Bloomberg New Energy Finance has performed an analysis of different forms of energy production in Australia, and discovered that electricity from renewable energy sources was cheaper to produce than electricity from new build coal and gas power plants.
New wind farms in Australia can produce electricity at $80/MWh, which is far cheaper than coal power stations which produce at $143/MWh, and even natural gas power stations at $116/MWh.
Michael Liebreich, the chief executive at Bloomberg New Energy Finance (BNEF), stated that “the perception that fossil fuels are cheap and renewables are expensive is now out of date.
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.”
This may leave some to question why renewables continue to receive support from the government, but BNEF explained that normally new build renewables must compete with pre-existing fossil fuel power plants which don’t have the large cost of construction.
BNEF also predict that by 2020, large scale PV solar farms will be cheaper than coal and natural gas, in fact Racth Australia, an Australian energy company, said that it can already build new solar installations at around $120/MWh, and prices are constantly falling. Based on the findings of the analysis Kobad Bhavnagri, the head of clean energy research at BNEF, suggested that “it is very unlikely that new coal-fired power stations will be built in Australia. They are just too expensive now, compared to renewables.
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.”