In Australia, Wind Power is Already Cheaper Than Fossil Fuels and Solar is Right Behind

Jeff Spross
Climate Progress / News Report
Published: Monday 11 February 2013
Australia currently charges polluters $23 (Australian dollars) per metric ton of carbon they emit, but the a recent study concluded that wind power would still undercut fossil fuels even without that correction of the market’s failure to properly build in the costs of carbon pollution.
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According to the latest research from Bloomberg New Energy Finance, electricity from wind power can now be supplied more cheaply in Australia than power from either coal or natural gas — and solar and other forms of renewable energy aren’t far behind.

Older coal-fired power plants from the 70s and 80s still compete at lower prices than renewables—but only because their construction costs have depreciated. For the deployment of any new power generation in Australia, renewables now appear to be the way to go.

Australia currently charges polluters $23 in Australian dollars per metric ton of carbon they emit, but the study concluded that wind power would still undercut fossil fuels even without that correction of the market’s failure to properly build in the costs of carbon pollution:

The study shows that electricity can be supplied from a new wind farm at a cost of [$80 per megawatt hour in Australian dollars], compared to [$143 per megawatt hour] from a new coal plant or [$116 per megawatt hour] from a new baseload gas plant, including the cost of emissions under the Gillard government’s carbon pricing scheme. However even without a carbon price (the most efficient way to reduce economy-wide emissions) wind energy is 14% cheaper than new coal and 18% cheaper than new gas.

Bloomberg New Energy Finance’s research on Australia shows that since 2011, the cost of wind generation has fallen by 10% and the cost of solar photovoltaics by 29%. In contrast, the cost of energy from new fossil-fuelled plants is high and rising. New coal is made expensive by high financing costs. The study surveyed Australia’s four 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.

So the study expects both coal and natural gas to rise in cost over the next two decades. Among other things, coal power consumes more water than any other source of energy. That will drive up coal’s cost, as fresh water becomes scarcer due to the very climate change driven by coal power’s carbon emissions. And in America, at least, there’s evidence that the major proven natural gas reserves will peak out within the time frame of BNEF’s analysis, rendering the boom in that energy source decidedly temporary.

Meanwhile, while the costs of solar and other forms of renewables are currently lagging, they’re dropping fast:

BNEF’s analysts conclude that by 2020, large-scale solar PV will also be cheaper than coal and gas, when carbon prices are factored in. By 2030, dispatchable renewable generating technologies such as biomass and solar thermal could also be cost-competitive.

According to companies like Ratch Australia, the cost of deploying new solar photovoltaics is already down to between $120 and $150 per megawatt hour, suggesting it may be dropping even faster than BNEF concluded. Kobad Bhavnagri, head of BNEF’s clean energy research in Australia, expects that by 2020 or 2030 “we will be finding new and innovative ways to deal with the intermittency of wind and solar.” And since Australia is most likely set for baseload capacity until at least 2020, when solar as well as wind will be undercutting fossil fuels, “it is quite conceivable that we could leapfrog straight from coal to renewables to reduce emissions as carbon prices rise.”

The world’s biggest manufacturer of wind turbines already has 50 percent of Australia’s market, which it expects to hold. And China’s largest manufacturer is eyeing the market as well. The deployment of rooftop solar is already dramatically reshaping the energy market in southern Australia, and the Green Party in Western Australia recently proposed installing solar panels on all public housing homes.

And while a move towards renewable energy by Australia’s economy certainly won’t fix global warming on its own, it’s a step in the right direction, away from the rash of heat waves and wildfires—worsened by the climate change driven by fossil fuels’ carbon emissions—that have recently slammed the nation.



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8 comments on "In Australia, Wind Power is Already Cheaper Than Fossil Fuels and Solar is Right Behind"

TheodoreRooseve...

February 11, 2013 5:11pm

Wind turbines kill too many hawks and other birds of prey.

Will Shirley

February 12, 2013 7:44am

Too many for what? Cars kill animals, too... quite a few. Man's intrusion into habitat kills thousands of animals. Again, so what? We do what we can to make it as safe as we can and the birds will have to adapt, you know: evolve into critters smart enough not to fly into a whirling blade. Otherwise we burn coal, destroy the ability for the planet to support life above bacteria stage. Would you prefer that?

Seabury Lyon

February 11, 2013 12:40pm

Tom Hartmans' recent Truthout blog has links to sources also showing renewables are now at near parity or cheaper than fossil fuels:

That should greatly impact U.S. demand for foreign and domestic crudes esp. the "dirty" ones. That makes for seismic changes in energy demands, policy and especially in investments in virtually all fossil fuels. "DIVESTMENT" will be taking on a whole new dimension, as will the jobs and economic benefits of new investment in renewables. Fasten your seat belts!

vermoner

February 11, 2013 12:06pm

Wind energy is being produced, but is it reducing fossil fuel consumption and GHG emissions? Tell the whole story, not the half that the wind industry is spinning. Dig deeper. The news is not good.

ETNIKS's picture
ETNIKS

February 11, 2013 5:14pm

VERMONER
Every Kilowatt H sold of wind and solar power, is a loss for the fossil fuel sector.
Why don't you clarify your statements instead of just barking?

MK69

February 11, 2013 7:54pm

Every car made put a cart maker out of work too. Should we still be using horses and carts to keep the cart makers in work?
You need a far better argument than that.

Seabury Lyon

February 11, 2013 12:47pm

Bloomberg (BNEF) and the U.S. Energy Information Administration are highly regarded analyzers/reporters. If you took a bit of time to actually read the information you could spare yourself some embarrassment.

Dig deeper and we find a wealth of data to support hope and a change in policy, at personal, state and Fed. levels.

tbcrawford

February 11, 2013 11:26am

Spread the good news!