Renewables can now trounce fossil fuels such as coal and gas for electricity generation – and without subsidies.
Bloomberg New Energy Finance’s (BNEF) Sydney analysis team has determined electricity can be supplied from a new wind farm at a cost of $80/MWh; far cheaper than the $143/MWh from a new coal plant or $116/MWh from a new baseload gas plant, including the cost of emissions under Australia’s carbon pricing scheme.
Even without the carbon price, wind still beats new coal by 14% and new gas by 18%.
“The perception that fossil fuels are cheap and renewables are expensive is now out of date”, said Michael Liebreich, chief executive of BNEF. “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.
As for solar PV, it will really shine in 2020 when it too will also be cheaper than new coal and gas when carbon prices are factored in say BNEF’s boffins.
Kobad Bhavnagri, head of clean energy research for BNEF in Australia, says it is very unlikely new coal powered plants will be constructed in Australia as they are now too expensive compared to renewables and even baseload gas “may struggle to compete”.
“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 said.
Mr Bhavnagri points out while new wind is cheaper than building new coal and gas, it still cannot compete with old facilities that have already been paid off; so policy support is still needed for construction of renewable energy facilities.
Big Energy is starting to see the light – RenewEconomy’s Giles Parkinson reported on Wednesday that the owners of the Collinsville coal-fired power station in northern Queensland, Ratch Australia, are considering shuttering the facility and replacing it with a large-scale solar farm.
In South Australia, a campaign to replace Port Augusta’s ageing brown coal power stations with base-load solar thermal power has received solid support not just from the community, but also the company that owns the coal plants.
Source: Bloomberg New Energy Finance
