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


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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.

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

  1. 1. In Australia: WindPower Already CheaperThan Fossil Fuels, SolarIs Right Behind
  2. 2. According to the latest research fromBloomberg New Energy Finance, electricityfrom wind power can now be supplied morecheaply in Australia than power from eithercoal or natural gas — and solar and other formsof renewable energy aren’t far behind.Older coal-fired power plants from the 70s and80s still compete at lower prices thanrenewables — but only because theirconstruction costs have depreciated. For thedeployment of any new power generation inAustralia, renewables now appear to be the wayto go.
  3. 3. Australia currently charges polluters $23 in Australiandollars per metric ton of carbon they emit, but the studyconcluded that wind power would still undercut fossilfuels even without that correction of the market’s failureto properly build in the costs of carbon pollution:  The study shows that electricity can be supplied from anew wind farm at a cost of [$80 per megawatt hour inAustralian dollars], compared to [$143 per megawatthour] from a new coal plant or [$116 per megawatt hour]from a new baseload gas plant, including the cost ofemissions under the Gillard government’s carbon pricingscheme. However even without a carbon price (the mostefficient way to reduce economy-wide emissions) windenergy is 14% cheaper than new coal and 18% cheaperthan new gas.…
  4. 4. Bloomberg New Energy Finance’s research onAustralia shows that since 2011, the cost of windgeneration has fallen by 10% and the cost of solarphotovoltaics by 29%. In contrast, the cost of energyfrom new fossil-fuelled plants is high and rising.New coal is made expensive by high financing costs.The study surveyed Australia’s four largest banksand found that lenders are unlikely to finance newcoal without a substantial risk premium due to thereputational damage of emissions-intensiveinvestments – if they are to finance coal at all. Here’s a graphic of BNEF’s findings, courtesy ofRenew Economy:
  5. 5. BNEF’s analysts conclude that by 2020, large-scale solar PVwill also be cheaper than coal and gas, when carbon prices arefactored in. By 2030, dispatchable renewable generatingtechnologies such as biomass and solar thermal could also becost-competitive. According to companies like Ratch Australia, the cost ofdeploying new solar photovoltaics is already down tobetween $120 and $150 per megawatt hour, suggesting it maybe dropping even faster than BNEF concluded. KobadBhavnagri, head of BNEF’s clean energy research in Australia,expects that by 2020 or 2030 “we will be finding new andinnovative ways to deal with the intermittency of wind andsolar.” And since Australia is most likely set for baseloadcapacity until at least 2020, when solar as well as wind will beundercutting fossil fuels, “it is quite conceivable that wecould leapfrog straight from coal to renewables to reduceemissions as carbon prices rise.”
  6. 6. The world’s biggest manufacturer of wind turbinesalready has 50 percent of Australia’s market, which itexpects to hold. And China’s largest manufacturer iseyeing the market as well. The deployment of rooftopsolar is already dramatically reshaping the energymarket in southern Australia, and the Green Party inWestern Australia recently proposed installing solarpanels on all public housing homes. And while a move towards renewable energy byAustralia’s economy certainly won’t fix global warmingon its own, it’s a step in the right direction, away fromthe rash of heat waves and wildfires — worsened by theclimate change driven by fossil fuels’ carbon emissions— that have recently slammed the nation.Author: Joseph Romm
  7. 7. So the study expects both coal and natural gas to risein cost over the next two decades. Among otherthings, coal power consumes more water than anyother source of energy. That will drive up coal’s cost,as fresh water becomes scarcer due to the veryclimate change driven by coal power’s carbonemissions. And in America, at least, there’s evidencethat the major proven natural gas reserves will peakout within the time frame of BNEF’s analysis,rendering the boom in that energy source decidedlytemporary. Meanwhile, while the costs of solar and other formsof renewables are currently lagging, they’re droppingfast:
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