"It doesn't matter how beautiful your theory is, it doesn't matter how smart you are. If it doesn't agree with experiment, it's wrong." Richard P. Feynman

Wednesday, September 7, 2011

Kogan Creek Solar Boost - Green Energy at any Cost!

When any large capital project is planned the prudent investor checks on the return on investment for the capital employed as there is an opportunity cost incurred in using capital that could be getting a good return elsewhere.
CS Energy's Kogan Creek Solar Boost is a "clean,green" energy project where a solar generator is being built next to a coal-fired power station, costing $102 million dollars with a forecast generation capacity of 44,000 MWhr of solar energy per year. It is billed as the largest construction of it's kind in the world which translated means that it was necessary to come to Australia to find politicians dumb enough to pay for a major part of the cost.

With some back of the  envelope calculations and putting the annual cost of the capital at $8 million dollars with depreciation and maintenance at maybe $4 million dollars we can quickly see that this clean green solar system is costing at least $12 million per year in real financial terms. Now this means that the real energy cost is at least $273 per MWHr or 27 cents per KWhr delivered to the grid showing that this solar energy is far from free.
Now it is reasonable to assume that the adjacent power station is supplying coal-fired energy at near the  grid average cost of 2.7 cents per KWhr so why would anyone want to build and use solar generation at ten times the cost.
Apparently the financially inept Queensland and Australian Governments have tipped in a total of $70 million to CS Energy for this project, one no competent businessman would ever consider. I assume that CS Energy will be using the solar generation to meet Government mandated green energy quotas which means the outrageous energy cost will eventually be passed on to long-suffering consumers.
You also have to ask about the sense in building a reflective solar array next to a coal-handling plant with the obvious dust problems but I guess sense has very little to do with this colossal waste of taxpayer's money.

1 comment:

  1. I agree with your economic argument Baron, but there is another side to this. Consider the sheer hypocrisy of exporting billions of tons of coal to other nation so they can pollute the atmosphere, while paying a premium for our own energy at home because we are building useless alternative energy plants in attempt to reduce carbon emissions by an amount that will barely register in global terms. What a joke!

    If they were serious about cutting down on carbon emissions they would simply shut down the coal mines and refuse to supply coal to anyone in both local and export markets.

    It is blatantly obvious that the politicians haven't got a clue and the bureaucrats advising them are only interested in building bigger and bigger bureaucracies to shore up their own positions and create even more stronger power bases.

    Gold Coast Queensland, Australia