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.

1. In Australia: Wind
Power Already Cheaper
Than Fossil Fuels, Solar
Is Right Behind

2. 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.

3. 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.…

4. 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.
Here’s a graphic of BNEF’s findings, courtesy of
Renew Economy:

5. 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.”

6. 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.
Author: Joseph Romm

7. 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:

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