A recent report from CSIRO (Commonwealth Scientific and Industrial Research Organisation) in collaboration with AEMO (Australian Energy Market Operator) has conclusively shown that solar and wind continue to be the cheapest ways to generate electricity. The report also includes the costs of carbon capture and storage (CCS) in the future production of electricity from fossil fuels and bullish projections for rapidly reducing costs of electrolysers for the production of hydrogen (up to 90% over the next three decades).
While the costs of producing electricity from fossil fuels remain stable (or rising depending on the costs of CCS), overall costs of producing electricity from solar (large, medium, or rooftop) and wind (especially offshore wind) are projected to continue to fall. Battery costs are also expected to fall. CSIRO found that the added costs of CCS technologies almost doubled the levelised cost of both gas and coal electricity generation.
The report notes that as the world moves towards a fossil free future, new coal power plant builds are likely to become more expensive to finance, thus making them less likely to be deployed.
Projections of the uptake of electric vehicles in the report (page 26) appear to be slightly more pessimistic than I am seeing in real-world statistics. The report does not delve into the use of EVs as batteries to back up the grid. One could speculate that this would lead to a greater reduction in the cost of battery storage, as this had already been paid for by the car owner. It would depend on how much the infrastructure and transmission build would add to the cost of storage.
“All estimates are based on a maximum of costs across nine weather years over which the costs were estimated. When added to variable renewable generation costs and compared to other technology options, these estimates indicate that wind and solar PV remain the lowest cost new build technologies.
“In this report, GenCost 2021-22: Consultation draft, we have made two major improvements. The first is global modelling now endogenously determines the hydrogen production technology mix under each scenario as well as the additional electricity demand imposed by hydrogen production from electrolysis, which is in addition to other electricity demand. The second improvement is that we include deployment of carbon capture and storage outside of the electricity sector.
We need to bear in mind that projections about renewables and other new technologies have been notoriously off the mark in the recent past. Although I would hedge my bets with CCS (as it has yet to be proven to be successful), it is possible that solar, wind, batteries, and hydrogen in conjunction with EVs are likely to outperform the CSIRO projections.
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