The future of energy generation and storage

[Chronos-Plutus]

Rather than going around in circles ideologically, how about we take a business approach to it?

This is, after all, a stock market forum and taking a business approach is exactly what an actual business does.

Let's do a real, actual scenario not a hypothetical one.

Eraring power station is located in NSW. It's a conventional technology coal-fired plant owned by Origin Energy with a capacity of 2880 MW (4 x 720 MW). It is planned to close due to reaching end of life in 2032 and is thus a very real situation where replacement is required with a decision required within the next few years.

Annual output from the plant is approximately 16 TWh (Origin Energy data) valued at about $1.2 billion based on spot prices.

Technically the plant is capable of higher annual production, it could do 20 TWh easily, but the market doesn't facilitate that since, as with most places, electricity demand in NSW is quite variable and in NSW average load over the year is just under 60% of peak load.

Now if Origin were to replace Eraring with a nuclear plant then, based on costs for Hinkley Point C in the UK, that comes to $32 billion.

In practice a replacement would not use 2 large generating units as at Hinkley Point C since incorporating that into the NSW grid would be technically problematic. Rather, it would involve 3 or 4 smaller units, increasing costs, however for simplicity we'll ignore that here and work with the $32 billion.

Total operating costs of the plant come to about AUD 32 per MWh based on this from the US government (converted to AUD at 70c): https://www.eia.gov/outlooks/archive/aeo19/pdf/electricity_generation.pdf

That gives a nuclear replacement for Eraring an annual operating budget of $512 million. Let's be nice and round that down to $500 million for convenience.

So $1.2 billion in revenue - $500 million in operating costs = $700 million cash surplus.

Now, if you were the CEO or a board member of Origin then, bearing in mind your obligation to shareholders, do you consider this to be a worthwhile investment that the company ought to make?

$32 billion to build it over at least 7 years with zero revenue during that time.

Once built it runs for 60 years and you get $700 million a year return on your investment without allowing for depreciation and eventual decommissioning costs.

Do you recommend to the rest of the board that the company proceed with this investment and if so, by what means do you propose to fund it?

For reference Origin's present market cap is $10.567 billion and AGL's is $10.744 billion.

What would you do if you were making the decision?

Personally, I don't see nuclear as stacking up financially in Australia.

If I was the CEO of Origin; I wouldn't bother even discussing nuclear, unless the commercial prohibition is lifted.

 

[rederob]

Rather than going around in circles ideologically, how about we take a business approach to it?

This is, after all, a stock market forum and taking a business approach is exactly what an actual business does.

Let's do a real, actual scenario not a hypothetical one.

Eraring power station is located in NSW. It's a conventional technology coal-fired plant owned by Origin Energy with a capacity of 2880 MW (4 x 720 MW). It is planned to close due to reaching end of life in 2032 and is thus a very real situation where replacement is required with a decision required within the next few years.

Annual output from the plant is approximately 16 TWh (Origin Energy data) valued at about $1.2 billion based on spot prices.

Technically the plant is capable of higher annual production, it could do 20 TWh easily, but the market doesn't facilitate that since, as with most places, electricity demand in NSW is quite variable and in NSW average load over the year is just under 60% of peak load.

Now if Origin were to replace Eraring with a nuclear plant then, based on costs for Hinkley Point C in the UK, that comes to $32 billion.

In practice a replacement would not use 2 large generating units as at Hinkley Point C since incorporating that into the NSW grid would be technically problematic. Rather, it would involve 3 or 4 smaller units, increasing costs, however for simplicity we'll ignore that here and work with the $32 billion.

Total operating costs of the plant come to about AUD 32 per MWh based on this from the US government (converted to AUD at 70c): https://www.eia.gov/outlooks/archive/aeo19/pdf/electricity_generation.pdf

That gives a nuclear replacement for Eraring an annual operating budget of $512 million. Let's be nice and round that down to $500 million for convenience.

So $1.2 billion in revenue - $500 million in operating costs = $700 million cash surplus.

Now, if you were the CEO or a board member of Origin then, bearing in mind your obligation to shareholders, do you consider this to be a worthwhile investment that the company ought to make?

$32 billion to build it over at least 7 years with zero revenue during that time.

Once built it runs for 60 years and you get $700 million a year return on your investment without allowing for depreciation and eventual decommissioning costs.

Do you recommend to the rest of the board that the company proceed with this investment and if so, by what means do you propose to fund it?

For reference Origin's present market cap is $10.567 billion and AGL's is $10.744 billion.

What would you do if you were making the decision?

Personally, I don't see nuclear as stacking up financially in Australia.

The construction debt compounds until operational. Then that debt needs to be amortised until expunged.
Using your figures would give a debt of about $40B, so assuming your figures held throughout it would make no profit after 60 years and then need to cover decommissioning costs.
Seems like a no brainer.

 

[Chronos-Plutus]

The construction debt compounds until operational. Then that debt needs to be amortised until expunged.
Using your figures would give a debt of about $40B, so assuming your figures held throughout it would make no profit after 60 years and then need to cover decommissioning costs.
Seems like a no brainer.

You lift the commercial nuclear prohibition; then we have the discussion. Otherwise we are just talking about doing something illegal!

Really; the tactics are pathetic! Holding our nation back, due to a mindless and stupid ideology!

 

[Smurf1976]

You lift the commercial nuclear prohibition; then we have the discussion. Otherwise we are just talking about doing something illegal!

That present laws preclude building it is irrelevant if there's no point to it anyway.

First step is analysis.

Then, if it's a goer on that basis, that's when the relevant company lobbies government to get it approved.

Same happens with a lot of businesses. Nobody goes to the trouble of lobbying government to change the law unless they've already concluded that it's worth doing whatever they're trying to get approval to do.

 

[Chronos-Plutus]

That present laws preclude building it is irrelevant if there's no point to it anyway.

First step is analysis.

Then, if it's a goer on that basis, that's when the relevant company lobbies government to get it approved.

Same happens with a lot of businesses. Nobody goes to the trouble of lobbying government to change the law unless they've already concluded that it's worth doing whatever they're trying to get approval to do.

In my opinion; we are talking about illegal activities!

Lift the commercial nuclear prohibition, then we talk; otherwise we are just wasting our time.

You might want to engage in illegal activities; but Origin, I am sure are a corporate and socially responsible entity!

 

[rederob]

You lift the commercial nuclear prohibition; then we have the discussion. Otherwise we are just talking about doing something illegal!

Really; the tactics are pathetic! Holding our nation back, due to a mindless and stupid ideology!

Not once have you put up the maths to your ideas.
Take a look at what @Smurf1976 presented and see where it's wrong if you believe you have a valid case.

 

[Chronos-Plutus]

Not once have you put up the maths to your ideas.
Take a look at what @Smurf1976 presented and see where it's wrong if you believe you have a valid case.

Are you on a different planet?

You want corporate entities to discuss and consider doing something that is illegal?

Wake up; you have no idea how responsible corporate entities operate!

 

[rederob]

Are you on a different planet?

You want corporate entities to discuss and consider doing something that is illegal?

Wake up; you have no idea how responsible corporate entities operate!

You completely miss the point.
If you believe nuclear is a viable option then it needs to stack up commercially.
Governments can and do change laws to ensure national energy security.

 

[Chronos-Plutus]

You completely miss the point.
If you believe nuclear is a viable option then it needs to stack up commercially.
Governments can and do change laws to ensure national energy security.

No: you miss the point.

You lost on the Sun Cable today; and now you have lost on the nuclear discussion.

Discussing illegal activities doesn't fit well within an entity's matrix that is socially responsible.

 

[basilio]

Rather than going around in circles ideologically, how about we take a business approach to it?

This is, after all, a stock market forum and taking a business approach is exactly what an actual business does.

Let's do a real, actual scenario not a hypothetical one.

Eraring power station is located in NSW. It's a conventional technology coal-fired plant owned by Origin Energy with a capacity of 2880 MW (4 x 720 MW). It is planned to close due to reaching end of life in 2032 and is thus a very real situation where replacement is required with a decision required within the next few years.

Annual output from the plant is approximately 16 TWh (Origin Energy data) valued at about $1.2 billion based on spot prices.

Technically the plant is capable of higher annual production, it could do 20 TWh easily, but the market doesn't facilitate that since, as with most places, electricity demand in NSW is quite variable and in NSW average load over the year is just under 60% of peak load.

Now if Origin were to replace Eraring with a nuclear plant then, based on costs for Hinkley Point C in the UK, that comes to $32 billion.

In practice a replacement would not use 2 large generating units as at Hinkley Point C since incorporating that into the NSW grid would be technically problematic. Rather, it would involve 3 or 4 smaller units, increasing costs, however for simplicity we'll ignore that here and work with the $32 billion.

Total operating costs of the plant come to about AUD 32 per MWh based on this from the US government (converted to AUD at 70c): https://www.eia.gov/outlooks/archive/aeo19/pdf/electricity_generation.pdf

That gives a nuclear replacement for Eraring an annual operating budget of $512 million. Let's be nice and round that down to $500 million for convenience.

So $1.2 billion in revenue - $500 million in operating costs = $700 million cash surplus.

Now, if you were the CEO or a board member of Origin then, bearing in mind your obligation to shareholders, do you consider this to be a worthwhile investment that the company ought to make?

$32 billion to build it over at least 7 years with zero revenue during that time.

Once built it runs for 60 years and you get $700 million a year return on your investment without allowing for depreciation and eventual decommissioning costs.

Key risks are premature major failure of equipment such that operation for 60 years is not guaranteed, that the project is likely to be highly controversial which will likely subject the company to extreme levels of scrutiny, and that the market may shift in a manner which permanently reduces viable output at some time during the project's lifespan.

Do you recommend to the rest of the board that the company proceed with this investment and if so, by what means do you propose to fund it?

For reference Origin's present market cap is $10.567 billion and AGL's is $10.744 billion.

What would you do if you were making the decision?

Personally, I don't see nuclear as stacking up financially in Australia. That's a business analysis not an ideological one.

Nice work Smurf. Synthesises this discussion excellently and, in particular, highlights the snake in the woodpile - the figures on nuclear don't stack up.

 

[basilio]

That present laws preclude building it is irrelevant if there's no point to it anyway.

First step is analysis.

Then, if it's a goer on that basis, that's when the relevant company lobbies government to get it approved.

Same happens with a lot of businesses. Nobody goes to the trouble of lobbying government to change the law unless they've already concluded that it's worth doing whatever they're trying to get approval to do.

The other alternative of course is to beat the drum on what an "important patriotic, nation building, visionary project" this will be and expect that the public through a dazzled government will pony up whatever is required to ensure the builder and operators will make a suitable profit on the "con" struction and operation of this magnificent project. And of course the Government (ie us) have to underwrite the decommissioning and anything that might go pearshaped..

 

[Chronos-Plutus]

The other alternative of course is to beat the drum on what an important patriotic, nation building, visionary project this will be and expect that the public through a dazzled government will pony up whatever is required to ensure the builder and operaters will make a profit on teh con struction and operation of this magnificent project.

You have just highlighted how much of a sad cheater that you are!

We are discussing energy on its merits, leave your indoctrinated ideology at the door!

 

[Chronos-Plutus]

WELL; IT LOOKS LIKE THAT WITHIN JUST ONE NIGHT; THAT I HAVE SECURED SINGAPORE'S ENERGY NEEDS FOR THE NEXT ~50 YEARS.

THOSE ******* DUMB AUSTRALIAN MANAGERS THAT I WORKED FOR SHOULD BE SACKED! PARTICULARLY THE HR TEAM!

 

[orr]

Now you're just making stuff up with the solar 2 cents per kWH. .

Ahh no Redder's is not.
The link below is to US 0.02/kwh contracts and lower...

https://reneweconomy.com.au/total-t...-qatar-world-cup-at-world-lowest-price-62819/

Note also for the last 38 years every time world production of solar panels has doubled the price per watt has declined by 24%. To ignore cost curves in this debate would be a mistake.

VPP's (Virtual Power Plant) aligned to private battery ownership has had little if any comment on this thread. The empowerment of the individual with regard this technology is not yet appreciated by the vast majority; But certainly will be by the time the first modular reactors are slated to leave the Sth Korean factory's circa 2026... wouldn't want to be hanging by the nuts for that.

And yes Plautus you are a very very clever boy... You should take your very cunning plan to BP. But over the channel at Total? You may expect to spend some time waiting in the lobby, they know 'merde' when they see it .... keep up the good work..

 

[Chronos-Plutus]

Ahh no Redder's is not.
The link below is to US 0.02/kwh contracts and lower...

https://reneweconomy.com.au/total-t...-qatar-world-cup-at-world-lowest-price-62819/

Note also for the last 38 years every time world production of solar panels has doubled the price per watt has declined by 24%. To ignore cost curves in this debate would be a mistake.

VPP's (Virtual Power Plant) aligned to private battery ownership has had little if any comment on this thread. The empowerment of the individual with regard this technology is not yet appreciated by the vast majority; But certainly will be by the time the first modular reactors are slated to leave the Sth Korean factory's circa 2026... wouldn't want to be hanging by the nuts for that.

And yes Plautus you are a very very clever boy... You should take your very cunning plan to BP. But over the channel at Total? You may expect to spend some time waiting in the lobby, they know 'merde' when they see it .... keep up the good work..

I can take it to the Prime Minister of Singapore; then watch you soil your pants for a laugh!

 

[basilio]

In Australia we have had a number of detailed plans and costings to demonstrate the financial returns from moving quickly to a renewable energy economy.

Not surprisingly other countries like the US have also undertaken this research with similar results. The Berkley Campus of the University of California have a detailed analysis outlining the benefits financially and environmentally of achieving 90% renewable energy by 2035

http://www.2035report.com/wp-conten....pdf?utm_referrer=https://www.2035report.com/

 

[Chronos-Plutus]

In Australia we have had a number of detailed plans and costings to demonstrate the financial returns from moving quickly to a renewable energy economy.

Not surprisingly other countries like the US have also undertaken this research with similar results. The Berkley Campus of the University of California have a detailed analysis outlining the benefits financially and environmentally of achieving 90% renewable energy by 2035

http://www.2035report.com/wp-content/uploads/2020/06/2035-Report.pdf?utm_referrer=https://www.2035report.com/

Are they IVY League?

Not that it means much these days, considering the talent and ideas from these universities.

 

[Smurf1976]

You want corporate entities to discuss and consider doing something that is illegal?

Wake up; you have no idea how responsible corporate entities operate!

Pretty much every business does exactly that.

Go to your nearest city, find a vantage point and have a look at the CBD.

Everything you see was illegal when first evaluated. Only after evaluation and deciding that it was worthwhile was approval sought to construct any of those buildings.

Using that example, plenty of developers have sought and in some cases obtained approval to build things which are contrary to planning schemes and the like by arguing the merits of their proposal and accommodating the requests of the relevant authorities as to how to make it acceptable to them.

Building a coal, gas, oil, nuclear, biomass, geothermal, hydro, wind, solar or tidal power plant would be illegal without the relevant approvals most certainly. That doesn't preclude someone doing their sums and concluding that it is or isn't worthwhile approaching landowners and government with a view to proceeding with whatever scheme they're proposing.

If anyone was seriously proposing a $30 billion investment then they'd have zero difficulties in getting a one on one meeting with the Prime Minister to discuss it that's a given. Wouldn't matter what industry it was - if you're proposing to invest that sort of money then you've got access to anyone you might need access to. In saying that, one thing they're certain to ask is about the viability of the project - they're not going to get involved in a potentially difficult public debate if they're not confident that the proposal is real and would actually be built if approved. They'll want to be sure you've done the sums and that you can and will proceed with it if government gives the nod.

 

[Chronos-Plutus]

Pretty much every business does exactly that.

Go to your nearest city, find a vantage point and have a look at the CBD.

Everything you see was illegal when first evaluated. Only after evaluation and deciding that it was worthwhile was approval sought to construct any of those buildings.

Using that example, plenty of developers have sought and in some cases obtained approval to build things which are contrary to planning schemes and the like by arguing the merits of their proposal and accommodating the requests of the relevant authorities as to how to make it acceptable to them.

Building a coal, gas, oil, nuclear, biomass, geothermal, hydro, wind, solar or tidal power plant would be illegal without the relevant approvals most certainly. That doesn't preclude someone doing their sums and concluding that it is or isn't worthwhile approaching landowners and government with a view to proceeding with whatever scheme they're proposing.

If anyone was seriously proposing a $30 billion investment then they'd have zero difficulties in getting a one on one meeting with the Prime Minister to discuss it that's a given. Wouldn't matter what industry it was - if you're proposing to invest that sort of money then you've got access to anyone you might need access to. In saying that, one thing they're certain to ask is about the viability of the project - they're not going to get involved in a potentially difficult public debate if they're not confident that the proposal is real and would actually be built if approved. They'll want to be sure you've done the sums and that you can and will proceed with it if government gives the nod.

Smurf; that is just absurd!

Corporate entities that have a responsibility to their shareholders will not engage in criminal opportunity.

Please stop with the nonsense.

 

[rederob]

Smurf; that is just absurd!

Corporate entities that have a responsibility to their shareholders will not engage in criminal opportunity.

Please stop with the nonsense.

Project planning is not a criminal activity.
As @Smurf1976 points out, most of what we see built around us was at some stage not allowed.
You seem to be quick to discount things you do not understand and have no ability to quantify.