1. 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

2. 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

3. bree.gov.au I AETA Overview

4. 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).

5. 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 2050. 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.

6. 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).

7. 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.

8. 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.

9. bree.gov.au II Assumptions, Costs and Technologies

10. 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 2016-17 and low of 0.86 USD/AUD by 2031-32. Capital costs are provided on the basis of an Nth-of-a-kind (NOAK) plant in Australia and at a utility-scale.

11. 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 2016-17 and low of 0.86 USD/AUD by 2031-32. Capital costs are provided on the basis of an Nth-of-a-kind (NOAK) plant in Australia and at a utility-scale.

12. 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.

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

14. 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)

15. bree.gov.au III AETA Model

16. bree.gov.au AETA Common Technology Parameters

17. 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 001111111 Emissions368 kgCO 2 e/MWh (Net) Capital Cost Forecast Summary ($/kW)201220202025203020402050 % Emissions captured00.0% North Queensland116711851189120312111243 First Year available for construction2012 South Queensland113911571161117411831214 2012 Overnight Capital Cost1062 $/kW NSW (including ACT)108911051109112211301160 Fixed O&M cost10000 $/MW/ye ar Vic104310591063107510831111 Variable O&M cost44 $/MWh sent out Tas99310081011102310311058 Local equipment and commodity split18 % of Capex SA109711141118113111391169 International Equipment split56 % of Capex Northern Territory113411521156116911781209 Labour split26 % of Capex SWIS (WA)113511531157117011791210 Discount Rate10 % Pilbara (WA)119412121216123012391272 Amortisation Period (Life of Plant)30 years

18. bree.gov.au AETA: Regional Costs 16. CCGT LCOE ($/MWh)Year Region201220202025203020402050 North Queensland (NQ NTNDP Zone)108124133138147149 South Queensland (CQ, WQ, SEQ NTNDP Zones)108124132138146148 NSW (including ACT)103120129135144146 Vic96114124130139141 Tas99117126132141143 SA104121130136144146 Northern Territory118122126131140143 SWIS (WA)132134136140148150 Pilbara (WA)126128130134143145

19. bree.gov.au AETA: Component Costs

20. bree.gov.au AETA: LCOE Over Time

21. bree.gov.au IV LCOE Technology Comparisons

22. bree.gov.au

28. V LCOE International Study Comparisons

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

30. bree.gov.au VI Key Findings

31. 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.

32. 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.

33. bree.gov.au Download AETA Report and Model at WWW.BREE.GOV.AU bree.gov.au