The growth wind power in Australia will hurry along the decline of coal and even the future of gas has been called into question.
Research from RepuTex indicates growth of wind capacity is likely to result in the gradual decline of natural gas and brown coal output as the economics begin to increasingly favour renewable energy in Australia – and this scenario will occur sooner rather than later.
According to RepuTex Associate Director of Research Bret Harper, Australia will see re-investment in stalled wind projects as early as 2015 as REC prices begin to rebound.
While a current oversupply of Renewable Energy Certificates (RECs) is keeping their value down, as power companies begin to run out of these cheap certificates new renewable capacity – and lots of it – will likely be required. This situation could occur as early as 2015.
“Over 11,000 MW of capacity will be required over the next 7 years to fill the gap to the RET, which equates to more than 2.5 times forecast market demand,” says Mr. Harper.
“If we see that amount of RECs come online, we would expect carbon intensity to drop by around 10% through to 2020, and the economics of the market will significantly change to favour low carbon fuels.”
According to RepuTex’s Quarter 1 Power and Renewable Update, growth in wind output is likely to keep wholesale electricity prices low, pushing marginal coal operators even closer to – and then over – the edge.
Reputex anticipates over 80% of new power generation capacity between 2015 and 2020 will come from wind power. The company says even natural gas will go into decline as it faces increasing competition with cheaper black coal alternatives and domestic gas prices start rising up to international levels.
“Conversely, prospects continue to look positive for renewables even if the carbon price does not reach the heights of Treasury predictions during this period,” said Mr Harper.
