Renewable energy now cheaper option than new fossil fuels in Australia

• 11 years ago (2013-02-16)
• David Flin

Renewables 757

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A study by Bloomberg New Energy Finance (BNEF) suggests that unsubsidized renewable energy is a cheaper option for electricity generation in Australia than new coal- or gas-fired power stations. According to the BNEF study, electricity can now be supplied from a new-build wind farm in Australia for $83/MWh, while the cost of electricity supplied from a new coal plant is $148/MWh, and $120/MWh for new baseload gas plants. While these figures include emission taxation under the carbon pricing scheme that was introduced last year, the report says that even without a carbon price, wind energy is still 14 per cent cheaper than new coal, and 18 per cent cheaper than new gas.

The prices are a continuation of a downward trend for renewables in Australia. Since 2011, wind energy costs have fallen by 10 per cent, while photovoltaic solar has decreased by 29 per cent. Conversely, fossil fuel energy generation costs have trended upwards, motivated by high financing costs linked to Australia’s “big four” banks charging substantial risk premiums for potential reputation damage associated with technologies that emit high levels of greenhouse gases.

Michael Liebreich, Chief Executive of BNEF, said: “The perception that fossil fuels are cheap and renewables expensive is now out of date. The fact that wind power is now cheaper than coal or gas in a country with some of the world’s best fossil fuel resources shows that clean energy is a game changer which promises to turn the economics of power systems on its head.”

BNEF believes that the construction of new fossil fuel-fired power stations in Australia is unlikely. This is because the country isn’t expected to require new baseload capacity until after 2020, by which time renewable energy will be even more cost-competitive than coal and export-priced natural gas. It is also anticipated that new technologies will have solved the intermittency problems of solar and wind by this time.