Wind Cheaper Than Fossil Fuel Electricity In Australia

First it was big solar, in New Mexico, showing it could beat the pants off new coal on price. Now comes word that in Australia, where coal has long dominated the energy scene – it’s the world’s biggest coal exporter – wind power is thrashing the dirty fuel on price.

It’s not even all the close, actually, according to Bloomberg New Energy Finance, which did the new analysis.

coal wind australia

Western Australia coal mine (image via Calistemon/Wikimedia Commons)

BNEF said “electricity can be supplied from a new wind farm at a cost of AUD 80/MWh (USD 83), compared to AUD 143/MWh from a new coal plant or AUD 116/MWh from a new baseload gas plant.”

A couple of trends are driving this brave new reality Down Under: Renewables are getting cheaper and new fossil fuel-powered plants are becoming more expensive. Since 2011, Bloomberg New Energy Finance reported, wind generation has become 10 percent cheaper and PV is down a whopping 29 percent. High financing costs are making new coal plants prohibitive – lenders are fearful of the “reputational damage of emissions-intensive investments,” BNEF said, and “new gas-fired generation is expensive as the massive expansion of Australia’s liquefied natural gas export market forces local prices upwards.”

“The perception that fossil fuels are cheap and renewables are expensive is now out of date”, said Michael Liebreich, chief executive of Bloomberg New Energy Finance. “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,” he said.

Policy is playing a role in this trend, too; in Australia, a new carbon pricing scheme is making new coal and even natural gas-fired baseload plants more expensive to operate. But take away that component, and wind is still has a 14 percent edge on new coal, and 18 percent advantage over new gas.

Bloomberg said that it won’t be long – by 2020, for sure – before utility-scale PV will be cheaper than either coal or gas. That means that Australia might actually be looking at a mostly renewables future.

“It is very unlikely that new coal-fired power stations will be built in Australia. They are just too expensive now, compared to renewables,” Kobad Bhavnagri, head of clean energy research for BNEF in Australia, said in a statement. “Even baseload gas may struggle to compete with 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.”

Pete Danko is a writer and editor based in Portland, Oregon. His work has appeared in Breaking Energy, National Geographic's Energy Blog, The New York Times, San Francisco Chronicle and elsewhere.

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