GenCost Reports Are ‘Out of Date’: Former Nuclear Research Agency CEO

The former head of Australia’s nuclear research agency has said GenCost reports are “out of date” and “out of touch” with the requirement to provide Australian consumers with reliable electricity.
During a recent inquiry hearing on nuclear power, Adrian Paterson, who was the CEO of the Australian Nuclear Science and Technology Organisation (ANSTO) from 2009 to 2020, said GenCost reports did not provide a full picture of electricity generation in Australia.
“GenCost is generation cost. It is the cost at the fence of the facility that is producing the electrons,” he told a parliamentary committee.
“It doesn’t take into account the grid extension that we’ve been talking about. It doesn’t take into account the artificial inertia. It doesn’t take into account any of these factors.”
Inertia refers to the grid’s ability to maintain the steady frequency of electricity, which is crucial aspect of an energy network.
GenCost reports are the product of the collaboration between Australia’s peak science agency, CSIRO, and the Australian Energy Market Operator (AEMO).
They provide insights into electricity generation and storage costs in Australia and are often used by government agencies and ministers as reference materials to promote renewable energy policies.
According to the latest GenCost report, solar and wind remained the “cheapest” newly built electricity technology.
However, the second issue with these reports, according to Paterson, is that it uses a flawed method to calculate energy system costs.
“It is based on the levelised cost of electricity, which was invented by an organisation in the United States called Lazard,” he said.
The former ANSTO CEO said the method was very popular when it was invented but was later abandoned by the industry.
“By the end of the first decade of the 2000s, nobody in the engineering professional industry to supply real electrons to real customers used the levelized cost of electricity to do anything like that anymore,” he said.
Furthermore, Paterson said the current “gold standard” for measuring energy system costs was a method called the “levelised full system cost of electricity” invented by Robert Idel, an American energy economist.
“Because both wind and solar produce direct current (DC) you have to have digital inverters at the fence to take that DC current and make that beautiful 50-hertz [Hz] wave,” he said.
“But because those digital inverters put a saw tooth onto the 50-Hz wave, it is low-quality electricity, and it has no inertia.”
In Australia, electricity runs on 220-240 volts and 50 Hz, compared to 110-120 volts and 60 Hz in North America.
“No grid the size of the Australian Eastern grid can operate without inherent inertia. And so the market operator is already buying old plants with those rotating machines that are not making any electricity, and it’s taking the digital inverter electricity and putting it in those plants to create what is called synthetic inertia,” Paterson said.
“This is not discussed in any of the documents in any detail that we have before us from AEMO.”
The former CEO then stated that he could not find a way for Australia to double the size of the grid, reduce its energy density, and provide reliable electricity at the same time.
“We know from the published, peer-reviewed engineering literature that it is more expensive to do what the AEMO is asking us to do in the ISP [Integrated System Plan] than it is to build the nuclear, no matter how long it takes,” he said.