The firm responsible for modelling used by the Nationals to claim coal is cheaper than renewables now says the work was shaped with the client and not designed to compare energy sources in real world conditions.
⚡️ What happened: ARCHE Energy is a Queensland-based energy consultancy firm responsible for much of the work used in a report National Party senators have used to justify abandoning Net Zero policy.
Speaking to the National Account, ARCHE CEO Andrew Murdoch said the work his company performed for National Party-aligned think tank the Page Research Centre:
Was not designed to forecast the energy system or compare technologies under real market conditions.
Was designed to explore “how cheap could any technology be”, meaning the work looked at best-case scenarios rather than market realities, without considering how coal performs in today’s market, how the grid actually works, or to determine which technology is cheapest in real-world conditions.
Used assumptions that were discussed and agreed with the client, rather than determined independently by ARCHE.
This is coal: To make coal competitive, the model made a few assumptions.
That coal plants would run at 91% availability. In reality, Australia’s coal fleet is running closet to 61%.
No economic curtailment, meaning the modelled version of coal plants would never have to switch off when it would potentially be losing money — something current coal plants do constantly.
Fuel costs way below the current market rate, based on the cost of “stranded” coal — coal that is not currently used in real markets and may not be economically viable
Upfront costs: Our reporting over the past couple of weeks has revealed the Nationals relied on a report that combined two completely different sets of numbers — using ARCHE’s modelling for brand-new ultra-supercritical coal plants, but pairing it with the much smaller price tag for refurbishing the ageing fleet.
The ARCHE modelling included the full cost of building new plants, but the Page report replaced that with refurbishment costs, removing roughly $100 billion in capital expenditure from the comparison.
What do you say to that: The National Account put this mismatch to Murdoch directly, and asked whether the Page Research Centre had used ARCHE’s modelling incorrectly to reach its conclusion about the cost of coal.
Murdoch wouldn’t confirm Page got it wrong.
But he did say: “It would have been better if they’d spoken to us first.”
Straight to TV: Despite this, National Party leader David Littleproud has used ARCHE’s numbers to claim coal is the cheapest energy source.
Murdoch said neither the Nationals or the Page Research Centre checked with ARCHE before publishing their report, despite using the modelling as the foundation for a major policy shift.
The National Account’s Archie Milligan has the larger rundown👇