SIMON NICHOLAS: New year, same reminder: there’s no such thing as ‘clean coal’

The government’s new draft Integrated Resource Plan (IRP 2023) states that “SA’s approach to energy security is in line with international trends and developments”. On the contrary, it seems the department of mineral resources & energy has not been keeping itself up to date with global developments in the power sector.

The draft IRP 2023 finds that a long-term SA power future based on renewable energy will be the most costly to implement and will not be able to provide security of supply. Instead, it is suggested that nuclear, gas and “clean coal” are needed.

It’s a little depressing that this still needs to be said in 2024, but here we go again: there is no such thing as “clean coal”. Such phrases and ArcelorMittal SA’s “green blast furnace” need to be called out for what they are — a deliberate attempt to distract and mislead.

Despite the technology’s long history of failure, the new IRP insists carbon capture, utilisation and storage can make coal-fired power clean. A 2022 Institute for Energy Economics & Financial Analysis report found that underperforming carbon capture projects considerably outnumber successful ones globally, and by large margins.

Despite generous incentives, the track record of attempts to apply carbon capture, utilisation and storage to coal-fired power plants is one of failure at the implementation stage or early suspension of operations. As well as the high cost of such installations, technical issues have been one of the most prominent barriers with projects failing to operate at their designed capture rates.

Sasol has stated that carbon capture, utilisation and storage “can capture more than 85% of carbon dioxide emissions” from coal power stations and industrial sites like its Secunda plant. However, there is little or no evidence available to back up this figure.

Red flag

Most existing carbon capture facilities do not disclose their capture rates or provide data that would allow independent assessment of their performance — a huge red flag. The few that do show that capture rates are well below what fossil fuel interests say is achievable. Reducing coal plant emissions somewhat doesn’t make them “clean”.

In addition, the cost of reducing emissions via carbon capture, utilisation and storage will mean it will never make a significant contribution to decarbonisation wherever cheaper alternatives exist. The cost of solar, wind and battery storage has reduced, while the cost of carbon capture, utilisation and storage has not declined over the decades it has been implemented.

Speaking of cost, it is hard to accept that nuclear power is going to provide SA with dependable power in an affordable way. The draft IRP includes nuclear power in its long-term modelling and seems particularly taken by small modular reactors, explaining that there is “growing global interest” in this nuclear technology.

Small modular reactors are the nuclear industry’s attempt to tap into the energy transition by building small reactors that cost less. It isn’t going well. The nuclear industry’s flagship small modular reactor project — NuScale’s 462MW proposal for Utah — saw its expected power cost jump 53% to $89 per megawatt-hour (MWh) at the beginning of 2023, despite federal tax subsidies totalling $4bn. This was on the back of a 75% increase in the estimated construction cost of the project, which had risen from $5.3bn to an eye-watering $9.3bn.

Not surprisingly, the project was cancelled last November due to the spiralling cost. The cancellation saw NuScale’s share price collapse further still. It’s now priced at just more than $2. In August 2022 it was $15. The company is laying off 28% of its workforce, who seem unlikely to agree that there is “growing global interest” in small modular reactors.

While carbon capture, utilisation and storage and small modular reactors are going nowhere, another power technology — battery storage — is breaking out, thanks to declining costs and growing commercial experience that is demonstrating what it is capable of.

The new IRP hints at this, stating that “the traditional power delivery model is being disrupted by technological developments related to energy storage.” However, despite including battery storage in its modelling, the IRP fails to recognise how this technology will replace the role of gas-fired power in supporting high capacities of intermittent renewable energy.

In Australia, battery storage systems are getting larger and the capacities being built are far exceeding expectations. Battery storage is already meeting more than 20% of peak evening demand in Australia, casting a long shadow over the future role of gas-fired peaking plants of the kind the new IRP deems are necessary. And Australia doesn’t have to worry about importing gas.

South Australia was an early adopter of battery storage, and this has helped put the state on track to reach net 100% renewable energy years ahead of schedule. So clean is South Australia’s grid already that it can produce green hydrogen simply by plugging electrolysers into the power grid to use cheap renewable power in the middle of the day that would otherwise be curtailed.

To be sure, the status of Australia’s power system is different to SA’s. There is a need to carefully maintain Australia’s electricity supply as its coal-fired power stations are shut down, but this pales in comparison with the challenges SA faces. However, the advanced state of the energy transition in places like South Australia will eventually be replicated globally and should give policymakers insight into what the future holds.

Power system modelling of the type used in the new IRP is only as good as the assumptions put into it. If SA continues to get its assumptions wrong about technologies like carbon capture, utilisation and storage, small modular reactors, battery storage and gas peaking plants, it will be all the harder to overcome its power supply challenges.

• Nicholas is energy finance analyst at the Institute for Energy Economics & Financial Analysis.