The Labour government is saying nuclear power is too complex, costly and slow. But we need to get our electricity somehow. So, really, it’s a simple question: are renewables any better?
Sure, throwing up a solar panel on your roof is cheap and easy. But that’s only a small part of what it takes to transition to renewable energy.
Renewables shuffle the financial challenge of the energy system around. This makes them look cheap in comparison which doesn’t take their full costs into account.
The Australian Financial Review is reporting how the electricity grid’s rollout is progressing:
‘Downer EDI has started assisting Spain’s Elecnor on the NSW side of the $2.3 billion EnergyConnect cable from South Australia, as grid owner Transgrid tries to prevent a collapse of the troubled project critical for the transition to low-carbon energy.’
‘Collapse’ of a project that’s ‘critical for the transition to low-carbon energy’?
Uh oh…
Is it really that bad? Yes, according to a recent Strategic Intelligence Australia report…
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You may think that renewable energy is the linchpin of the energy transition. But you’d be wrong. The electricity network – transmission and distribution – is the key to unlocking Net Zero. And its greatest challenge.
It’s an infrastructure project so large it simply doesn’t compute for the human mind.
Estimates for the size, cost and nature of the grid vary wildly. It depends on a truly vast list of variables. Some of them are highly uncertain, such as energy storage capacity, weather patterns and geopolitics.
But I’m not sure it matters very much given the scale of things. For perspective, it took about US$100 billion to build the Great Wall of China, in today’s money. And that cost was spread over 2,500 years. It remains the biggest infrastructure project the world has managed to date, measuring more than 21,000 kilometres.
But this is tiny compared to what Net Zero has planned for your back yard…and everyone else’s too. Bloomberg’s NEF research group estimates a Net Zero electricity grid will cost the world over US$21.4 trillion by 2050. That’s about a fifth of global annual GDP spread over 26 years.
A trillion here, a trillion there…
soon you’re talking real money
Here’s how Bloomberg’s analysts break down this cost using International Energy Agency data…
- ‘The total investment comprises $4.1 trillion to sustain the existing grid and $17.3 trillion to expand the grid for new electricity consumption and production.
- ‘Annual investment triples from $274 billion in 2022 to $871 billion per year in the decade preceding 2050.
- ‘Annual expenditure on distribution networks more than triples to about $533 billion by 2050, from $147 billion today.’
Where does all the money go?
‘Power lines expand tremendously. BNEF estimates 80 million kilometers in grid growth between 2022-50, more than enough to replace the global electricity grid today. This breaks down to about 68 million kilometers of above-ground lines, 12 million kilometers of underground cables and 0.2 million kilometers of submarine cables.’
Never mind that the recent AI boom has already blown these estimates out of the water with its voracious energy demand. The conclusions are extraordinary regardless:
‘“We must effectively double the size of the global electricity grid by 2050. This future grid needs to be smart, flexible and responsive, enabling us to harness the full potential of renewable energy rather than be bogged down by it.” said Sanjeet Sanghera, Head of Grids & Utilities at BloombergNEF and lead author of the report.’
In the understatement of the century, the Bloomberg NEF report goes on to point out that, ‘Significant policy intervention is required to realize this scale of investment in the grid.’ How else are they going to get their hands on your money, land and labour to build so many eyesores?
That’s a lot of money headed for the companies building the renewable energy grid network. I picked my favourite for the Strategic Intelligence Australia portfolio.
But, as anticipated in the report, the rollout of power lines is not going very well. It’s already the key bottleneck in the rollout of new renewables projects. In the UK, there is a 20 year wait to connect new renewables to the grid!
Nuclear power exporter Sweden recently rejected a power link to Germany because its grid is such an unstable mess.
The 211-mile, US$2 billion Twin State Clean Energy Link between the US and Canada was abandoned.
The cost of a power cable linking Morocco with the UK is soaring out of control.
And now Australia’s EnergyConnect project is close to collapse.
Whether the grid, the storage or the renewables come up short, it’ll be lights out for Australia without nuclear power.
No wonder Germany’s parliament has begun an investigation into the politicians who shut down their nuclear power.
One day, Australia will have one into why we avoided it for so long.
In the meantime, this kind of government debacle is why my colleague Greg Canavan is positioning for what he calls a ‘decade of decimation’. See more here.
Until next time,
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Nick Hubble,
Editor, Strategic Intelligence Australia
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