Renewable power now cheaper than coal, gas

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According to a report from Bloomberg New Energy Finance (BNEF), wind power is now cheaper to produce than coal by up to 44 per cent.

(Canunda wind farm image by David Clarke, CC BY-SA 3.0)

After extensive research modelling the cost of generating electricity in Australia, Bloomberg New Energy Finace's Sydney team has concluded that unsubsidised renewable energy is cheaper to produce than coal or gas energy in Australia — one of the world's largest coal producers.

In a statement released 7 February, BNEF revealed that electricity from a wind farm can be produced at a cost of AU$80 per megawatt hour — compared to AU$143/MWh for a new coal plant and AU$116/MWh for a new gas plant — 44 per cent and 31 per cent less, respectively.

That calculation includes carbon pricing; however, even when you take carbon pricing away, wind energy is still cheaper than coal by 14 per cent and gas by 18 per cent. These figures also account for the cost of building new stations.

Michael Liebreich, chief executive of BNEF, said:

The perception that fossil fuels are cheap and renewables are expensive is now out of date. The fact that wind power is now cheaper than coal and 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.

Since 2011, the cost of wind generation has fallen by 10 per cent and the cost of solar voltaics has fallen by 29 per cent. However, the cost of fossil fuels — a finite resource — is rising. According to Kobad Bhavnagi, head of clean energy research for BNEF Australia, said that this means that coal stations are rapidly becoming a thing of the past.

"It is very unlikely that new coal-fired power stations will be built in Australia. They are just too expensive now, compared to renewables," he said. "Even baseload gas may struggle to compete with renewables. Australia is unlikely to require new baseload capacity until after 2020, and by this time, wind and large-scale PV should be significantly cheaper than burning expensive, export-priced gas. By 2020-30, we will be finding new and innovative ways to deal with the intermittency of wind and solar, so it is quite conceivable that we could leapfrog straight from coal to renewables to reduce emissions as carbon prices rise."

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blaah posted a comment   
New Zealand

I'm a little skeptical of the findings, though I don't have the details to say so. I know wind has been substantially more expensive than coal in the past. Gas has always been expensive. The thing with wind is that the business case depends heavily on the load-factor, which is influenced by how frequently and strongly the wind blows. Most commerial wind farms only produce 20-40% of their rated capacity. I don;t know whether they have taken this into account. I also don't know whether renewable energy subsidies have been accounted for; because I know wind generation is heavily subsidised in Europe.


trebor83 posted a reply   

And the fossil fuel industry is heavily subsidised in Australia. I wonder if they took that into acount.


Chandler posted a reply   

They haven't included renewable subsidies - from above:
"... unsubsidised renewable energy is cheaper to produce than coal or gas energy in Australia ..."


RichardF1 posted a comment   

So how exactly do you provide reliable baseload power from renewables?


JohnnyB posted a reply   

We'll have that sorted by 2030....apparently...


blaah posted a reply   
New Zealand

Storage lake hydro will give you use-when-you-need-it renewable power. Whether it is reliable or not is an issue of rainfall.


trebor83 posted a reply   

Using Thermal Solar plants with liquid salt energy storages.

Using Photovoltaics with hydrogen fuel cell storage.

Using Geothermal power.

Using Wind power with biomass backup.

Using an integrated, large scale network of all of the above. The technology exists today if we care to use it.


Restricted_access posted a reply   

According to our idiot Climate Commissioner, geothermal energy is easy. So, he invested in a geothermal company. No long afterwards, he announced that geothermal energy was more complicated than expected. This is the same idiot who in 2007 said, "There will never again be enough rain to fill our dams and rivers systems".

As for wind power, it is not that long ago that countries, such as Holland, shut down huge numbers of wind generators because those were costing a fortune to operate.


Restricted_access posted a reply   

You take a bunch of Greenies and burn them during the night. :-)

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