A conversation regarding the transition to net zero greenhouse gas emissions in Australia, with Andrew Murdoch, the Managing Director of Arche Energy. Andrew shares his positive outlook and realistic insights into the challenges of integrating renewable energy into the electricity grid. He also advocates for being open to a range of options, including nuclear power and carbon capture and storage.
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About this episode’s guest: Andrew Murdoch
Andrew Murdoch is the Founder and Managing Director of Arche Energy.
Andrew has been operating in technical-commercial roles in the Queensland National Electricity Market (NEM) Zone since it was first founded over 20 years ago. In 2017, he founded Arche Energy to provide a high-quality clean energy, power and infrastructure consultancy to facilitate investment in the clean energy sector. He is an experienced general manager, project director and engineer operating in renewable power, power generation, energy, ports and heavy infrastructure.
His experience spans business development activities, major approvals, project execution, operations and maintenance and decommissioning. Andrew is an innovator and optimiser thriving in changing environments through the adaptation and integration of emerging and innovative technologies into business applications.
What’s covered in EP202
How is the transition to net zero going? (1:59)
The problem with intermittent generation. (7:36)
Transitioning from one energy source to another. (13:40)
Traditional hydro & pumped hydro. (16:08)
Geotechnical risks in construction. (20:11)
The infrastructure challenge. (24:00)
Zero marginal cost power. (30:23)
The role of nuclear energy in the transition to net zero. (45:42)
Links relevant to the conversation
Previous Economics Explored episodes mentioned in this episode:
The Aussie electricity market malfunction of June 2022 – EP156 – Economics Explored
Sir David Hendry on economic forecasting & the net zero transition – EP198
Transcript:
Australia’s Net Zero transition: successes & challenges w/ Andrew Murdoch, Arche Energy – EP202
N.B. This is a lightly edited version of a transcript originally created using the AI application otter.ai. It may not be 100 percent accurate, but should be pretty close. If you’d like to quote from it, please check the quoted segment in the recording.
Gene Tunny 00:06
Welcome to the Economics Explored podcast, a frank and fearless exploration of important economic issues. I’m your host Gene Tunny. I’m a professional economist and former Australian Treasury official. The aim of this show is to help you better understand the big economic issues affecting all our lives. We do this by considering the theory evidence and by hearing a wide range of views. I’m delighted that you can join me for this episode, please check out the show notes for relevant information. Now on to the show. Hello, thanks for tuning into the show. In this episode, I catch up with Andrew Murdoch to talk about the transition to net zero greenhouse gas emissions here in Australia. My occasional co host, Tim Hughes took part of the conversation to Andrew is the managing director of RK energy, which describes itself as a clean energy power and infrastructure advisory providing depth of experience to the investment community as it develops and executes clean energy power generation and infrastructure projects. It’s headquartered in fortitude Valley, Brisbane, not far from my office. As you’ll hear, Andrew is generally positive about the transition to net zero. And he has that can do attitude you’d expect from an engineer is also a realist. He gave us some great insights into the challenges associated with bringing large amounts of renewable energy into the system. And he made strong arguments for remaining open to a range of options such as nuclear power, and for persisting with r&d and carbon capture and storage of so called clean coal technology. Okay, let’s get into it. I hope you enjoy our conversation with Andrew Murdock. Andrew Murdoch from RK energy, good to have you back on the programme. Thanks, John.
Andrew Murdoch 01:59
Good to be here.
Gene Tunny 02:00
Excellent. Tim, thanks for joining us for this conversation, too.
Tim Hughes 02:04
You’re welcome. Good to be here.
Gene Tunny 02:05
Excellent. So Andrew, you got in touch after the conversation that Tim and I had recently with Sir David Hendry. And one of the things we talked with Sir David about was the transition to net zero. And we talked about what was happening in the UK and what he thought about nuclear energy as a possibility for Australia. And we talked about these small modular reactors. So you got in touch with us. And you’ve been on the show before. And you’ve mentioned that you have some thoughts on renewables on how we’re going with the transition to net zero on nuclear energy. So we’re keen to chat with you about that today. If you’re happy to do that.
Andrew Murdoch 02:44
Yeah. Thanks. Thanks, John. Yes, happy, happy to do so. Yes, sir. David, raised some interesting points. And so I thought it would be good to expand on some of those a little bit.
Gene Tunny 02:52
Excellent. So to kick off with Andrew, could you tell us how do you think this transition to net zero is going here in Australia? And then we might chat about how it’s going overseas, please.
Andrew Murdoch 03:05
Yeah, look, I think in Australia to date, the transition is going going very well. There’s a lot of excellent projects that are that are happening, we’ve seen a significant increase in the share of renewable energy on the market, and a corresponding reduction in the intensity of greenhouse gases per megawatt hour generated. Each of the states have now got some some ambitious renewable energy targets that they are all working towards. And, you know, we’re starting to see statistics like 25% renewables penetration in states like Queensland and higher in other states as well. 25% 25 Wow. 25% for for financial year 2023, which is, which is fantastic.
Gene Tunny 03:48
So this is the percentage of the electricity generated in the state that is coming from renewable sources, such as solar, and hydro, and it includes the rooftop solar, as well as the big solar farm.
Andrew Murdoch 04:01
Yeah, that’s correct. Yeah. So it’s predominantly solar, wind and rooftop power.
Gene Tunny 04:05
Gotcha. Okay. So we’re at 25% or so here, but we’ve they’ve got some pretty ambitious targets every day for where they want to get to.
Andrew Murdoch 04:14
Correct yes. So for example, Queensland’s renewable energy target is 50% renewables by 2030. So that’s only another another seven years away. And then 80% renewable by 2035. New South Wales is targeting a 70% reduction in greenhouse emissions by 2035 from 2005 levels. So they are really quite ambitious targets. And as renewable penetration increases, it gets harder and harder to manage, as we have to shift more power from times of high renewable generation such as the middle of the day when all of the solar farms are operating long periods of high wind, collecting the surplus power storing it and shifting it to times when the wind is not blowing the sun’s not shining is is one of two significant challenges. The other significant challenge we have in terms of significantly increasing renewables penetration is in increasing the transmission infrastructure to be able to collect all of the energy that’s generated in the in the renewable energy zones or areas where the sun is strong when the wind and the wind blows and moving that into the load centres in the cities and industrial areas.
Gene Tunny 05:23
Okay, so what’s the issue at the moment, we don’t have the lines where they need to be.
Andrew Murdoch 05:28
Yeah, so the lines have historically connected the large baseload thermal power stations in places like the Bowen Basin and the Hunter Valley, and connected them to, to the load centres in the big cities and, and industrial areas. So because that’s where the energy is flowing, it’s flowing, it’s flowing from the areas where the coal is to where the where the load is, now it needs to now we need to get the energy from where the wind blows in the sunshine as to where the to where the load is. And that’s a lot more geographically dispersed. And, yes, there has always been transmission lines to a lot of these communities. But those transmission lines have been sized to suit the towns and communities in the area, rather than and of course, that load is much, much smaller than the hundreds and 1000s of megawatts that we want to be transmitting from those areas back into the cities.
Gene Tunny 06:20
Right. So what does that mean? We need bigger, more high capacity? Lines? I mean, how do we think about that? It’s more expensive than is there needs to be upgrades? It needs to be new lines, correct?
Andrew Murdoch 06:30
Yeah. So so the renewable energy zones are all about connecting the high renewables areas to the load centres? And yes, physically, that means new lines, higher voltages, higher capacity transmission systems into those areas.
Gene Tunny 06:45
Right. And what are these renewable energy zones? Do you know roughly where they are?
Andrew Murdoch 06:50
Yes, so New South Wales has a five renewable energy zones. They have the central west Irana, they have had New England, hotter, Southwest, Queensland released its renewable energy zone roadmap. I won’t try and list all of them. That’s right. There are quite a few, right, some of the areas that Queensland are progressing North Queensland area around the wheel or west to build a wheel of their weather, there is already some some pretty good transmission systems, but it’s all about connecting, connecting local farms into the local wind farms and solar farms into the into the existing transmission system, Darling Downs, areas around McArthur wind farm, expanding those expanding those zones as well.
Gene Tunny 07:34
Great, okay. Right. You mentioned that as you get more renewables into the system, you have these issues of like, it’s going to be harder to go to the next stage. I mean, we’re at 25%. So you’re saying that it gets more difficult because then you’ve got more of your power from intermittent sources from the renewables, you don’t have as much from coal or from gas. So here’s what you’re saying, Have we got the low hanging fruit already? So the the rest of the fruit, they’re going to be more difficult to pick? Is there any rule as to when you have problems? I mean, we’re at 25%. Now, I mean, can we can we get up to 50%? Like, what does that entail? Is does that is that when we need the pumped hydro, do we need pumped hydro to get to 50%? How do we think about this?
Andrew Murdoch 08:22
You’re short, so No, there’s not a there’s not a hard rule, things just get harder and harder. So okay, you know, using the low hanging fruit analogy, you need a bigger and bigger ladder as the as the fruit gets higher and higher. So the driver for pumped hydro or any storage is the volatility in the price. So the difference between the low price and the high price is what provides the economic incentive to put storage in. So the more the more generation that happens at the same time, whether it’s solar in the middle of the day, or wind, when the when the wind is blowing as a ratio against the peak demand. The greater that difference is, the greater the economic incentive is for run for the installation of batteries. From a energy supply perspective, from a security of supply perspective, it becomes a probability game. So you’ve got the probability of the sun shining, and the probability of the wind blowing in various different geographically dispersed regions around around the country on the network. And what’s the probability of any one meteorite meteorological event impacting the energy supply to the point where we have to start turning power off? The more storage you have on the system? The more dispatchable generation you have whether it’s coal or gas, the lower than probability is the more concentrated your your, your renewable energy resources are meteorologically, if you have all of your solar farms in the one location, for example, and and you get you get right in that location, will you you’re going to get no generation whereas if you spread them out all over the country, well, you’ve got a greater chance of there being a Everything’s sunny in any one spot. And of course, if you spread them out in a line that runs east west, then you’re extending your generation day as well. So yeah, yeah.
Gene Tunny 10:09 Tim, do you have any questions for Andrew at this stage?
Tim Hughes 10:12
It is a sort of like more of an overview, sort of like question, I guess, when we look at 80% by 2035. Without obviously having a crystal ball, I mean, it’s there as a target, what are the chances of achieving it? And what does it look like to be able to be 80% reliant on renewable energy with those things that you mentioned that, you know, there are pitfalls with wind with solar, with having hydro, which I understand really acts as like a bit of a battery, so that it can have water pumped to the top during the day while there’s available power? And then it can access that power in the evening? With 18%? In your view, is that achievable? Are we on track?
Andrew Murdoch 10:52
Yes. So greerton, did some excellent modelling about a year or so ago. And what they found that was that 90% was a was an achievable target from a market operations perspective. And their modelling was around reliability of supply versus time of day, and they found that 90% renewables penetration that was about the optimum. Now the final 10%, was was made up by gas, when it comes to the probability of being able to achieve it. Yeah, look, with enough pumped hydro, and with enough batteries, yes, you can do it. And certainly with the gas in the system to deal with those periods where the sun doesn’t shine, and the wind doesn’t blow for for weeks on end, well, you can just just run gas for that 10% of the time. And if you’re 90%, carbon free and 10% carbon at that gas intensities of roughly half that of coal, you know, that’s a pretty good outcome on average 24/7 basis. So in terms of carbon intensity,
Gene Tunny 11:49
so this is interesting, because, like you mentioned, oh, yeah, so it doesn’t you haven’t got the renewables for for a week or so. Like there could be prolonged periods where you don’t have the renewables who got very little from renewable. And therefore, if you’re saying, well, the gas is 10%. But then for those periods of time, the gas is going to have to be providing 5060 or 70%, isn’t it? So you might need that you need more gas capacity than you would in the current configuration? Is that is that one way of thinking? Is that right? Correct.
Andrew Murdoch 12:22
Yeah, and your gas becomes more of a standby generator. And so in that scenario, where you have very low levels of renewable generation, for a for a long period of time, and all of your batteries are flat, and all the hydro dams are empty, that’s when the gas has to has to kick in. And that raises a whole heap of questions around security of guest supply as well. Yeah. When you are only providing gas for a short period of time, where do you store it? And yes, pipelines have have low impact capability. But that has to be commercial for the pipeline operator and for the provider of the guests in the first place, as well.
Gene Tunny 13:04 So yeah, what’s that capability line,
Andrew Murdoch 13:06
line pack. So line pack is gas that is stored in a gas pipeline and a transmission pipeline. So we have transmission pipelines that criss cross the country, taking gas from gas fields into the into industrial and city centres, the pipes are typically somewhere between 306 100 millimetres in diameter. And they’re pressurise, the more the greater the pressure that that you run the pipelines in the more gas you can store in there. So it kind of acts as a big gas bottle, and a transmission pipeline at the same time. And so but that stored gas is what we call line pack.
Tim Hughes 13:40
Gotcha. Okay. Yeah. I was gonna ask, actually, because one of the other things with this some with different sources of energy, how does the transition looks so for instance, like just to be able to switch from, from one source to another source to another source to then put gas in or hydro or whatever it’s going to be? Undoubtedly, we’re charting, you know, getting into unchartered waters a little bit, because this is the intention to try and make that work, have a good problem. Is that likely to be that flexibility that will be needed?
Andrew Murdoch 14:08
Well, yes. So this is the beauty of the market. So the market operation is such that the generators will each bid in the different technologies that they have at different price points, depending upon what their bidding strategy is, typically, you’ll be in such that you you’re bidding to generate whenever the spot price is greater than your short run marginal cost of operation, your cash costs. So then you’re then Generating Positive Cash Flow, the market and the transmission system doesn’t really care where the electrons are coming from, if they see, as soon as there is energy flowing through the system. It just flows through the system and the Australian energy market operator amo, they run a dispatch engine, where they collect bids from from all of the generators around the country and every five minutes. It will it will issue dispatch instead rushes to each of the generators to either output more power output less power or maintain the same level depending upon what price they’ve built into the system and, and what level of generation they’re physically able to provide at that point in time.
Gene Tunny 15:14
Okay, so, Andrew, in terms of how we compare with other countries, I remember maybe it was when we were chatting last time, but there are some countries that seem to have high renewable penetration, but it’s, it’s the countries with geothermal. Is that correct?
Andrew Murdoch 15:30
Well, it depends upon what natural resources you happen to. Yeah. So if you’re New Zealand, or Iceland, and you happen to have some excellent geothermal resources, and then great tap in tap into the side of the volcano that you happen to have, and grab some of that heat and turn it into power, so yeah, yeah. So that that works very well. If you happen to have a lot of hydro resources, if your Nordic country for example, or or, again, New Zealand, or Tasmania, then then you know, you’re blessed with that rainfall and you can harvest it, then, then then you have that option. mainland Australia is a little bit more difficult. We don’t we don’t have the rainfall to support massive hydro schemes other than Snowy Hydro in Tasmania. So we are limited to solar and wind for the bulk of our, the bulk of our renewable, geothermal is an option, but our geothermal resources are very deep and not not high grade, so quite expensive to get that heat to the surface and turn it into power.
Gene Tunny 16:32
So can I ask you a question about hydro versus pumped hydro? Who was your you mentioned? Norway? So there’s no I have a lot of hydro. So is it able to generate a consistent or quite irregular amount of energy, from the hydro resources, they don’t have pumped hydro, they’ve got actual, they’ve got enough rain fall? Or that they’re capturing it? They’ve they’ve set up these hydroelectric dams in a way that it’d be good to have some understanding of that just is there a difference between normal hydro and pumped hydro? Yeah, is that we’re
Andrew Murdoch 17:02
Yeah, so so the key difference between normal hydro and pumped hydro is for normal hydro, the rain or snow falls onto the top of the hill, yeah, a plateau somewhere, collects somewhere into a reservoir or, or some other collection system up high in the mountains, then you run it through a set of penstocks into a turbine that might be several 100 metres, maybe, maybe further underground. And then it will discharge into the river system, several 100 metres below where it’s collected, as opposed to pumped hydro, where you taking water from a lower reservoir using cheap power to pump it back up the hill, and then storing it at the top of the hill. And then and then running it back down again, during periods when when prices are higher. Now you can do both in the same scheme. And there there are several examples of of both, so you might collect the your snowmelt or your rain up in the up in the hills, run it through the run it through the turbine once and then go, Well, you know what, I wouldn’t mind doing that the second time, and pump it back up the top of the hill again. And that that is particularly useful for areas where there’s seasonal variations in the amount of water that come through the system, snow melt, for example. So during the during the autumn, you might, you might pump more water up the top of the hill and use it in pumped hydro mode during the spring, you might just use it as a one through system.
Tim Hughes 18:31
And so that will be something where, for instance, because one of the issues that seems with solar or wind, but particularly with solar here is that we can’t store we can generate more than we can store. Is that right?
Andrew Murdoch 18:44
Yeah. Correct. At present, yes, the generation, the PV generation capacity is significantly higher than our ability to store it.
Tim Hughes 18:52
So the pumped hydro is a good solution to use the excess energy in a way of pumping the water back up. So that effectively having it as an extra battery like that the hydro itself serves as a battery. So you can then use that power in the evening.
Gene Tunny 19:06
Yeah, well, it’s a solution. The question is, is it a good solution relative to other solutions we have for for transitioning to net zero, right. Right. Because it’s there’s a cost to it, isn’t there? I mean, presumably like building these big, these pumped hydro dams. That’s I don’t know how billions of dollars, isn’t it? I mean, it’s huge amount of money that we have to spend and
Andrew Murdoch 19:28
Correct, correct. Yeah, these are big projects. They’re big civil works projects, billions of dollars, many years. Lots of geothermal risk, lots of opportunity, say lots of geotechnical risk. I beg your pardon. Lots of opportunities for the projects to not go as well as perhaps we first planned
Gene Tunny 19:47
now. Geotechnical risk. You mean the risk of earthquakes? No, I
Andrew Murdoch 19:50
mean, the risk of rock being harder than new. Gotcha. I mean, and I’m in the risk of tunnel boring machines getting stuck for months. underground, those kinds of those kinds of exercises. So it really impacts in terms of cost and shedule risk and you know, it’s it is difficult to it is difficult to predict what rocks underground will cost. And many a construction company has gone to the wall because of not not understanding geotechnical risk.
Gene Tunny 20:22
Right. Wow. Okay. Yeah, that’s that’s a really good point. Because we’ve got to build two new pumped hydro here in Queensland. And that’s because yeah, we need the storage, because we’re going to be relying a lot on solar and wind, we don’t have geothermal as they do in was it Iceland or something like that?
Andrew Murdoch 20:39
Yeah. Iceland or New Zealand, New Zealand, to a lesser extent PNG.
Gene Tunny 20:44
And geothermal will be good. Because is it? 24/7? Effectively,
Andrew Murdoch 20:49
correct. Yeah. So the volcano doesn’t sleep. Right. Yeah. So the heat source that is there? 24/7? Yeah. Baseline reserves.
Gene Tunny 20:59
Yeah, I guess what we’re interested in is, because there’s an upcoming event at the start that typically I think isn’t a Tim, I think so. Yeah, around the corner from where we are here in in fortitude Valley or Newstead, and it’s about does Australia need nuclear power? Because we’re discovering that the greater penetration of renewables relying more on renewables, well, we need to upgrade the grid, we need to upgrade transmission lines. And there are all sorts of, you know, huge estimates of what that could cost. I’ve seen a trillion dollars or so it seems that there’s there’s an argument about all what is really the cheapest cost of electricity. Once you take into account all the all of these network costs, there was a controversy about the CSIRO levelized cost estimates, could nuclear be part of the the solution given that there are all of these costs with renewables? And we’re not really sure whether it will? Well, I mean, maybe maybe we are sure it will work. This is what I want. I’m interested, in your view on to what extent should we be looking at nuclear as a potential backup or a plan B, if this, this current plan doesn’t work out?
Andrew Murdoch 22:09
Yeah, well, we certainly should be considering nuclear as one of the options. The the engineer in me likes to consider things with a sceptical and inquiring mind. So what are all of the options? What are the ones that will work? What are the ones that won’t work? What will they cost? What are the probability that we will achieve the outcomes that we’re trying to achieve? So in the context of assessing any type of technology, we should be looking at? What is it going to cost? What are the consequences? How does it impact our society? How does it impact our landscape? My personal view is that that advanced small modular reactors have a role to play, particularly when we’re getting into the very deep baseload. So the power that has to run 24/7 at very high levels of reliability, that’s going to be very difficult and expensive to do with intermittent renewables. And it is possible to do it with independent renewables, it’s possible to do it with intermittent renewables and storage and gas topping. But another arrow in the quiver of decarbonisation tools that we could use is small modular reactors.
Gene Tunny 23:21
Okay, we’ll take a short break here for a word from our sponsor.
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Gene Tunny 23:55
Now back to the show.
Tim Hughes 24:00It is a really interesting area, because it’s changing very quickly. I was gonna ask, one of the big costs that gets talked about is infrastructure. And I know before we started recording was mentioned about Mount iser, for instance, and the cost of running the copper string connection, which is good to just talk about in a sec. But as a general thing, the infrastructure as we currently look at it is extremely expensive, with the technology changing as quickly as it appears to be. Is it possible that, obviously, the decisions have to be made now and action has to be done now? Is it possible that some of this very expensive infrastructure may become redundant in the not too distant future with the possibility of, for instance, we haven’t also leading into the conversation about SMRs small modular reactors, which I imagine would require less of this infrastructure, if that was to be the case that they would be rolled out in more locations so we don’t need them. move energy over large distances. So I guess the overriding question would be, you know, like with this changing technology, battery storage is obviously a big part of this, where it may not be necessary to put all this expensive infrastructure in place. Now, how does that pan out? Obviously, we have to go with what’s available, but current technology, how do we stop ourselves wasting money on infrastructure that becomes unnecessary, fairly soon?
Andrew Murdoch 25:26
Sure. Good question. I guess you there’s a whole heap of crystal balling that there is.
Tim Hughes 25:33
I realise it’s an impossible question. And it’s very much a sort of moot point, because this is clearly I mean, it’s all expensive. But there’s a lot of money involved in this. And and it’s, you know, it’s taxpayers money getting invested in these systems. And, of course, it’s contentious. And yet, of course, we have to go with what we know, we can’t put things on to what we think is going to happen. But it appears that is moving in a direction quickly enough that we might be able to, I don’t know, it might be prudent to hold off on some of these bigger things. So sorry. I’ve put about five different questions in there. So the copper string connection if we can go with that. So the current way of moving power over long distances is currently quite expensive. Yeah.
Andrew Murdoch 26:13
Great. Yeah. So I guess I’ll talk specifically about copper string because it’s an interesting project. And it probably in describing it, it, it probably addresses many of your questions. So firstly, the fundamental reason that you would want to connect mount iser, to the national electricity markets are currently mount highs, a Cloncurry. And all of the mines that operate off that system operate on an isolated grid. So there’s a small power station diamond Tina power station that operates in Mount iser, it burns gas, it’s connected to the Carpenteria gas pipeline, and it provides power to those to the mines in those in that area. The original value proposition and this value proposition still holds true today in connecting Metalizer to the national electricity market is to reduce the cost of minerals processing in Mount iser. So if you reduce the cost of power, the bulk of the power consumption in the mount Isaac grid is used to make big rocks into small rocks so that copper and other minerals can be can be leached out of it. So if you reduce the cost of power, all of a sudden, you can chase lower and lower grades or your mind lifes get extended, and economic output from the northwest minerals province increases. So that’s the value proposition. If you connect mount iser, to the national electricity grid, those existing power stations at Mount iser, they still exist, and they can still generate power. And instead of just selling it to customers on the Mount iser grid, they can certainly sell that power to people elsewhere on the grid, they can sell it to you and me here in Brisbane or people in Sydney or anyone else who’s connected to the national electricity market. So that opens up the number of customers to them. You also end up in a situation where you have a high voltage electricity network connection going a long way west into a very high solar flux region. So you can still be making a lot of solar power and mount iser, at 6pm when the sun’s gone down here in Brisbane, and we can take advantage of some of that geographical diversity in the in the network by building that extension, you’re also crossing over the great divide. So going from Townsville to mount iser you’re crossing you’re going very close to Hughenden. And there’s excellent wind resource. And of course, a lot of really, really sunny paddocks along the road as well. You’re going past Julia Creek and all the vanadium deposits in there. There’s multi pronged economic output that comes out of out of this particular investment.
Gene Tunny 28:43
So vanadium is one of those critical minerals, is it so this is what you’re suggesting that we it might become economic to a we might need it already. And then we process it there. What would be the advantage of?
Andrew Murdoch 28:56
Yes, so there’s there’s a number of vanadium projects in the Julia Creek area. Okay. Yeah, that are going ahead and they they will probably those projects will probably proceed with or without copper string, okay. It’s just if they can get lower cost power, then that helps the production. So those projects, going to ship the or they’ll delay the process that on site or ship it to Townsville where it will be where it’ll be processed, and then either export it as vanadium. They also have some other other products that come with it as well. I think one of them has a an oil shale product as well. So there’s a petroleum product that comes out as well from
Gene Tunny 29:33
Okay, good one. Sorry, I interrupted you before it’s just interested in vanadium.
Andrew Murdoch 29:37
Yeah, and then I guess to come back to the redundancy risk point. So for project like copper string, the redundancy risk is I guess, offset by the fact that minerals production in the Northwest will will continue for some time won’t continue indefinitely. At some point we’ll run out of minerals there to mine, irrespective of that is that solar farms that are being built out there and the wind farms that have been built out there, once they’re built, they will continue to generate and very low cost forever. Whenever, you know subject to upgrades and stuff like that, you know, you might need to replace your solar panels and upgrade to the next level of technology, etc. But once you’ve, once you’ve developed them, why would you ever turn them off if you’ve got this zero marginal cost power coming onto the system? So I’m not so much worried about redundancy? In the context of putting new technologies such as SMR, or clean coal or any other technology into the grid? Well, yeah, okay, they’ve got to stand up on their own two feet, every project has to be economically viable. And again, if I owned a wind farm or a solar farm that they’ve lived out on the end of a long along spur or in a renewable energy zone, I wouldn’t be turning it off to make space for a competitor would just keep keep generating. So
Gene Tunny 30:58
on the clean coal, you mentioned clean coal, that’s not really a thing anymore. Is it? Because they figured out it was not economic? Is that right? The whole carbon capture and storage,
Andrew Murdoch 31:08
not so much figured out that it was an economic, I think we just gave up on it. Which is a shame. If you look to Norway, and the US and Canada, they are continuing with carbon capture and storage. There are some carbon capture and storage projects happening in Australia. Santos are doing a project on the Moonee fields, right, of course, is Chevron during the Gorgon project, and all of the under the safeguard mechanism of any new LNG projects have to be 100% carbon neutral, so that sort of enhances the driver to collect reservoir co2 and reinjected back into into underground aquifers. So so that’s
Gene Tunny 31:51
that’s just the co2 or the greenhouse gas emissions associated with the actual extraction. Is it because it’s not in terms of not the greenhouse gas emissions associated with the burning in some other countries? Is it
Andrew Murdoch 32:03
correct? Yes. Gotcha. Yeah. For reservoirs, such as typical Northwest shelf reservoir where there is there is co2 and methane in the reservoir. Yeah, instead of venting the co2 and selling the methane that will now be required to deal with the co2 for new projects connected to LNG facilities. Yeah, got mechanism. So their
Tim Hughes 32:25
own process becomes neutral as such. Correct. Okay.
Andrew Murdoch 32:28
So back to clean coal. Yeah, my personal view is that in Queensland in particular, we’re doing ourselves a disservice by not pursuing clean coal. Now, that’s not to say that it’s going to be the answer. But again, it could be one of several solutions, or one of several contributors to lower lower carbon power in Australia.
Tim Hughes 32:51
Right, just on that note, so for instance, to get to 80% by 2035. So if clean coal was an achievement that could be done, that would be part of the 80% not part of the 20% remaining.
Andrew Murdoch 33:03
Well, it depends upon how you define renewable. Okay, so yeah, okay, so
Tim Hughes 33:08
So actually, sorry. So that’s the distinction is it’s renewable, not necessarily carbon? Yeah,
Gene Tunny 33:13
I guess you could say it’s renewable equivalent?
Tim Hughes 33:17
Well, no, it’s a fair point. I mean, like, for instance, I mean, as a consumer, like, you know, I love the direction this, this is going and it’s quick, and it stalled for a long time. It’s not too long ago, Tony Abbott and Joe Hockey, were making it making a joke out of renewable energy. So the acceleration and the takeoff has been incredibly fast, which is really exciting to see. And so the intention here is really good from the consumers through to the market through to government now, which is great. And of course, like the conversation like this really is like, well, how well can it be done? Is it realistic? And, you know, what are the best choices? Because it’s moving so fast? So clean coal? Yeah, I mean, like anything that gets extracted from the earth is still viable, in my view, if it can be done in a good way for the environment, like, you know, it’s a big conversation, but it’s basically can we do things ethically, sustainably, renewable, etc, that’s, that’s great. But these figures, these, these amounts going towards 80%. And, of course, at some point, 100%. I mean, that would be the ultimate target. And so I
Gene Tunny 34:24
think that’s, I think, in Australia, that it would be too difficult because of the intermittency and just, you’d need some gas still, don’t you? I mean, no one’s talking about 100% renewable at the moment in Australia, are they I can be the first you can be the first I’m just wondering whether it even be feasible. I honestly don’t know. I guess
Tim Hughes 34:42
from that all I mean, is like, you know, new technique because of the emphasis and the money and the brains and the word going behind this. Now, obviously, this technology is moving very quickly. So ultimately, I mean, like we could end up with very clean energy fusion could be at some point in the future. I mean, like, this is decades away. Who knows what may happen? But the direction we’re heading in is a positive one. And yeah, we have to do what we can with what we have currently. Can we go back to the SM eyes a little bit because this is something this is something that was new to me with that conversation we have with Sir David Hendry. Looking into it a little bit like everything else, it’s a little contentious. It does appear to be a cleaner option, certainly than the traditional nuclear reactors. But it’s not without risk, and it’s not without some waste. What are your views on SMRs? Andrew?
Andrew Murdoch 35:35
Yes, so I think there are a good option that we should consider for that very deep baseload generation, that role that is currently provided by coal in mainland Australia. We need to address safety and we need to address waste because they are obviously weaknesses in the SMR option. So I’m going to make some comments. These comments are based on the the GE Hitachi BW RX reactor, which is currently being designed for a project in Canada. So bw is boiling water reactor. It’s a it’s a reactor that consumes uranium 235 split cells into into through a fusion reaction, the core is surrounded by water that water boils, the water is then dried and then go through a steam turbine to generate power.
Gene Tunny 36:23
Sorry, you mean a fission reaction? fission reactor? Yeah, gotcha. I might have misheard
Tim Hughes 36:29
it further. So close. I had to really work that one out and lock it in. So fusion is the one that’s talked about often is a bit of a an Eldorado of energy production. But we’re not there yet. And it could be some time away. But fishing is what we currently have it Yeah,
Andrew Murdoch 36:44
fishing is what we currently have. Yeah. So yeah, so that’s splitting atoms fusion is squishing them together. Yeah. The power output is moderated in the in the fusion reactors by a boron set of boron carbide plates that move up and down within the uranium to regulate the absorption of neutrons. And that dictates the rate of the nuclear reaction and the generation of heat. So these boron boron carbide plates in a modern reactor is when they’re fully inserted, they will will slow the reaction right down and let it come to an end. So in a modern reactor, they’re held up by a set of electromagnets, should power fail to the reactor, if something happens, then that electromagnet obviously loses power, the boron plates will drop under gravity into the off position, and then the reaction will come come to an end. All the reactors don’t necessarily have that failsafe mechanism, there might have been some mechanical linkage that might have had to push them up rather than rather than let them drop down etc. So, you have this this safety system where if the power goes up, it moves to a safe position. One of the improvements that came out of Fukushima was to introduce reduce the energy density in the reactors so that they could cool naturally using convective currents. So the the the G material states that the BW RX will call naturally for up to seven days without any operator intervention without any external power. So when we when we start to look at Chernobyl, and that was an issue with the positioning of the control rods, and Fukushima where the the circulating pumps stopped working. Those two failure modes have been addressed in these new newer reactors. The other comment is that they lower temperature, lower pressure. So the GE Hitachi machine runs at 285 degrees C and around seven and a half mega pascal, which compared to a coal boiler is relatively relatively low temperature and low pressure. So if we were, if I was specking, up a new coal fired power stations today, it would be 600 degrees and 30 MPa, so significantly hotter, significantly higher pressure, so pushing the boundaries of modern material science, whereas the BW RX has a lot more achievable, I guess, more comfortable pressures and temperatures that give you a wider range of materials that you can select from and will last a lot longer with respect to creep life and fatigue right
Gene Tunny 39:20
there. One of the things I think I remember about these SMR hours, I don’t know if we chatted about it last time, or if I was when I was chatting with Ben Scott on on the show, can you just put these where we’ve got existing coal fired power stations, you can replace the the coal fired power? What is it the generator or whatever it is, with the with the actual SMR?
Andrew Murdoch 39:45
Yeah, it looks so in my view, that’s a good location for them because you already have the transmission infrastructure and you already have the water. So an SMR is going to use about the same amount of water as an equivalent coal fired power station, maybe a little bit more because that because those temperatures and pressures are a little bit lower, so the sample efficiency is not quite as high. So it might use a little bit more water. And there’s no reason why we can’t put some hybrid cooling in there as well to reduce that water consumption. So those issues are all are all solvable. But yes, hybrid cooling. So the traditional way of cooling steam turbines is using evaporative coolers. So they’re the big hyperbolic cooling towers that with nuclear power stations, actually nothing to do with the nuclear part, it’s everything to do with the steam turbine part. Yeah, so and that basically evaporates water to, to take the heat out of the condenser. A dry cooling tower is more like a radiator in your car, where you’re just using the air circulating through the radiator to cool it, a wet cooling tower will an evaporative cooling tower will will be more efficient, because it drops the temperature to the dew point temperature rather than the dry bulb temperature, which gives gives you a couple of percent of efficiency in your steam turbine, which is very valuable. And then if you do a hybrid you the reason you would do a hybrid is essentially to save a bit of water, drop the high temperature heat out using the radiator and then still achieve those lower temperatures by by taking maybe the last 10 20% of heat out using evaporative cooling. Right. Okay, gotcha.
Tim Hughes 41:15
So there’s still some radioactive waste from SMRs. Is that right? So it’s reduced. So compared to the energy it can generate, it’s less than a large nuclear station, nuclear power station, but there is still some waste percentage wise, I guess, compared to the power generated, correct?
Andrew Murdoch 41:35
Yes. Yeah. So radioactive waste. I mean, correct? Yes. So yes, it does generate high level radioactive waste. And the most significant part of that is the spent fuel rods. Now the spent fuel rods can be reprocessed. It’s I can’t remember the ratio. Now it’s something in the order around 95% of the energy remains in, in the uranium fuel rods after they’re removed from the reactor so that reprocessing which is essentially is, is refining the amount to view to three, five and removing some of the you two, three A’s. And once it’s reprocessed, it can go straight back in the reactor and run for another. So
Tim Hughes 42:08
is this transionic waste? Is that right? Because this is David Henry mentioned about he referred to transionic waste, which can then be reused by the SMR. I’m just repeating this is. I mean, this is we went over this briefly with Sir David. So it would be something we could put to him directly. But that was my understanding that there was a certain amount of the waste that can then be used as fuel. By the SMR.
Andrew Murdoch 42:37
Yeah, correct. Correct. Yeah, the bulk, the bulk of it can be reprocessed, okay, and reused. Now, that said, even if you don’t, and a lot of countries don’t reprocess their waste, because it’s quite expensive compared to to producing new fuel rods from raw uranium, even if you don’t just still only generating a very small amount of waste.
Tim Hughes 42:57
Radioactive Waste is pretty serious stuff for a long period of time. So the disposal of that, I guess, must be quite expensive, let alone the dangers of handling and processing that
Gene Tunny 43:08
we’ve got a lot of places you could bury it in, in Australia, Outback Queensland, Australia, you know, plenty of place.
Tim Hughes 43:17
So, um, but the thing is, obviously, with the aim for clean energy, it’s an uncomfortable addition to the suite of energy provision sources that we may be looking at. However, I mean, it was interesting, because I didn’t know of it until just recently with the interview with David Hendry. He’s a climate econometrician so very keen on having, you know, a clean, ethical source. And he was a supporter of this. So it’s certainly interesting. And, you know, it certainly is something that needs to be considered because obviously, the alternatives, everything’s got to pay off at some point.
Andrew Murdoch 43:55
Yeah. And that we shouldn’t we shouldn’t be too glib about the waste issue. It is a serious, it’s a serious issue. And, you know, one of the one of the cons on the pro con balance of of any technology, my personal view is that if we do go down an SMR path that we should also be committed to reprocessing. Yeah. So look, I think the this conversation sort of highlights how complex and as yours Yeah, and that in any technology choice we make there, there are trade offs that we have to make. If we look at things like land impacts, okay, well, in nuclear, yes, you’ve got to, you have to store the waste somewhere. So that’s going to have any impact on land. And yes, we’ve got some good geological characteristics about Australia and lots of space. If I look at Coal, for example, well, you’ve got to dig holes in the ground and that has an impact on the land if you want to burn gas you’ve got to go and you’ve got to go and sink gas wells and that has an impact on the land if you want wind then you’re going to have to go on go and find some windy hills that are probably covered in some nice gum trees and and put up some wind turbines. If you want to put up solar farms, you’re going to have to go clear some bush or tell Take some agricultural land or grazing land and turn that into solar cells. So there are no free lunches. And
Tim Hughes 45:05
if you want to store the energy, you’ve got to build the batteries, build the batteries
Andrew Murdoch 45:09
or dam, the dam, the valleys or whatnot, all of these things there are paid off, there’s a bill to be paid one way or the other. So the best we can do as, as a community is to is to assess all options. On a level playing field basis with a with a sceptical and inquiring eye. What is the best engineering? What’s the best economics? What’s the best ecological science? Can we afford it? will it produce the ecological social power reliability needs that we want? Or is it the best compromise of all of those?
Gene Tunny 45:42
Yeah, yeah, absolutely. Based on this conversation sounds like we should be considering some more options. Maybe we’ve taught our hands. Because we’re not talking about potential role of nuclear, we’re not talking about potential role of clean coal, or there’s less focus on that, then there once was, has been amazing. Again, really good. Good for us, because this is such a complex area. And I mean, I’ve got my own thoughts, but I don’t know enough about the engineering to be able to speak authoritatively on it.
Andrew Murdoch 46:15
Now. Look, it’s been a good discussion. Yes. Thank you. Thank you for the opportunity.
Gene Tunny 46:19
Oh, it’s a pleasure, Andrew, we’re always, always happy to chat. And yeah, it’s good to get your insights on the transition to net zero. So Thanks, Andrew. Thanks, Tim.
Tim Hughes 46:29
Thank you. Thanks, Andrew. Thanks.
Gene Tunny 46:32
Righto, thanks for listening to this episode of Economics Explored. If you have any questions, comments or suggestions, please get in touch. I’d love to hear from you. You can send me an email via contact@economicsexplored.com, or a voicemail via SpeakPipe. You can find the link in the show notes. If you’ve enjoyed the show, I’d be grateful if you could tell anyone you think would be interested about it. Word of mouth is one of the main ways that people learn about the show. Finally, if your podcasting app lets you then please write a review and leave a rating. Thanks for listening. I hope you can join me again next week.
47:19
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Credits
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