Much has been made of the notion that “renewables can’t supply baseload power”. This line suggests we need to replace Australia’s ageing coal fleet with new coal or nuclear. The fact of the matter is that, already, “baseload” is an outdated concept and baseload generators face extinction.

What is baseload?

Traditional utility grid management suggests there are three types of load: baseload, shoulder, and peak. Baseload is underlying 24/7 energy demand. Peak load is regular, but short-lived periods of high demand and shoulder loads are what lie in between. Under this model, system planning is straightforward – assign different types of energy generation to the different loads according to the price and qualitative characteristics.

Traditional, simple dispatch of generation technologies according to cost and flexibility

Historically in Australia, coal supplies most baseload demand since it is relatively cheap and very slow to ramp its output up or down. In some countries, baseload is met with nuclear since it is even less flexible than coal, but only two countries generate more than 50% of their energy from nuclear.

With the roles of different generators clearly delineated, power planners’ jobs are much easier in this idealised system than today’s grid.

Solar kills baseload

In a system with lots of solar, prices fall dramatically at around midday because solar has no fuel cost. Because much of Australian solar is on rooftops, grid demand also falls. For those hours, baseload generators must either operate at a loss or shut down. Continuing to generate produces more energy than the grid requires at very low or negative prices. This is not a conscious choice—it is the structure of the market that the cheapest bid gets dispatched first.

In practice, most baseload generators are simply not capable of ramping up and down fast enough – they must bear loss-making prices in the middle of the day and try to make it up with high prices at peak periods. Moreover, this daily up/down ramp (called “load-following”) brings efficiency losses and extra maintenance costs.

The situation in modern Australia – because baseload generators cannot be turned off, cheap solar is curtailed in the middle of the day.

As solar increases, this dynamic makes baseload generators impractical and unprofitable. Already, this is the situation in South Australia – in the last week of Winter 2024, SA ran on more than 100% net renewables. SA is instantaneously meeting 100% of demand from solar alone most days. It is no surprise that SA’s last coal-fired power plant shut nearly a decade ago, in 2016, after years of being operated only seasonally.

The rest of Australia has not yet caught up to SA and Tasmania in terms of renewables and there is still a case for coal in the national energy market. However, the trend in solar uptake is abundantly clear and there will be no economic case for coal in just a few short years’ time anywhere in Australia.

Storage nails the coffin shut

Excess energy in the middle of the day is useless if no-one wants to use it or if they want to use it overnight; this is where firming is required. When variable renewables are paired with enough storage or back-up power, it is called “firm”. For a utility grid, this means large amounts of storage such as batteries and pumped hydro energy storage, as well as flexible generation such as hydro and possibly open cycle gas turbines.

In our transitioning grid, baseload generators run at a loss in the day while storage offtakes cheap solar to sell at peak times. This is called energy arbitrage —buying low and selling high — and it is extremely profitable. It is tempting to think this arrangement could continue, but it cannot. As more batteries come online, the economics of baseload generators gets worse.

We are set for a storage surge as utility batteries come online, electric vehicles ingrate with the grid, Albanese offers household battery subsidies, and battery prices continue to plummet. In this future, midday energy is still practically free because storage cannot consume it all and peak power prices are reduced because of battery arbitrage. Without profitable peak power prices, the economics of baseload generation are well and truly dead.

What about data centres?

Power-hungry data centres have been meeting planning roadblocks because they consume more power than local infrastructure can handle. Rather than waiting for third parties to build out infrastructure, big tech companies want to take matters into their own hands. The possibility of big tech companies commissioning or commandeering nuclear reactors to supply new data centres with 24/7 power has created a media buzz.

It is unlikely that a self-reliant data centre would look to 100% renewables. This is not because renewables are unreliable, it is because firming renewables is easier at larger scales – wide geography helps to smooth out locally variable weather. Although nuclear is the most expensive option, big tech has cash to burn. The bigger hurdle to new nuclear is a 10-year-plus build timeline.

But whether or not data centres adopt nuclear is irrelevant for civil electricity because utility electricity grids are not data centres. If big tech builds nuclear to power data centres, it neither proves nor disproves that that technology is a good option for the whole grid.

Nuclear for Australia is madness

Peter Dutton, if he succeeds in the upcoming election, faces an uphill battle to enact his nuclear energy policy. Not only must he overturn federal and state bans on nuclear power, he has to figure out how they would make money. If Dutton were to build a nuclear plant, it would require a forever-subsidy to compete in the market.

The industry is aware of this. Daniel Westerman, chief executive of the market operator AEMO, was recently quoted as saying: “Australia’s operational paradigm is no longer ‘baseload-and-peaking." AEMO has said competition from renewables is a key reason why coal has been retiring faster than announced.

The market is aware, and the industry is aware that baseload is not endangered, it is already functionally extinct. If the Coalition do build a nuclear power plant, Australian taxpayers will be the proud owners of an unprofitable, uncompetitive, expensive and unsellable liability.