:01 - 00:10:14:07

Aidan Morrison

So we looked at it. Look on the world. It's almost never been attempted, like the United States is the only place in the world where a kind of, like, literally pure, private market kind of initiated. And it was this second, second reactor. It was at Yankee Road, like the most remarkable. In fact, I think it's still a high water market of kind of private companies coming together and saying, let's build this nuclear reactor here.

00:10:14:07 - 00:10:40:05

Aidan Morrison

And going into the design and some that, everywhere else in the world, it's either a case of, sort of regulated monopolies, as in like, you know, utilities that have some sort of regulated kind of you will be the seller of electricity here that they go and support building the generation to. So they have access to kind of an uninterruptible, regulated cash flow, like, you know, or it's state owned company, like the, you know, like the ETFs and the rather homes and that sort of stuff.

00:10:40:07 - 00:11:11:11

Aidan Morrison

and the Kepco were largely state owned, and you can have a bit of private ownership too, like Tepco's 49%, privately owned, but 51% government owned. So which will turn the world and kind of like, sorry, but the, you know, private enterprise in nuclear is the exception, not the rule. And when you look at all the places where it's worked well and the things that we observe, where it works well, when you build lots of the same design in the same country, but also at the same site, like, you know, that's the kind of it comes down to it.

00:11:11:11 - 00:11:28:20

Aidan Morrison

There's the one simple rule that you shouldn't break, and just don't build these things in ones and twos, like, you know, if you particularly when you study at the first time, if you decide you're going to build 1 or 2 or something, I just say you've guaranteed that you will stuff up nuclear, like this is the one thing you can't do in the UAE is showing that perfectly.

00:11:28:20 - 00:11:54:20

Aidan Morrison

Like I looked at and I thought about three and there was not enough. And then when two decided that four and they size the site for six and it's worked out relatively well, because if you if you kind of have that scale, then it's okay to take your time and say, I'm going to learn the lessons properly on the first one and, and have a defensive, very careful approach, because spending more on the first is okay if you're building for if you're only building one, then all the pressure is on trying to get that one done.

00:11:55:01 - 00:12:19:01

Aidan Morrison

Just like to to nail it the first go and have a lucky kind of strike. So, I just think that I think that all those arguments sort of pushed you into this needing huge scale. And the most economical development is not a 1 or 2 or even a $10 billion, but a 40, $50 billion investment that the whole grid will then kind of like expose that kind of thing would last for a hundred years.

00:12:19:01 - 00:12:44:17

Aidan Morrison

It's such a market. It's like creating your own hydro. Yeah. Catchment. Right. Like, you know, it's kind of literally you create this thing that produces low cost power forever, but it's a massive scale that makes that possible to be low cost for, you know, forever. So I think it's natural the government, would have to be involved in at least backing that enough to make sure the right scale at the right place and the right commitment to a single design, gets in there.

00:12:44:17 - 00:13:09:13

Aidan Morrison

So it's great to see that. I think that, you know, that's been picked up. And the other thing is as well is that I just think that someone mentioned this to me, that guess you can't unban something and expect the market to ever jump into the gap. It's impossible to under. Like once you have said that you're willing to and would have a ban on something, you should assume that everyone will be reticent to leap into that space.

00:13:09:15 - 00:13:25:03

Aidan Morrison

you sort of poisoned the well forever. in that sense, that's problem we have with gas at the moment. Like, you know, government saying, oh, maybe we will un this type of gas exploration or development here. No one comes back like, you know, they've been scared off properly. Right? You know, this, it's a competitive market out there.

00:13:25:03 - 00:13:40:00

Aidan Morrison

So unless you're willing to have the government kind of drive the investment and really take some risks, put some skin in the game to bring people back. I think that, I think that the critics on the other side said that a private company would not invest in this, quite right. Like, you know, that's that's probably the case.

00:13:40:02 - 00:14:01:13

Aidan Morrison

That doesn't mean that the whole society should be left bereft of nuclear forever. It just means that, the, you know, the government's required in leading, the initiative to get to get it done on this scale. So anyway, it's, really, I'm glad that the, the traditional lines of politics haven't bound people so strongly that they can't, can't consider changing that.

00:14:01:15 - 00:14:35:16

Chris Keefer

Right? Right. former decouple guests. once said, man is blind until he has a metaphor that allows him to see. And, it's tricky to find, apt metaphors for nuclear. it's unique in a lot of ways. but I have found, again, when talking to policymakers that that comparison to hydroelectricity, at least in terms of that idea of the, construction risk, the high capital cost, is goes a long way to explain, demystify the phenomenon, the idea of, you know, private sector companies coming in, to fund a, you know, gigawatt scale hydro dam.

00:14:35:18 - 00:14:55:15

Chris Keefer

it's it's hard to imagine I haven't actually looked at the history there, but I think most of these, again, have been constructed under similar, levels of state planning and ownership, or at least big, vertically integrated, monopoly utilities. So, certainly there's there's some challenges that have been identified. you know, it's it's become such a culture war.

00:14:55:15 - 00:15:20:03

Chris Keefer

It's so hyper political. you know, this is a liberal representative democracy. Governments change hands. what are some of the challenges that that are being identified and, and what are some of the ways you think that they can be managed? I guess I'm pointing to the one of sort of, you know, political instability. And if this becomes such a, you know, line in the sand and Partizan issue, one worries a little bit about, you know, being able to carry through with the nuclear project.

00:15:20:03 - 00:15:25:04

Chris Keefer

If, you know, the coalition holds term for a couple governments, these are, you know, long term projects.

00:15:25:06 - 00:15:46:12

Aidan Morrison

Yeah. Yeah, it's a really good question. the question of the culture war. Look, I, I think that that's, that's really interesting, but I think that is the way that certain people choose to portray the issue and the way it appears superficially in the press. but the Australian political landscape is not like the, the American, political landscape landscape.

00:15:46:12 - 00:16:07:20

Aidan Morrison

Right. Where I think that in the case of America, this kind of, partizan divide and polarization, it really does split people down the middle. And you've got people that are kind of really strongly kind of democratic or progressive and then really strongly kind of reactionary, kind of, you know, right, wanting to sort of, you know, support the likes of Trump.

00:16:07:22 - 00:16:27:22

Aidan Morrison

Australian politics, I think, is not like that. I think that you have a 70% of the population that is sort of relatively disinterested in politics and not particularly passionate or tribal about. I think we have a fairly big swinging voter bloc or kind of loosely affiliated, block that aren't that aren't really champing at the bit and passionate about it.

00:16:28:00 - 00:16:50:16

Aidan Morrison

However, the people that are commenting and the writing that's done by the very engaged kind of, very committed, parts of society that's sort of 15% at each end. They're the ones that are loud. And I think that when you have those guys engaging in the press, it sort of seems like you have this kind of extremely sort of tight, nasty sort of culture war kind of thing.

00:16:50:16 - 00:17:08:17

Aidan Morrison

But to be honest, I think it's still fair to say that the majority of Australians, they they're not in this culture war. They dislike this kind of, you know, polarization. They're not they're not avid political followers. They kind of they want things to work and they want to just get on with their lives. They've got better things to do with most of their time.

00:17:08:17 - 00:17:25:03

Aidan Morrison

They'd rather watch sports and politics, right. Like, you know, and the guys that in Australia that watch politics, they watch American politics because it's better viewing, more exciting. Right. Like know. So it's kind of I just think that it's a misread, of Australia to say this has been brought in and is just being prosecuted or it's just about a culture war that's going to be fought on.

00:17:25:03 - 00:17:46:14

Aidan Morrison

That's lines. It appears that way because of because of the way that it's the extremely engaged kind of bits that are, that are fighting in the press, about this. Right. And so and I think it's worth mentioning kind of suppose some of the politics about like, Peter Dutton and the liberals that have brought this kind of in.

00:17:46:14 - 00:18:13:10

Aidan Morrison

So Peter Dutton is on the is in the conservative kind of faction of the Liberal Party, which is. So he's sort of on the right of the he's on the, on the right edge of the right wing party. and so and he's held posts in government such as in, in immigration and like, you know, I think probably held some pretty tough lines on stopping boats and some of these like which, by the way, every immigration minister on that side of politics, which has been a lot in the last years, has has done so.

00:18:13:12 - 00:18:34:01

Aidan Morrison

but, his background is a policeman, so he's a tall guy. He's he's got sort of no sort of natural smiling, kind of charismatic charm or good looks like people say that he's, you know, he looks like a potato. the other side is called him Voldemort at one point. but, he's he's kind of he's he's present it by the people who are on the left.

00:18:34:01 - 00:18:59:15

Aidan Morrison

And progressive is being this kind of arch conservative kind of dark, brooding, kind of stern to grim kind of, character, really unkindly. And he doesn't have, like, natural kind of, you know, sort of charisma and charm proving he's betrayed most. He's looking like kind of stern and concerned at best in the press. There's very few photos from around of him sort of smiling or looking relaxed.

00:18:59:17 - 00:19:22:23

Aidan Morrison

and the other thing that happened, recently this year. Right. Which I think tells you a lot about what's happening in the kind of this kind of verge on the culture war is kind of thing is that, there was a referendum held on this thing called The Voice, which was meant to give change the constitution, to give a permanent, separate representation to indigenous people in Australia, a voice to Parliament and change the constitution to do that.

00:19:23:00 - 00:19:46:19

Aidan Morrison

And this was seen by lots of people in the progressive side as politics is a kind of a, you know, a really good and virtuous thing to do. There was a statement that came from a big assembly of indigenous people. the statement from the heart Uluru statement that requested this thing. So it was seen as a kind of, like an inherently good, very, very good thing to do.

00:19:46:19 - 00:20:04:20

Aidan Morrison

But I think the progressive and it was popular at the at the start of the process, it was very popular. and the government is popular as about 60, 70% seemingly support for this idea. And Peter Dutton ask some questions about, you know, a bunch of hard questions about how it would work and who would, who would be voting and sort of what it would lead to.

00:20:04:22 - 00:20:35:13

Aidan Morrison

And slowly this thing just slid into unpopularity and got a resounding defeat at the polls as more sort of details emerged, it turns out the Prime Minister hadn't read the full statement of the heart, statement from the heart, the Uluru Statement, and, and was connected with a kind of higher level of ambition to do things like get a treaty and movements to pay the rent and have truth telling other things that Australians would find it hard to, hard to accept, like, you know, paying, paying the rent and the huge financial things that connected with this sort of activist, fringe kind of movement.

00:20:35:15 - 00:20:56:15

Aidan Morrison

And it wasn't clear in the end whether it would definitely, you know, definitely be a practical thing that would be guaranteed to alleviate sort of, you know, poverty and hardship and poor health outcomes, or whether it was simply a symbolic gesture that was meant to kind of, you know, and and there was a huge campaign as well arguing against it, saying that it would divide Australian politics into sort of separate racial groups.

00:20:56:15 - 00:21:17:12

Aidan Morrison

And, and, and I think there's sort of, you know, a question in my mind, too, that sort of resonated with like, for the first time in history, we have just slightly above proportional representation of indigenous people, in Australian Parliament. And so kind of if you start a new, separate institution and that kind of question would be like, do the best indigenous voices go for that separate voice, or do they stay in the main parliament?

00:21:17:12 - 00:21:46:18

Aidan Morrison

And I think there's a lot of, and there's an argument I'm sympathetic to sort of say, like, they should be in the real Parliament having the real, full, unfettered, complete, involvement in the system. So anyway, push comes shove. Peter Dutton is blamed by the progressive left was deeply attached, attached to this, this kind of, this referendum for killing that it was absolutely trounced at the polls, 60% like, you know, pretty much every state, against it.

00:21:46:19 - 00:22:10:05

Aidan Morrison

and so put it on the tapped into some kind of, I think, credible skepticism and held a line there and it was massively rewarded, seemingly. but a large part of population. But the left hate him for it. Like, you know, if you if you talk to the very progressive parts, they just kind of see him as an unimaginable force of evil.

00:22:10:07 - 00:22:36:17

Aidan Morrison

and so it's, I think it's very interesting because it looks like culture wars on the surface. But the rest of the country, who had not deeply attached to these culture wars, they will be persuaded by very kind of like down to earth ho hum things about economics and practical things and that sort of thing. And I really disagree with portrayals that this is just a full kind of culture warrior ambit to kind of slam the, you know, sort of react against the left.

00:22:36:17 - 00:22:57:13

Aidan Morrison

I mean, this is what Simon Holmes, the court wrote as soon as the policy was announced, he said, Peter Dutton has gone full Trumpian. This is the equivalent of saying, I'm going to build a wall and make the Mexicans pay for it, right? That's that's how the progressive left, see this some sort of bombastic, kind of like rejection of everything that the, the, progressives, support.

00:22:57:15 - 00:23:19:04

Aidan Morrison

And it's totally unrealistic and totally uncosted and, and I just, you know, respectfully disagree with that take like, you know, he said, we're going to start a state run company to back at least two power stations across these seven sites. And the economics, I think, and we can talk about this more. I think we'll are looking more and more favorable the closer we stare into the facts.

00:23:19:06 - 00:23:41:19

Aidan Morrison

it looks very competitive. I could expand on this for hours, but, but I think that the middle Australia won't be swayed by those and only militarily matters. The, you know, the 15% that allows neither side do not matter in this election. It's a question about what happens for that central 6,070% who have biggest things in their lives and politics, and the questions on the economics and the safety and and the reliability.

00:23:41:19 - 00:24:07:17

Aidan Morrison

Electricity, I think, will be crucial. And so, and if they decide in favor of nuclear power at this particular election, I don't think there's any going back. I think that I think that all the other barriers will quickly melt away. People will realize that this was a sort of, you know, relatively silly scare campaign. If we vote, if there is a sort of resounding vote in favor of nuclear power, it's a big, huge wave.

00:24:07:17 - 00:24:27:22

Aidan Morrison

Right. But if that happens, like happen for aukus, like, you know, which is the Australian nuclear submarine, agreement with the UK and the United States, like once that was announced. Right. there was a spark of fury from the Greens, but labor has fallen completely in behind it and is now supporting it in government as we need these nuclear submarines.

00:24:27:22 - 00:24:58:09

Aidan Morrison

And yes, they're safe and they kind of biding their time. But yes, we'll have to deal with the waste from them. So like, you know, I think that once that that boundary of resistance is broken through, if Australians falling behind that I'm not particularly concerned about a flip flop and changes his way on that, because I think that I think that once that is established that Australians are behind it all the economics and the the sensibility for the energy system will stack up and no one will bother trying to trying to fight that battle again, in my opinion.

00:24:58:09 - 00:25:00:02

Aidan Morrison

So that's a that's how I see it.

00:25:00:04 - 00:25:21:09

Chris Keefer

Is this upcoming election like really a referendum on on energy, on nuclear? More specifically, are there a lot of other issues on the table? I mean, again, I, I'm, attuned to certain, bandwidths and wavelengths here. I have to believe it's about more than that. But it does seem like there's no other country in the world where where nuclear is being talked about this much, where a party is, you know, staking their position.

00:25:21:09 - 00:25:24:08

Chris Keefer

I think so, so firmly. unpack.

00:25:24:09 - 00:25:52:19

Aidan Morrison

That's a good question. And there is a there is a clear, crystal clear answer on it. Right. Is that the this the government, the government that we currently have that is supporting renewables to the hilt and is opposing nuclear power. They said they want this election to be a referendum on nuclear energy. So we have this incredible, situation literally the Prime Minister said this election will be an election, a referendum on on energy, on nuclear energy.

00:25:52:21 - 00:26:17:10

Aidan Morrison

thinking that they'll we should win that election, right. Like, you know, and on this topic and of course, the coalition has granted them that like and we've we've never had big tangible policy reform in kind of, I mean, since the whole Keating Howard era. Right. Like, you know, GST being launched by Howard sort of in the, late 1990s, early 2000, that was the that was the last we heard of major reform.

00:26:17:12 - 00:26:32:20

Aidan Morrison

Every election since then has been a kind of small target. You know, they will talk about various topics, but there's no grandiose reform proposed on anything. It's sort of, you know, and it comes down a lot to kind of just who do you trust more as the safest set of hands on the levers that will nudge things a little bit this way.

00:26:32:22 - 00:26:53:08

Aidan Morrison

This is the first time we've had any debate that's been in a lead up to an election that has been 100% on substantial policy change, like a reform agenda, and both parties have leant into it and said, yes, we will have this election being a referendum on this topic. So, I mean, there are other topics that will get talked about, right?

00:26:53:08 - 00:27:13:09

Aidan Morrison

Like, you know, there's a housing affordability is a huge one and the hip pocket interest rates are very high. Lots of people are hurting a cost of living crisis like you know, that's what I mean. That's what everyone has said this election will be. This will be a cost of living election matter. But when you when push comes to shove, what are the levers that people can clearly see government has their hands on.

00:27:13:09 - 00:27:42:19

Aidan Morrison

Right. That can affect cost of living. Even though power bills aren't a big proportion of the total household wallet, they're one of the things that people can understand policy relates to. And so I think even, you know, cost of living election, which is what it should be if there's serious policy reform on the table that will push it to being an energy election anyway, because there's not many other things that the government could credibly do that could massively shift in a way that people understand.

00:27:42:21 - 00:28:11:06

Aidan Morrison

costs of living. so housing is the burning one that should have a lot of attention to it. But all the changes that would make a big impact there, difficult, ambitious reform things. And I just can't see either party running a major alternative kind of reform proposal. that would have huge consequences. On a different topic, now, particularly since the the government tried a couple, on negative gearing, which is a tax arrangement, a year or two ago.

00:28:11:06 - 00:28:24:12

Aidan Morrison

And that didn't work. So so this will be an election dominated by the will and wish of both parties by nuclear energy. It's extremely important. And and I hope that the rest of the world is watching. I think it's a I think it's an important time.

00:28:24:14 - 00:28:43:15

Chris Keefer

I mean, we're talking large investments either way. you know, carrying through with, you know, the plans on, on renewables deployments or on nuclear, what are some of the numbers that are, that are being tossed around, I guess, in both camps? And, you know, Follow-Up question. I'm just, you know, eager to hear how things are moving towards 82% renewables by by 2030.

00:28:43:15 - 00:28:46:00

Chris Keefer

Maybe that's will part. That is our second question there.

00:28:46:00 - 00:29:02:16

Aidan Morrison

But okay. Definitely come back to that second question because I think it's, it's crucial. the numbers, the numbers kind of that are most often promoted and the whole debate sort of revolves around is this Jen cost report, which, which I spoke about and produced that video on, late last year, large.

00:29:02:16 - 00:29:07:16

Chris Keefer

Nuclear is in. I have to think that you've had some influence on on this year's document.

00:29:07:18 - 00:29:27:07

Aidan Morrison

Yes, I think I and the team at center for Independent Studies. Yeah, that's, that's exactly right. And I can tell you that story because it's it's it's it's worth telling. Right. Is that previously, in the draft, in the, in the, in the draft Jen cost report, which is produced by the way, premier scientific agency, the Commonwealth Scientific Industrial Research Organization, CSIRO.

00:29:27:07 - 00:29:59:22

Aidan Morrison

Right. So in the draft was released in December. They had a they had the single case from the, the, the project, the low carbon project, that was the, the new scale design. Right. And so and that was presented about at like, you know, above $30,000 per kilowatt installed, capacity. So and that project was running, I mean, I'm not totally persuaded about the economic viability of the small modular reactors and that particular design, but that gave us a huge cost.

00:29:59:23 - 00:30:34:04

Aidan Morrison

That was the only nuclear, power that this this, it was the only source, the only data point referenced in this entire report for what nuclear power was. Base this single project of small. Most reactors produced by this company in the United States and I think was pretty hopeless. And we submitted, submissions. And many other people also, put in submissions to the CSIRO, but I think the critical thing that I think ticked things over the line is we asked the question, because it was cited that in the report that only small modular reactors were suitable for Australia, according to stakeholders and experts.

00:30:34:04 - 00:31:01:23

Aidan Morrison

And we asked the question in one of the consultation webinars of the author of The port, please, which experts told you that only small modular reactors suitable for Australia? And the answer was I think, I think a catastrophic embarrassment. They pretty much said that back in 2018, we had a stakeholder discussion. There were no nuclear experts in the room, and pretty much just admitted that SMR seemed to the flavor of the day, and they never looked back at it.

00:31:02:01 - 00:31:18:20

Aidan Morrison

I never revisited the question and I've had to admit in this final version that there's no hard technical reason why why large scale nuclear couldn't be deployed in Australia faces all the obvious challenges of, you know, getting the first project done. And this, you know, the upfront costs of regulating the pretty much there was there was nothing behind it.

00:31:18:23 - 00:31:48:19

Aidan Morrison

It was just a it was just a, an excuse. They were running with the flavor of the day and hadn't done no serious technical research to back up that presumption. And they've looked at large scale nuclear. And their approach they've taken is building at scale model on the Korean, design and, and iterative process, which is very kind, but then scaled up the cost of what the Koreans do for their reactors by the same ratio is what Koreans build coal plants for, what we build coal plants for, and the Koreans, deaf metal builders, we can't beat them at shipbuilding and also have industry.

00:31:48:19 - 00:32:11:23

Aidan Morrison

So I think it's a sort of reasonable method and arrive at a sort of reasonable number like, you know, $89,000 per kilowatt hour. So a third, less than a third of the cost that we had just six months before as being the only cost for nuclear. So now nuclear, that's the capital build cost and now nuclear. the numbers that are produced for that started around $140 and go to $250 per megawatt hour delivered.

00:32:12:01 - 00:32:41:06

Aidan Morrison

But the bottom end of that band, that band only reflects, only reflects variation in your, capacity factor goes from 53%, at the at the highest cost and, and up to 89%. And so if you consider that a nuclear power plant modern one, if it's built and operating in a mature, steady state, can easily achieve 90%, like, you know, it's a 90 or the US fleet on the 70s operating above 90% at the moment.

00:32:41:08 - 00:33:00:12

Aidan Morrison

really only the very lowest version of the costs of the Jane Cost Report in my mind, is fair, is a fair representation of what nuclear would cost, according to all their other assumptions. And that is very, very close to the upper bound of the renewable, integrated renewable cost, the 90% integrated renewable cost that they have in their report.

00:33:00:12 - 00:33:19:07

Aidan Morrison

So it is at best Nick and Nick, I think, like when you give an honest appraisal of the fact that nuclear can have a high capacity factor, and then you start considering what is going on with the renewables. And by the way, that their report also assumes that nuclear power plants have an economic life of 30 years.

00:33:19:09 - 00:33:39:07

Aidan Morrison

so when you adjust for that, right, like, you know, you actually, again, discounted cash flows and it's just candidate 6 or 7% like a pretty cruel to the extending the life, but it makes enough of an impact that you get into the bad. You're actually definitely kind of neck and neck in the band of what's estimated for for, for renewables at 90%, penetration.

00:33:39:09 - 00:34:01:06

Aidan Morrison

So the questions remain. And unfortunately here we've had these beautifully transparent assumptions. And in fact, there's a spreadsheet that you can just change the assumptions and rules for nuclear. The costs for integrating renewables are far less transparent. So we we know the problems that are there. but it's very hard to kind of like quantify them in detail.

00:34:01:06 - 00:34:18:23

Aidan Morrison

Right. The estimates for storage and transmission and firming, they look too small for me. They they're smaller than what I think I could measure by the equivalent comparison to the integrated system plan for 2022, which is the reference document they're using. but still, we've asked them to list, for example, all the individual projects they include in that cost.

00:34:18:23 - 00:34:38:17

Aidan Morrison

And they didn't. They just gave an aggregate figure. Right. So there's still a lot more they could do to make this process a lot more transparent. We also note the integrated system plan uses a model that has perfect foresight and perfect foresight for all the dispatch and construction of their all, every, every part of the system. Right? So in reality, there's no chance that that system would end up being reliable.

00:34:38:17 - 00:34:56:17

Aidan Morrison

It's the minimum that gets through. If you know exactly when to build every plant and when to charge every battery, and when to fill every day in, and when to discharge it. With perfect foresight. A real system would cost a lot more than that, for sure. And there's been acknowledgments of the perfect foresight issue in the integrated system plan that's not yet reflected, I think in gen cost.

00:34:56:18 - 00:35:19:21

Aidan Morrison

also, gen cost doesn't include the actual plan that we're building. It's an idealized model of what renewable energy could be if you built the best of it. But for example, we, having state governments mandate just projects that have had no economic optimization whatsoever. For example, offshore wind in Victoria mandated nine gigawatts of the stuff, and that's three times the cost of the onshore wind.

00:35:19:21 - 00:35:38:17

Aidan Morrison

Which gen cost? assumes will make up the balance of their optimized mix. So we're not building the optimal version. and the real version of buildings can be a lot more. So I think really maybe the top of I think the top of the renewables band is where the real numbers start, and they go a lot higher than that.

00:35:38:18 - 00:36:04:04

Aidan Morrison

And the bottom of the nuclear band is where the realistic numbers start, and they go a bit lower than that. and so I think that this debate, and we're trying very hard to kind of produce the compelling evidence and get this, get this discussed and get this sort of stuff exposed. But I don't think that the narrative that nuclear is six times as expensive as, integrated renewables will survive the next six months at all.

00:36:04:04 - 00:36:13:22

Aidan Morrison

I think that in the, in the intellectual circles, that debate's already done and over. It's close at best. But getting that to penetrate the news cycle will be a real challenge.

00:36:14:00 - 00:36:42:06

Chris Keefer

And when you say, just for clarification, you know, integrated renewables, is this talking about the, the firming of the intermittency and if so, I remember in our previous discussion you talked about the sunk costs that were not being, calculated and budgeted for, but also that, this system depended on a huge amount of home batteries, for instance, which the costs were just assumed to be borne by Australian citizens who voluntarily or not chose to, have an EV plug in to the grid or a Tesla powerwalls.

00:36:42:06 - 00:36:49:10

Chris Keefer

That's still part of of the assumptions. I mean, what are some of the potential cost drivers that that move renewables beyond that, upper band that you're discussing?

00:36:49:12 - 00:37:14:14

Aidan Morrison

Yeah, yeah, it's a really, it's a good question. Gets slightly complex because there's a, the, the, the other big report and model that's relevant is this integrated system plan produced by a market operator. So gen cost is meant to add up the total costs and the levelized cost of energy, produced from different different sources, including a 90% integrated firmed renewable system.

00:37:14:16 - 00:37:45:14

Aidan Morrison

however, the actual model that models what Australia's meant to build and the optimal development path is a much more sophisticated and larger model, produced by the market operator. That's called the integrated System Plan, but that does not add up the cost. It never attempts to add up the full system cost. And that particular model is the one that assumes that we will have, about 70, 60, 70GW of kind of battery power, which is mostly provided by consumer owned assets, which they don't include in their cost base.

00:37:45:14 - 00:38:07:19

Aidan Morrison

It's just kind of assumed to exist. Assume that we'll get to 95 or 99% vehicle update, and 70% of the time people will be charging and discharging at times convenient to the grid and sort of made available to support the grid and not, at their own convenience. So the assumptions there are absolutely heroic and I think totally unrealistic, but definitely not free.

00:38:07:19 - 00:38:36:15

Aidan Morrison

And they're just not included as a cost in that particular model. CSIRO report this time, following the, the feedback that, you know, I was involved in that video, they did produce a second set of numbers, right. which are meant to incorporate most of those. And the way they did that is they said, let's try to model what, the renewable integrated system would cost in 2023 when we don't have many batteries, you know, in, in powerwalls in people's homes, we don't have any electric vehicles that discharge the grid.

00:38:36:15 - 00:38:58:18

Aidan Morrison

So we'll assume what would have to be replaced at grid scale right now. and, and so they meant to have incorporated some of that in the 2023 number. Again, I can't see how it's all stacked up enough. And they still exclude, I mean, the the key thing to understand is they've used careful language and key words to describe what they are and aren't showing.

00:38:58:18 - 00:39:19:20

Aidan Morrison

And what they say is they're trying to model the cost to be faced by an investor, not the whole system not to use it. The model, the cost to an investor to provide this, assuming everything else in the system is free and available to support that, right? So at the moment, they're basically assuming that, you know, all the other stuff in the system is there today.

00:39:19:22 - 00:39:41:07

Aidan Morrison

And, and getting to 90% renewables can utilize whatever other capacity in transmission cables already built, coal power stations that are still sitting around, perhaps. so that's sort of free and available to help support the other part of the system. And in 2030, they assume that all these home batteries are built. They still have those same sets of numbers, exactly the same floors.

00:39:41:07 - 00:40:16:15

Aidan Morrison

They assume in 2030 all the transmission line, Snowy Hydro 2.0, everything that building the next five years at this furious, breakneck pace, which is an important story to get at, is built and is free and available to the next investor. Right. And so, I think it's a horrendous kind of abuse of the fine print, if you will, because this report, which is looked at as being the authoritative thing to inform a public policy discussion about what's good for the nation and what's good for consumers, is actually worded in such a way that that's not what it's fit for.

00:40:16:15 - 00:40:37:16

Aidan Morrison

It's meant to only be questioning what would be good as the next step for an investor adding to this system, assuming the rest of what's built in it is free and available, which makes it useless, honestly, frankly, useless for informing a discussion about what will the whole system cost if you keep building it up in that fashion? but that is a complex argument to get across.

00:40:37:17 - 00:41:12:05

Aidan Morrison

Lots of audiences. and it is still brandished furiously, and I think quite inappropriately by the federal minister saying, look, the science is in like, you know, it's, science. The CSIRO spoken, they find this is too expensive. But that particular scientific report was not considering what the total cost borne by society would be. Yeah. it is, considering what the cost for the next incremental investor would be in certain cases that had to pay for the new stuff that they brought into the system, but not the full cost of what was already put in to support the era this stuff.

00:41:12:05 - 00:41:15:06

Aidan Morrison

So anyway, that's that's sort of what's happened there.

00:41:15:06 - 00:41:40:23

Chris Keefer

So, yeah, I mean, so how how are things unfolding? when I was in Australia last, last summer, there was, you know, announcements of, I think life extensions that are roaring, you know, there's certainly plans to shut down the coal fleet. how are they progressing? And, how is all the transmission, snowy? the renewable energy zones, how are things sort of progressing in terms of the the stated goals of the transition?

00:41:41:00 - 00:42:02:03

Aidan Morrison

They're not I mean, that's, the short answer across all those fronts. you'd have to say that it's hard to avoid the conclusion that the energy transition is really, I mean, stalling at best and and running off the rails at worst. so, for example, a roaring that was long discussed, long mooted as a possibility, right.

00:42:02:03 - 00:42:24:08

Aidan Morrison

That Iran, in which the largest coal fired power station in Australia would need to be extended, it was scheduled to be shut down in 2026. and and of course, all of the investment justification, is being driven. the narrative is very much, look, coal is closing. Therefore we must have all these other things built to to fill in the gap.

00:42:24:10 - 00:42:42:03

Aidan Morrison

And of course, there's other things haven't been built. And I think that even if they were in terms of providing reliability of power, we've had some quite spectacular sort of wind droughts and dark days in the middle of winter just this year. So I think that to fill those gaps, I don't think to the batteries we thought we'd have on even have come close to being sufficient.

00:42:42:03 - 00:43:15:02

Aidan Morrison

So the New South Wales government has cut a deal with, cut a deal with origin and it's quite interesting deal actually. And they've, they've sort of said that will basically support up to around $400 million, keeping these plants, going for the next two years. and on the condition they're closed after four years. The weird thing about this deal is that it actually puts all the control on the choices back in the hands of Origin Energy, the owner of this coal plant, they don't have to accept the subsidy.

00:43:15:02 - 00:43:31:22

Aidan Morrison

They can decide prior to the start of the financial year that they would rather just run this plant for their own profit and do it. And I think that it's quite I mean, I don't know what they'll do that they might accept the because if they get underwritten, there's a cap to their profits. Right. There's a chance they don't have to take that underwrite and not have the profits cap.

00:43:31:22 - 00:43:54:23

Aidan Morrison

So they might be reading in the lines that it's more profitable them to keep filling in the gaps by keeping this thing running, with their profits uncapped potentially. And the next two years afterwards, they've negotiated the ability without any support and funding to stay in the market for up to two years longer as well. So I actually don't see that as showing that the market is even showing that these plants would be shut down.

00:43:55:01 - 00:44:25:08

Aidan Morrison

it's horrendously inefficient for the whole of society to be running this ramping situation, providing, firming. but it might still be profitable to consumers who would lose out if they can just charge enough through those periods to make that work, but that still might happen. So in any case, the argument that all the coal is coming off line, according to the to the narrative and the and the timetable is set, is is completely falsified by these sort of extensions and subsidy arrangements being extended to guarantee that these things stay in for longer.

00:44:25:10 - 00:44:45:08

Aidan Morrison

so I don't think that coal is closing on the other questions, the production of the actual installation of renewable energy, at a grid scale, I think that has basically dried up. There was, there was some really substantial reports that were produced by, I think, the Clean Energy Council that said how much it reached financial close and how much it stole each year.

00:44:45:10 - 00:45:11:05

Aidan Morrison

And, and there was big pause around December last year when they stopped releasing these new reports. And I think the answer was, and the previous ones had shown that almost none or none had been announced. that more or less the renewables have stalled. the new grid scale. And part of the reason for that is that, it's I mean, I my contention is that it's harder for them to get the power purchase agreements to pay a high enough price to guarantee their investment.

00:45:11:05 - 00:45:31:22

Aidan Morrison

They need to have an offtake agreement that basically underwrites their power. And because we're reaching this level of of power generation in the grid now, where renewables are starting to cannibalize each other and prices slumping, the capture prices falling when it's a very good windy, sunny day, etc. it's much harder to persuade someone to pay a high price when when you're generating the power on the spot market is actually quite a low price.

00:45:31:22 - 00:45:56:09

Aidan Morrison

And so to fix that, governments are introducing new schemes to basically underwrite minimum levels of revenue. And the biggest of these is done by the federal government. It's called the Capacity Investment Scheme. The concept to have capacity available was meant to provide, underwriting to firming capacity, such as peaking gas plants and or batteries that might help to provide that sort of dispatchable power.

00:45:56:11 - 00:46:23:06

Aidan Morrison

But it's been changed in December last year to extend it to basically underwrite many, many gigawatts of new wind and solar generation on top of some of the batteries and excluded the gas firming capacity from it. So it's become basically a mechanism to underwrite enough investment. in renewables against natural market forces to hit these targets, of 80% renewable generation by 2030.

00:46:23:08 - 00:46:45:14

Aidan Morrison

So that's, that's that's my read of it, is the argument that kind of the renewable energy is rolling out under its own economic steam. I think that's dead now, like because we literally have a subsidy mechanism which is expressed purpose is to just go out to market and say, tell me what we need you to, to pay you, to underwrite for you to build this amount.

00:46:45:16 - 00:47:01:06

Aidan Morrison

so the idea that this kind of renewable energy transition is running under its own steam and the economics point this way, I think is, is just blatantly falsifiable. If that was the case, they wouldn't be introducing this massive and and we don't know, a cap of the way they said there's a cap somewhere, but it's not public.

00:47:01:06 - 00:47:34:10

Aidan Morrison

They haven't declared what the maximum dollar value of this subsidy scheme is going to be. so it's just yeah, I think that that's not rolling out either. And the transmission, the transmission is they're doing their best to force it alone. and I think the disastrous thing that's happening there is that the presumption that all the targets are met, which looks hopeless, hopelessly unrealistic, is now used to underwrite the business case that's used in our regulatory frameworks to force customers to pay for this transition.

00:47:34:12 - 00:48:01:14

Aidan Morrison

And I think this is the most sneaky and egregious thing that has been done by far, is that our our market operator has interpreted the declaration of targets as being. Now we need to stop modeling any situation where those targets are not achieved. So the Australian public is being basically forced through the regulatory process to to pay for transmission.

00:48:01:14 - 00:48:20:04

Aidan Morrison

That only makes sense if we do have 82% renewable energy in six years time, and there's almost no chance that in reality will be achieved with it would have to require more than a doubling, of the overall rate of uptake that we've had in the last five years, which was far higher than we had in the previous five years to do that.

00:48:20:04 - 00:48:51:09

Aidan Morrison

So, so, like, it's no one's serious now thinks that will be achieved. And yet the regulatory system considers no circumstance where it's not it is assumed to be achieved. So we literally have a situation where our regulator is forcing the premature investment in these, transmission assets, which is egregious, in my opinion, just absolutely egregiously poor because I think there should be requirements, federal requirements, the law to say that they're meant to protect and consider protect consumers from premature in our investment.

00:48:51:09 - 00:49:19:06

Aidan Morrison

But now, because they've interpreted these targets as just as though they're going to happen, it's guaranteed to over invest. And I think that Australians haven't cottoned on to that yet. and and look, forgive me for rambling, but it's it's worse than that, even still, because the integrated system plan, even assuming that this target we met models a model, for example Hume link, which is the biggest, transmission project that's about to be built.

00:49:19:06 - 00:49:38:04

Aidan Morrison

It's $5 billion connecting Sydney to Snowy Hydro, the model that is being built in 20 2930, which is exactly the time when all that renewable energy will be built. And they say here, oh, look, now it's just snuck over the line as being beneficial in 2930. But on the other hand, they've given approval to build it in 26.

00:49:38:06 - 00:50:06:19

Aidan Morrison

Right. So that actually like actually modeling it at a time when Snowy Hydro will be online, when there'll be tens of gigawatts of renewable energy built. and then it sort of stacks up. But they've given regulatory approval. We're trying to get regulatory people to say, you can build three early on that. So guaranteed there will be three years, even assuming those estimates are built where, it's premature investment and there's no credible case, that, that it will provide net benefits to consumers in those three years.

00:50:06:21 - 00:50:19:20

Aidan Morrison

So it's, it's I think it's shocking on, on all those fronts, coal fired power stations, transmission, and the and the uptake of renewable energy. I don't think there's a serious claim that this is working the way the government has claimed it would.

00:50:19:22 - 00:50:40:21

Chris Keefer

it sounds like there's a lot of variables, a lot of moving parts and, maybe an overconfidence that everything's going to line up on schedule and I'll, I'll kind of plug in, but but overall, a very complex system. Now, remind me where we're at in terms of, renewables and what the breakdown is, because I understand, despite being a dry continent, there's still a fairly significant contribution from hydro.

00:50:40:21 - 00:50:46:09

Chris Keefer

Like what? Which part of that, you know, renewables portfolio that needs to grow in terms of the wind and solar portion now?

00:50:46:12 - 00:51:07:00

Aidan Morrison

Yeah. Yeah. or wind and solar basically like Australia has about 7% of our energy provided by hydro. and it varies a tiny bit, sort of, you know, year on year. But it's, it's, it's sort of a little under 10%. is, is what we get from hydro. it's kind of accepted, though, that all the really good spots for kind of run a river, rainfall powered hydro.

00:51:07:01 - 00:51:30:08

Aidan Morrison

Yeah. More or less taken. so, strictly. That's not true. There are other places in Tasmania, but there was huge conservation battles that are fought and won to protect these kind of world Heritage area, amazing places like the Franklin River, for example. So unless you wanted to go and kind of dam very high conservation value areas in Tasmania again hydro is kind of kept out.

00:51:30:10 - 00:51:56:16

Aidan Morrison

and so all this growth from sort of 7 to 82% has to come from, from wind and solar, and at the moment rooftop solar is growing, and still has been growing quite, quite rapidly. Right. So a lot of, I think the hope and optimism that we can reach these sort of very high levels is built on the assumption that, well, solar broadly has been taken out but large, but it's been been driven by rooftop solar.

00:51:56:16 - 00:52:24:18

Aidan Morrison

And again, the situation there on close inspection shows that we've sort of, you know, we've swallowed, we swallowed an economic story that doesn't really stack up. which is that rooftop solar is economical and and for household it feels economical. But we've had these incredible feed in tariffs at various points mandated by different state governments, sort of up to 44 sort of, you know, sense still, even higher and so much higher than that in Queensland.

00:52:24:20 - 00:52:52:04

Aidan Morrison

or maybe it's around that, but higher than the retail price. You get fitting for your power when there's too much of it. And, and so those are still coming off slowly. but also when you save power by having your solar panel power your home, you're able to save your full usage charge. And your usage charge actually is used to cover the cost of fixed costs in the energy system, like the transmission and distribution network, which your solar panels don't help you cover and you still depend on just as much.

00:52:52:04 - 00:53:09:08

Aidan Morrison

So. So I think that solar has added up weirdly, a little bit more and more at the higher that power prices go. But we've got ourselves into this death spiral where like, you know, by getting more people on to get more solar, the load shape premium gets worse. The duck curve gets worse, the coal fired power stations can running it.

00:53:09:09 - 00:53:35:09

Aidan Morrison

We can run less efficiently. We have to amortize the cost of all our fixed costs over a smaller amount of, kilowatt hours sold. So it's it's it's a it's a it's really a spiral. It's a, it's a positive feedback loop which has to break at some point. And we've just had the point now where, major distributors have announced, they have to start charging people, charging people for exporting their grid, power to the grid because of the complexity and cost that introduces as opposed to paying them for it.

00:53:35:09 - 00:53:57:21

Aidan Morrison

So I think these bitter truth bills that are inevitable, as the economics and engineering catches up, are going to start to come out and we'll see rooftop solar, it won't become as as highly rewarded, even though it's still more highly rewarded than what the actual underlying nomics, suggests. That will slow down. I think people say, by the way, the grid scale solar, all the best sites are taken.

00:53:57:23 - 00:54:18:12

Aidan Morrison

and that's weird, right? Because Australia has so much space. Have you said it best sited at taken. Right. That's a that's ridiculous. And but the problem is, is well this cannibalization issue is that like now at the moment, because there's so much rooftop solar on the system, the capture price of solar in general is just so low that only the very, very best and the sweetest spots, would ever make sense.

00:54:18:12 - 00:54:38:11

Aidan Morrison

And so it's described to me you'd only really ever throw a line over the back of an existing substation to a solar farm. The idea of building any substantial new transmission to open up, new solar is kind of more or less dead on arrival. So I've actually heard that said, like, you know, village, you know, someone in a conference.

00:54:38:11 - 00:55:05:00

Aidan Morrison

Is that, you know, the best spots are kind of gone for grid scale solar, which is like which is which is incredible. Right. Until they're building more transmission for wind, because that has greater diversity and is not yet sort of, you know, fully cannibalized. And and the correlation is not quite so intense, but for solar, because of so much rooftop on solar system, you know, the grid scale solar is hard to make a case for unless there's already a line right to that spot, which is, which is fascinating.

00:55:05:00 - 00:55:14:10

Aidan Morrison

So we didn't celebrities and, and this huge battles for that, because the wind has such a huge impact on rural communities and, and, and natural landscapes as well. And,

00:55:14:12 - 00:55:33:17

Chris Keefer

I guess building off of that question of, of social license and delays and, and deployment, I was actually watching, conversation between you and, Alan Finkel. and he was saying, listen, maybe we need to be optimizing more for social license and sacrificing sites that have the best actual wind resources, in order to get things built faster.

00:55:33:17 - 00:55:40:23

Chris Keefer

It sounds like that would, start to affect that kind of upper bar of, of, anticipated costs as well, pretty significantly.

00:55:41:01 - 00:55:59:11

Aidan Morrison

That's exactly, exactly right. And look, I and I agree with the thrust of Alan's direction very much. There is that like, you know, you have to have a holistic understanding of the, the, the benefits and costs of, of, of, of wind, for example. and so if you try to predict the environment, this carbon emissions is one thing, but also the native habitat that you might be destroying, etc..

00:55:59:11 - 00:56:27:12

Aidan Morrison

So, I mean, yeah, I mean, I'm in favor in principle saying like, we have so much space, why don't we move all the wind, etc. to the places where there is genuinely less social and ecological disturbance, right. and so I agree, the thrust, the direction. But the question is what does that cost? And I think that, Alan, this kind of estimate that you might get significantly lower kind of actual quality of wind and you'd have to go further away, which means building transmission lines further, means that that reflects the economics.

00:56:27:12 - 00:56:48:18

Aidan Morrison

And so if you take at the moment the economics we have and by the way, there was in Renew Economy, which is a very prominent renewables kind of, newsletter. This is an excellent example of a wind farm that had, I think 60 something turbines approved, there planned and in their application and on planning reasons for protection of.

00:56:48:20 - 00:57:06:07

Aidan Morrison

No, I think, amenity was I mean, 17 of them got knocked back and 40 some were approved. And they wrote back and complain and said, the economics doesn't stack up now. We can't get down to $110, per megawatt hour. Right. And this is like, you know, this is above them. This is above the minimum that the full integrated system with farming was meant to be.

00:57:06:07 - 00:57:35:19

Aidan Morrison

And this is a report we can't get. We can't get down $110. So the system won't go ahead unless you give us all those. Yes. turbines. Like, you know, we need the best ones. Some of those we we need to scale. We advertise. Well, fixed. But not so. So the reality is at the moment that if you if you if you start to try to impinge at all on the freedom of these wind operators to have the very best peak and all as many turbines, and that's what they want their costs for standalone sites before you factor in the transmission and the firming and gas and all the other stuff, inefficiencies in the

00:57:35:19 - 00:58:07:01

Aidan Morrison

system. just on the borderline of not really being economically viable anyway, shift everything out away from, any socially or ecologically contested spaces. I just think that is that absolutely will make the economics far, far worse again. Like, if it's by, 30% or 40% is is what Alan suggested, like, you know, I think in that case, nuclear wins hands down, like the contest is, is is well and truly over at that point.

00:58:07:01 - 00:58:24:02

Aidan Morrison

If you add another 30 or 40% on top of those standalone costs that look like, you know, they're already kind of on the cusp of where they're really not competitive anymore. So I totally agree. I mean, I'd love to see the I'm not against renewables if they don't have all these downsides, but they do have these downsides, right?

00:58:24:02 - 00:58:38:21

Aidan Morrison

So if you can put them in a place where they're there's density and exist, great. But then the economics doesn't stack up. so I just think those the realities, those are the trade offs that you have to be honest about. And I think that, Alan writes valid point. We've got to honestly discuss all those trade offs.

00:58:38:23 - 00:59:01:02

Chris Keefer

In the meantime. I mean, I understand I've understood that, there's significant investments in gas, with, the 90% renewables plan in terms of, most, I think pickers, to ensure system reliability, with coal stations, no new coal stations being built in coal stations retiring. it seems like there's room for gas in the system, whichever way Australia goes.

00:59:01:04 - 00:59:10:15

Chris Keefer

you mentioned there's bands and variety of states. I'm not sure if that's on production or on on actually building these facilities, but where things out in terms of, building new, gas plants in Australia.

00:59:10:17 - 00:59:35:09

Aidan Morrison

Yeah, gas is on the like. It just is absolutely on the horns of an unresolved dilemma in terms of the current government today. policy about this. Right? So, I mean, on the one hand, the government has come around to sort of saying that they need to have gas in the system and announced a gas policy before that said, yes, we need to support, there was a, a month or so ago in the sort of announced the a relatively pro gas.

00:59:35:09 - 00:59:54:21

Aidan Morrison

This is an important part of the transition, which, by the way, the integrated system plan shows that it is we need to have, I mean, it's double our capacity for the peaking gas plants, and the actual volume doesn't decline very much, actually. And at certain points it's higher. So it's undisputable that gas is crucial to the planned transition, beyond dispute.

00:59:54:21 - 01:00:22:06

Aidan Morrison

And the government had made announcements to that effect. and yet there was a headline, the front page, The Australian yesterday, and I got calls and I went and had a news appearance about this, about a, a taxonomy, a traffic light system for kind of writing investments about how important they were and how useful or counter to, net zero ambitions and stuff, were organized by a sort of financial industry body but funded by the government through this.

01:00:22:08 - 01:00:37:10

Aidan Morrison

And they had put, gas, not even in the amber kind of, transition category, but in the red phase out and get rid of that category. and so that that was a kind of a jarring dissonance which made the front page of The Australian yesterday and, and, and I spoke about it in Sky news as well.

01:00:37:10 - 01:01:00:08

Aidan Morrison

So, whether we like gas and willing to invest enough in it, I think is absolutely exposing the the tensions and the kind of, you know, the, the engineering realities of a slowly catching up with, I think the, the renewables movement, and state governments, I mean, the federal government has backed building a, peaker plant through this, through Snowy Hydro state owned company.

01:01:00:10 - 01:01:17:07

Aidan Morrison

and that's turned out to be more expensive than was originally thought. but that's just one like, you know, it's, sort of a gigawatt ish, right? Like, you know, so, we need a times that in the next ten years. There's there's nothing. There's nothing that seems to be on the cards. the capacity investment scheme won't invest in it.

01:01:17:07 - 01:01:43:22

Aidan Morrison

The capacity effect as these things will be tiny if the renewable targets are met. So it's sort of acknowledged that there's no the market can't have confidence to invest in that under these circumstances. It's, it's, it's and and there's also the, the problem at the moment of, getting enough gas supply, on the east coast of Australia, like Australia is in this weird position where we have these most massive gas export capacities from the north west, Australia and also in Queensland.

01:01:43:22 - 01:02:06:00

Aidan Morrison

Like we we supply some of the we one of the biggest supplies natural gas in the world and, and at very competitive good global prices. Right. Like, you know, but with the consumers of some of the most expensive gas, because when those agreements on the East Coast were signed for those huge export, the government didn't make any sensible reservation policy and say that this fraction has to be for domestic sales.

01:02:06:00 - 01:02:28:11

Aidan Morrison

So the companies building it took took, you know, sold the full volume used in advance. They sold the full volume at a fixed price to the to the foreign customers. So so we've got oodles of gas going overseas and we struggle to supply enough in the domestic market here. And states in particularly Victoria a sort of bad onshore gas, any unconventional gas.

01:02:28:11 - 01:02:49:08

Aidan Morrison

So anything involves fracking. and and there's been other bans. There was a blanket ban actually one point I think on on sort of unsure. Yeah. So very like these governments have made a very, very hard for any new development of onshore gas, in Australia, have resulted in this situation. We now have potential shortfalls and certainly high prices.

01:02:49:10 - 01:03:05:16

Aidan Morrison

And now we have Twiggy forest like the, the, the iron ore billionaire who's building an import terminal. Right. So, I think he's seen the writing on the wall and knows that there is, potentially going to need to be we'll need to be importing gas into the East Coast as.

01:03:05:16 - 01:03:06:19

Chris Keefer

LNG.

01:03:06:21 - 01:03:11:02

Aidan Morrison

As LNG, and then re gas following it and selling it into, into our East Coast markets.

01:03:11:06 - 01:03:17:00

Chris Keefer

Is that because the pipeline capacity doesn't exist to move it to the areas where it be required, or is this just because of the.

01:03:17:00 - 01:03:29:00

Aidan Morrison

Way from the West Shelf? Yes. They we just can't we can't move it from like I mean, this like it's, you know, you're from big country like Canada, but this is this country's away, so you know, it be and then.

01:03:29:05 - 01:03:38:02

Chris Keefer

Mercator projection that, you know, for all of us in the northern hemisphere, Australia looks, you know, like it, like it would comfortably fit within, you know, half the US, but we, we forget what a massive cotton.

01:03:38:02 - 01:04:02:13

Aidan Morrison

It's, it's it's huge. So no, there's not that capacity. And so we look like we gonna start buying off at export prices. Like, we know gas that's been gone from someone else's wells and liquefied and then regasification here which which guarantees pretty much expensive gas. And I think the real issue here is that that feeds absolutely into the interests, expensive gas feeds into the interests in the business cases for renewables.

01:04:02:13 - 01:04:30:20

Aidan Morrison

Right. Because if you're if you're firming capacity, if every new bit of renewables displaces an expensive alternative generation that is marginally expensive for the next increment, and that just bumps up your, the business case, right? For for your investment. Right. You can say always saving the public money because we're saving this expensive alternative here. so expensive gas is absolutely critical to the, to the investment business case for renewable energy and all the transmission infrastructure as well.

01:04:30:20 - 01:04:54:03

Aidan Morrison

It supports it. Rather like cranking that handle just means you can claim you're saving Australians money because it's, you know, the base is going higher and you're sort of, you know, chipping a little bit off of it, you know, increasingly high cost alternative. So it's, it's a, it's a really a huge conflict of interest, I suppose, in trying to poison the development of any economical domestic gas in the southeast of Australia.

01:04:54:05 - 01:05:15:06

Aidan Morrison

and rely on expensive imports, because that will create the illusion that will flow through to regulatory instruments, actually, in the technical sense of of what, what renewables can provide. And it'll result in a much, much higher cost system overall. but it will it will definitely put wind in the sails of the investment case, for renewable energy by keeping gas expensive.

01:05:15:08 - 01:05:19:04

Aidan Morrison

So, yeah, it's a huge issue.

01:05:19:06 - 01:05:40:10

Chris Keefer

So we've got to wrap up, for now. but I want to put you on the spot for a second. I'm a huge fan of Aussie slang. and to me, what you're describing sounds like a bit of a hot mess, but I'm hoping to find a more illustrative term. from the Arsenal. How would you describe the stormy waters that you may be heading into?

01:05:40:12 - 01:05:59:10

Aidan Morrison

Yeah. Look, I mean, it's sort of. It's, slow motion train wreck. it's one of my favorite ones, right? Like, you know, it's just that the wheels have been set in this, in this motion for a long time. but we're just starting to sort of roll off the rails. Right? So, yeah, it is, it is, it is not just.

01:05:59:13 - 01:06:22:19

Aidan Morrison

It is not just what has come about in the last few moments, but the the commitment to it that now the current government, the commitment to this, you know, 90 plus nearly 100% renewable system, has been dug in like, you know, because this opposition to nuclear being fought in this election. And so we are we are having this fierce commitment to what was always an unsustainable track, being exposed.

01:06:22:19 - 01:06:39:18

Aidan Morrison

And I think that tension, there is, is just remarkable. And, and we'll see what happens the next few months about how, what else is exposed. but yeah, slow motion train wreck. That is just, I suppose, getting to the pointy end, faster part of what a train wreck looks like is sort of maybe the way I think I describe it.

01:06:39:20 - 01:06:50:18

Chris Keefer

All right, all right. We'll have to leave it there, my friend. I'm actually going to be, coming out to join you in Australia in a few months time. so I wait for to dip in my, toes back in the waters out there. We can do an even.

01:06:50:18 - 01:06:52:07

Aidan Morrison

Worse, in a few months.

01:06:52:09 - 01:06:55:12

Chris Keefer

Let's do it. Let's do it. Thanks for coming back on phone.

01:06:55:14 - 01:06:56:00

Aidan Morrison

Thanks, Chris.