The argument that fossil fuels are cheaper than renewable sources of energy has long been used to hold back the shift to clean power. But that's increasingly not the case. A new report about the Australian energy industry provides solid evidence that renewable energy can increasingly compete on cost with fossil fuels. The Bloomberg New Energy Finance report reveals that unsubsidized wind farms can undercut electricity sold by new coal or gas-fired power plants.
The analysis suggests electricity can be provided from wind farms at a cost of A$80/MWh, while the cost of power from new coal or gas plants, which is now subject to a carbon tax, stands at A$143/MWh and A$116/MWh respectively.
“The perception that fossil fuels are cheap and renewables are expensive is now out of date”, said Michael Liebreich, chief executive of BNEF. “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."
The company's analysis suggests the cost of wind power in Australia has fallen 10 per cent since 2011, while the cost of solar PV has fallen 29 per cent, aided by the global glut in solar panels.
Kobad Bhavnagri, head of clean energy research for BNEF in Australia, said investors were unlikely to support new fossil fuel power plants.
"[Coal-fired power stations] are just too expensive now, compared to renewables," he said. "Even baseload gas may struggle to compete with renewables. Australia is unlikely to require new baseload capacity until after 2020, and by this time wind and large-scale PV should be significantly cheaper than burning expensive, export-priced gas."
Photo: Sunset at Waterloo wind farm in South Australia. (Dave Clarke / Flickr)