Article by Brad Thompson, courtesy of The Australian
13.03.2025
Coal Australia says the Albanese government is using incorrect costings provided by CSIRO to make key decisions on the energy mix, amid warnings about power shortages and price hikes.
The industry lobby group said coal-fired power was far cheaper than current estimates by policymakers and remained the cheapest form of reliable energy in Australia.
Independent analysis by Arche Energy shows capital cost assumptions in the CSIRO’s GenCost report for so-called ultra-supercritical plants burning black coal were between 1.2 and 2.4 times higher than recent real-world benchmarks adjusted for Australian conditions.
Coal Australia said the resulting levelised electricity cost estimate for new coal plants was $50-$70/MWh which is significantly cheaper than the GenCost estimate of $102-$164/MWh. It is also considerably lower than the current wholesale electricity price in the National Electricity Market, which averaged over $120/MWh in 2024.
Coal Australia chairman Nick Jorss said the Arche research raised serious questions about the CSIRO’s methodology and conclusions, particularly as it related to the cost of coal-fired plants. “Unfortunately, due to the limitations of GenCost’s methodology and assumptions, the headline finding, that renewables have the lowest cost range of any new-build electricity generation technology, is not correct,” he said
“If the aim of GenCost is to provide objective estimates for the cost of building new electricity generation that is both technology-agnostic and policy-neutral, then the assumptions chosen in the levelised cost of energy calculations are inappropriate for that task.”
The CSIRO and AMEO collaborate with industry stakeholders each year to update GenCost, a leading economic report that estimates the cost of building new electricity generation and storage.
The CSIRO’s report poured cold water on Opposition Leader’s Peter Dutton nuclear energy plan by claiming the cost of large-scale power plants far exceeds firmed renewables over the long term, even if solar and wind farms are rebuilt every 25 or 30 years.
Coal Australia was formed last year to give coal miners an industry voice, with Mr Jorss – the Bowen Coking Coal boss – as its chairman.
Mr Jorss said the CSIRO needed to reconsider its numbers around coal to ensure the GenCost report was policy-neutral, technology-agnostic and could be viewed credibly by the wider energy market.
“It is our view that, based on real-world assumptions, GenCost would find that coal has by far the lowest cost range of all new-build generation technologies,” he said.
“A low-cost life extension of the current coal fleet, rather than prematurely shutting it under the government’s ‘82 per cent by 2030’ renewables target, clearly has the ability to provide much lower electricity cost outcomes for all consumers, retail and business alike.”
Coal Australia hit out at the CSIRO as a draft ruling from the he Australian Energy Regulator declared electricity bills would rise by as much as 9 per cent in NSW from July 1. Households and businesses in other states also face price hikes.
In December, the CSIRO estimated a 60-year solar project, including a complete rebuild after 30 years, would cost consumers $40-$68/MWh while a 50-year wind farm, including a rebuild after 25 years, was estimated to cost consumers $65-$108/MWh.
The Arche report found that extending the life of coal-fired power stations was a very cost-effective way of providing electricity to the grid, based on current Queensland coal station data.
A 10-year extension for a coal plant was found to require capital in the order of only $500,000 per MW of capacity.
The Arche research found the GenCost analysis relied on problematic assumptions, such as excluding realistic plant designs, and overstating capital and operational cost inputs.
Coal Australia chief executive officer Stuart Bocking said the nation should have some of the cheapest and most reliable energy in the world based on its high-quality coal assets.