bree.gov.au The Australian Energy Technology Assessment 31 July 2012 Professor Quentin Grafton Executive Director/Chief Economist Bureau of Resources and Energy Economics (BREE) The Economic Club of Canada Ottawa, Canada 21 February 2012

bree.gov.au Outline I.AETA Overview II.Assumptions, Costs and Technologies III.AETA Model IV.Levelised Costs of Electricity Technology Comparisons V.Levelised Costs of Electricity International Comparisons VI.Key Findings

bree.gov.au I AETA Overview

bree.gov.au AETA – Aim and Frequency AETA provides the best available and most up-to-date estimate of current and future costs (component cost and levelised costs) of a 40 electricity generation technologies. Full report and ‘bottom up’ study to be undertaken biennially, but opportunity for technology updates of cost and performance parameters biannually (March 2013 is next planned update).

bree.gov.au AETA 2012 Timelines Project initiated on 4 October 2011 to assess LCOE for 40 different technologies by state (and some cases sub-state) for 2012, 2020, 2030, 2040 and Work undertaken jointly with AEMO (Stage I). WorleyParsons (WP) has been primary contractor to deliver component costs and LCOE. WP sub-contracted ACILTasman to provide fuel costs and CSIRO provided use of its ‘learning rate’ model for long-term cost projections. Release of AETA Report and AETA Model 31 July 2012.

bree.gov.au Approach Component costs have been developed through a bottom-up engineering analysis of each of the technologies. Parameters provided for each electricity generation technology (capital costs, O&M costs, fuel costs, thermal efficiency, capacity factors, emission intensity, etc). AETA has been managed by a Project Steering Committee (PSC) Chaired by Professor Quentin Grafton (BREE) and including: Professor Ken Baldwin (ANU), Dr Alex Wonhas (CSIRO), Dr Arif Syed (BREE), Rob Jackson (AEMO), Rick Belt (RET) and Mark Stevens (RET).

bree.gov.au Stakeholder Participation AETA has been supported by inputs from wide range of stakeholders with expertise in a large number of the technologies (coal, gas, solar, wave, geothermal,…) In addition to stakeholder meetings in Stage I, BREE has Chaired two meetings of the Stakeholder Reference Group (SRG) that included 42 organisations/agencies/companies for feedback and inputs (10 February and 13 June 2012 ). Members of SRG were invited to provide written submissions on approach and parameters by COB 6 July. BREE received 13 written submissions.

bree.gov.au AETA Report and Model 1.AETA Report: Details the technologies and methods and provides comparisons to other studies 2.AETA Model: Downloadable model that provides component costs and levelised cost of electricity for 40 technologies that needs to be used in conjunction with AETA Report.

bree.gov.au II Assumptions, Costs and Technologies

bree.gov.au Key Assumptions AETA was developed to be consistent with the Australian Energy Market Operator’s (AEMO) National Transmission Network Development Plan (NTNDP), and its ‘planning scenario’. Key assumptions include: (1) economic growth of 2.5%; (2) $23/tonne CO 2 -e leading to a 5% reduction in CO 2 by 2020, and 80 % by 2050; (3) AUD moving to peak of 1.13 USD/AUD by and low of 0.86 USD/AUD by Capital costs are provided on the basis of an Nth-of-a-kind (NOAK) plant in Australia and at a utility-scale.

bree.gov.au Key Assumptions AETA was developed to be consistent with the Australian Energy Market Operator’s (AEMO) National Transmission Network Development Plan (NTNDP), and its ‘planning scenario’. Key assumptions include: (1) economic growth of 2.5%; (2) $23/tonne CO 2 -e leading to a 5% reduction in CO 2 by 2020, and 80 % by 2050; (3) AUD moving to peak of 1.13 USD/AUD by and low of 0.86 USD/AUD by Capital costs are provided on the basis of an Nth-of-a-kind (NOAK) plant in Australia and at a utility-scale.

bree.gov.au Component Costs Capital Costs (local & international components) Operation & Maintenance (fixed and variable) Fuel costs (provided by ACIL Tasman) Carbon sequestration and storage Owner’s costs Not included are decommissioning costs, network or transmission costs or additional local, site specific costs.

bree.gov.au Levelised Cost of Electricity (LCOE)

bree.gov.au AETA Technologies 40 electricity technologies evaluated: 1.Coal-based (14 options with different fuels & technologies) 2.Gas-based (CCGT with various options) 3.Solar-thermal (CLFR, parabolic trough, central receiver) 4.Solar-thermal hybrid (solar-coal & integrated solar combined cycle) 5.Photovoltaic (fixed and tracking) 6.Wind (on-shore and off-shore) 7.Wave (reaction point absorber) 8.Biomass (landfill, sugarcane & other) 9.Geothermal (HSA and EGS) 10. Nuclear (Generation III)

bree.gov.au III AETA Model

bree.gov.au AETA Common Technology Parameters

bree.gov.au AETA: Specific Technology Parameters 16. Combined cycle plant burning natural gas (CCGT) Basis: Single F Class gas turbine InputsValue Base ValueUnits Capital cost construction profile Plant Capacity (Net)374 MW Year 1Year 2Year 3Year 4Year 5 Plant Capacity Factor83 % 60%40% Thermal Efficiency49.5 % Base:60%40% Auxiliary Load12 MW Emissions368 kgCO 2 e/MWh (Net) Capital Cost Forecast Summary ($/kW) % Emissions captured00.0% North Queensland First Year available for construction2012 South Queensland Overnight Capital Cost1062 $/kW NSW (including ACT) Fixed O&M cost10000 $/MW/ye ar Vic Variable O&M cost44 $/MWh sent out Tas Local equipment and commodity split18 % of Capex SA International Equipment split56 % of Capex Northern Territory Labour split26 % of Capex SWIS (WA) Discount Rate10 % Pilbara (WA) Amortisation Period (Life of Plant)30 years

bree.gov.au AETA: Regional Costs 16. CCGT LCOE ($/MWh)Year Region North Queensland (NQ NTNDP Zone) South Queensland (CQ, WQ, SEQ NTNDP Zones) NSW (including ACT) Vic Tas SA Northern Territory SWIS (WA) Pilbara (WA)

bree.gov.au AETA: Component Costs

bree.gov.au AETA: LCOE Over Time

bree.gov.au IV LCOE Technology Comparisons

bree.gov.au

V LCOE International Study Comparisons

bree.gov.au Comparison with international studies, current costs

bree.gov.au VI Key Findings

bree.gov.au Key Findings (1) Estimated costs of solar photovoltaic technologies have dropped dramatically in the past two to three years as a result of a rapid increase in the global production of photovoltaic modules. Differences in the cost of generating electricity, especially between fossil fuel and renewable electricity generation technologies, are expected to diminish over time. Biogas (landfill and sugar cane) electricity generation technologies in 2012 are some of the most cost competitive forms of electricity generation (LCOE basis) and are projected to remain cost competitive out to 2050.

bree.gov.au Key Findings (2) By 2030 some renewable technologies, such as solar photovoltaic and wind onshore, are expected to have the lowest LCOE of all of the evaluated technologies. Among the non-renewable technologies, combined cycle gas (and in later years combined with carbon capture and storage) and nuclear power, offer the lowest LCOE cost competitive with low cost renewable technologies. For some technologies, LCOE is projected to increase over time due to: projected weakening of the Australian-dollar exchange rate, rising carbon price and cost escalation factors.

bree.gov.au Download AETA Report and Model at bree.gov.au