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Clean Power Australia solar rooftops via Shutterstock

Published on February 7th, 2013 | by Giles Parkinson

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Renewable Energy Cheaper Than Coal & Gas In Australia, Bloomberg New Energy Finance Finds

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February 7th, 2013 by  

This article was originally published on RenewEconomy (image added):

Australia solar rooftops via Shutterstock

A new analysis from research firm Bloomberg New Energy Finance has concluded that electricity from unsubsidised renewable energy is already cheaper than electricity from new-build coal and gas-fired power stations in Australia.

The modeling from the BNEF team in Sydney found that new wind farms could supply electricity at a cost of $80/MWh –compared with $143/MWh for new build coal, and $116/MWh for new build gas-fired generation.

These figures include the cost of carbon emissions, but BNEF said even without a carbon price, wind energy remained 14 per cent cheaper than new coal and 18 per cent cheaper than new gas.

“The perception that fossil fuels are cheap and renewables are expensive is now out of date”, said Michael Liebreich, chief executive of Bloomberg New Energy Finance.

“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,” he said.

But before people, such as the conservative parties, reach for the smelling salts and wonder why renewables need support mechanisms such as the renewable energy target, BNEF said this was because new build renewables had to compete with existing plant, and the large scale RET was essential to enable the construction of new wind and solar farms.

The study also found that Australia’s largest banks and found that lenders are unlikely to finance new coal without a substantial risk premium due to the reputational damage of emissions-intensive investments – if they are to finance coal at all.

It said new gas-fired generation is expensive as the massive expansion of Australia’s liquefied natural gas (LNG) export market forces local prices upwards. The carbon price adds further costs to new coal- and gas-fired plant and is forecast to increase substantially over the lifetime of a new facility.

BNEF’s analysts also conclude that by 2020, large-scale solar PV will also be cheaper than coal and gas, when carbon prices are factored in. In fact, it could be sooner than that, as we reported yesterday, companies such as Racth Australia, which owns coal, gas and wind projects, said the cost of new build solar PV was already  around $120-$150/MWh and falling. The solar thermal industry predicts their technologies to fall to $120/MWh by 2020 at the latest.

The Bloomberg analysis said the Australian economy is likely to be powered extensively by renewable energy in future and that investment in new fossil-fuel power generation may be limited.

“It is very unlikely that new coal-fired power stations will be built in Australia. They are just too expensive now, compared to renewables”, said Kobad Bhavnagri, head of clean energy research for Bloomberg New Energy Finance in Australia.

“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.” he added.

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About the Author

is the founding editor of RenewEconomy.com.au, an Australian-based website that provides news and analysis on cleantech, carbon, and climate issues. Giles is based in Sydney and is watching the (slow, but quickening) transformation of Australia's energy grid with great interest.



  • Tim

    That is far to costly even at those figures electricity would be to expensive for the lower class, that price is not sustainable to keep factory from moving of shore.

    • Bob_Wallace

      So your solution is to build no new electricity generation?

      If a company wants to start a factory and the grid is sold out then they need to figure out how to operate without electricity?

      And when old plants break down what should happen, a lottery to see who has to disconnect and go powerless?

      • billy

        Yes that is right what you’re saying, the government is proposing that factory only work at time when the wind blow and the sun shine, work force will have to stay on standby and monitor the sun and the wind levels so production can take place.

        • Ronald Brakels

          Billy, I think you’re lying. I know the Australian would be all over it like flies on truck popped wedgie if the government ever proposed such a thing. Care to show us an actual news article about this astounding proposal?

        • Bob_Wallace

          billy

          silly

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