We keep being told over and over again that renewables are the future. And in fact, we get told that they are cheaper.

Quite recently, there came a report which attracted an enormous number of headlines claiming that electricity generation would have cost up to 50% more or their prices would be 50% higher if Australia had stuck with coal and gas only, i.e. if we hadn’t gone ahead and built all of these so-called renewables that we’re rolling out all over the country. As soon as I saw that headline, I smelled a rat. But I thought instead of me trying to dive in and make sense of all the numbers, I would bring someone who does this for a living and does it exceptionally well. And that is Kevin You, senior fellow at the Institute of Public Affairs. Kevin, thank you so much for joining me here on the Topher project.

[From video] Thank you for having me. [End video]

I reached out to the IPA and asked who do you have who’s really across all of this and can help me and my viewers to understand how do these numbers get manipulated? How do they arrive at these sorts of conclusions and how do they get misrepresented in the headlines? And you were put forward as the best person for the job. So, thank you so much for coming on. What have you found as you’ve looked into this claim and the basis for it?

[From video]

So, uh one thing that we need to understand about this research by Griffith University is that it’s not actually research that compares renewables versus a system that’s built on coal and gas. That’s not what it is at all. The Institute of Public Affairs has done a study that does a more direct comparison between renewables and a system based on coal and gas. And of course, as you would expect, coal and gas are more affordable and more reliable than wind and solar. That wouldn’t surprise you. So what the study from Griffith University did was actually model the existing power generation system in the national electricity market. [End video]

I’m sorry to interrupt my interview with Kevin You, senior fellow at the IPA. We’ll get back to him in just a minute, but my name is Topher Field. This is the Topher project and this is what I do. I help people like you to cut through the crap and make sense of the nonsense that surrounds us. And so often these reports and then the media that comes out from these sorts of studies are just absolute nonsense. I am 100% viewer supported. So if you appreciate what I’m doing here at the Topher project, then please buy me a coffee via the button at topherfield.net. And also if you like my videos, then take a moment to check out my books. There’s Good People Break Bad Laws. This is about civil disobedience in the modern age. Then there’s Good Christians Break Bad Laws. This is about the theology of civil disobedience as well as my DVD documentary Battleground Melbourne. It’s won 114 awards around the world. And it’s all about the madness of what went down in Victoria, Australia during the COVID lockdowns. Plus, you’ll also find my t-shirts in a range of different designs in hoodies and t-shirts. And all of that’s available at goodpeoplebreakbadlaws.com. And everything you buy is going to help me to keep bringing you stories and interviews like this one with Kevin You.

[From video]

Which is the power grid that serves the eastern states of New South Wales, Queensland, Victoria, Tasmania and South Australia, which is currently in a tension where price is anchored down by coal predominantly and gas to an extent, keeping prices down. And then you’ve got renewables pulling prices up. And of course, as you know, and as your viewers would know, renewables have been winning because of government policies, and the renewable penetration has increased, and of course, you notice prices having increased as well. So they modeled the existing electricity market for 2025, assuming 50% renewable penetration, which is, in reality, it’s about 35 to 45%, but that’s all right. It’s close enough against a made-up scenario, which they call the counterfactual scenario, whereby instead of having more wind and solar starting from 2005 which actually took off around 2008, so the timing is actually not too bad instead of meeting demand through wind and solar, we meet increased electricity demand through new coal-fired power stations and gas.

Now, under this scenario, realistically, the electricity market would have incentivized maintenance reinvestment and occasionally life extension major projects in existing coal-fired power stations, in addition to investment in coal mining, gas exploration, and so forth. But under the counterfactual scenario that the researchers put together, they place an artificial constraint around the market mechanism. They make the assumption essentially, it’s a little bit more complex than this, but in simple terms, it’s the equivalent to assuming that coal-fired generators have to be blown up every 40 years. No, the actual lifetime of a coal-fired power station, it can go on for 60, 70, 80 years, and with major life extension projects, it can go on potentially indefinitely, and this is the same with nuclear. I think nuclear is a little bit more efficient than that. But coal can definitely survive for much longer than 40 years. But, you know, under this scenario, the assumption is that coal will get blown up every 40 years, and that’s where the price premium which isn’t actually 50% they say it’s 30 up to 50%. So it’s a range of 30 to 50%. That’s where a lot of the cost comes from. It’s from the brick and mortar, it’s from the boilers, it’s from the metals required to rebuild things from the ground up as opposed to coal being inherently more expensive. So that’s how they arrived at the 30 to 50% premium. [End video]

Well, I’m mindful that only just recently we had and I didn’t actually look this up immediately before this interview. I didn’t realize we were going to be discussing this exactly but I believe it was the general manager of the Loy Yang B power station saying that actually, that power station could continue to be with the appropriate life extension-type works being done. And so that’s not a surprise to me at all. One of the other things, though, that doesn’t seem to get factored into a lot of these scenarios the counterfactuals, etc. is the actual cost of renewable energy itself. And I’d love to get your thoughts. We’re watching these batteries get rolled out around Australia, this home battery program, which the prime minister is very proud of. The uptake is very high. They’re rolling out thousands of these every single week. But actually, the government is chipping in an enormous amount of money, which is to say taxpayers are chipping in an enormous amount of money. But that money is not going onto power bills; it’s being paid for out of other revenue. Do we have any idea of just how much of what is our cost of electricity is currently being shifted elsewhere and is kind of being hidden in other forms of spending?

[From video]

There’s complication around quantifying that because the cost is not just hidden in the subsidies, which I think, from previous analysis by Dr. Alan Moran, the most recent estimate was about 15 to 16 billion on an annual basis. But then there are also additional costs on top of that. So the influx of renewables into the electricity market breaks the market because the design of the market doesn’t assume that there’s such a thing as “garbage energy,” which is produced by wind and solar, which needs to be dealt with through negative pricing, amongst other things. And so the broader cost is far more significant than the dollar cost estimate that we can quantify at the moment. [End video]

Yeah. So for those that do want to dive deep into this, I know the IPA does a lot of good work on this. Where should they look? What should they be searching for? What documents do you have at the IPA? For those that really do want to wrap their head around how some of this works, what should they be looking for, and where would they find it?

[From video]

So we’ve recently done a study on the system cost of electricity, comparing coal versus renewables. It was done by a visiting fellow in energy security, Professor Steven Wilson from the University of Queensland, published in June-July 2024, and the research is available on our website ipa.org.au. And also, I would encourage your viewers to also have a read, have a close read of studies like the one that Griffith University has published because, yeah, this Griffith University study is quite revealing in a lot of their findings. If I can just give you a couple of examples. One of the key interesting findings of this research that wouldn’t get a lot of attention by The Guardian, for example, is that and I’ll quote them so that I’m not accused of putting words into their mouth “On a unit cost basis, coal and gas-fired generation were unambiguously the lowest cost of technologies in the mid-2000s.” So that’s a key finding of the Griffith University study.

Another finding is that the national electricity market is biased in favor of renewables and against coal and gas, which wouldn’t be a surprise to any of us. Another key finding is that the national electricity market is currently, and I quote again, “not ready for a position of incumbent coal plant exits.” So if you read carefully and there’s a non-technical summary of this research and similar research like this you can actually learn quite a lot from what they found but which doesn’t get publicized in the media. [End video]

And yeah, no, it is quite remarkable. And I’ve been doing this now for 16 years, and I developed a mantra for my own reference very, very early on in my work, which was that you don’t know the numbers until you know the numbers behind the numbers. And that’s so often the case with reports like this, and especially once the media gets a hold of it, they pick the thing that suits their particular worldview best, and they will report on that as though that’s the entire story when so often, as you say, if you just spend a bit of time reading, it proves to be very, very different to what they claim.

Well, Kevin You, thank you so much for joining me. Kevin You, senior fellow from the Institute of Public Affairs. Thank you for coming on to the Topher project today.

[From video] Been a pleasure. Thank you, Topher [End video]

That was Kevin You, he’s a senior fellow at the Institute of Public Affairs, and I very much appreciate the work that they do and the work that he does helping to cut through the crap and make sense of the nonsense. My name is Topher Field, this is the Topher Project, and I am 100% viewer supported. So, please help me to keep the Topher project going by buying me a coffee via the button at topherfield.net. And also, check out my books, my DVDs, and my merch at goodpeoplebreakbadlaws.com.

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