According to a report from Bloomberg New Energy Finance (BNEF), wind power is now cheaper to produce than coal by up to 44 per cent.
After extensive research modelling the cost of generating electricity in Australia, Bloomberg New Energy Finace's Sydney team has concluded that unsubsidised renewable energy is cheaper to produce than coal or gas energy in Australia — one of the world's largest coal producers.
In a statement released 7 February, BNEF revealed that electricity from a wind farm can be produced at a cost of AU$80 per megawatt hour — compared to AU$143/MWh for a new coal plant and AU$116/MWh for a new gas plant — 44 per cent and 31 per cent less, respectively.
That calculation includes carbon pricing; however, even when you take carbon pricing away, wind energy is still cheaper than coal by 14 per cent and gas by 18 per cent. These figures also account for the cost of building new stations.
Michael Liebreich, chief executive of BNEF, said:
The perception that fossil fuels are cheap and renewables are expensive is now out of date.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.
Since 2011, the cost of wind generation has fallen by 10 per cent and the cost of solar voltaics has fallen by 29 per cent. However, the cost of fossil fuels — a finite resource — is rising. According to Kobad Bhavnagi, head of clean energy research for BNEF Australia, said that this means that coal stations are rapidly becoming a thing of the past.
"It is very unlikely that new coal-fired power stations will be built in Australia. They 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. 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."