Renewable energy sources such as wind and solar are expected to produce the lowest cost energy in years to come, according to a Draft Energy White Paper by the Australian government’s chief energy forecasting agency.
Previously, the relatively conservative Australian Energy Technology Assessment (AETA) had projected that coal, gas, and oil would continue to be the future of Australian energy, with renewables playing a lesser role. In the space of a year, that has turned around.
The latest assessment has cut previous estimates of the ongoing costs of a variety of renewables, as well as greatly increasing the estimated cost of coal-fired power generation. The report estimates that by 2020 (just 8 years away now) wind power will the the lowest cost source of energy. The estimated average cost of wind power is $90 per megawatt-hour (MWh), and as low as $60/MWh in some areas. This will be cheaper than both coal and gas.
If you think that’s impressive, the estimates for solar power are even better. For regular readers of The9Billion, it will come as no surprise that the new estimates are for the lowest cost option to become solar PV (photovoltaics) by 2030. This price is expected to be as little as $50/MWh.
Regular readers will also know that we think that may well be too conservative for an exponential technology such as solar power. I think this is especially the case when you take into account the inevitable added boost renewables development will get from the a growing realization about the consequences of climate change over that period of time. After that realization finally hits globally, coal should rapidly become prohibitively expensive to dig up and burn.
The report already estimates that Australian carbon pricing and rising fossil fuel costs will dramatically raise prices. If carbon capture technology ever proves viable, and reaches scale, it’s likely to drive up the cost of coal power. This will be happening at the same time the price of solar power is declining rapidly.
The least expensive brown coal by the end of the decade is expected to be $129/MWh. Even without a carbon price, it’s estimated that it will be around $90 MWh, and that’s without the added price of carbon capture and storage. By 2020 and certainly by 2030, I think pouring carbon into the atmosphere in such large quantities is not going to be seen as a viable option.
Even gas is estimated not to have a favourable future. By 2020, although substantially lower in emissions than coal, it’s thought that gas will be more expensive than wind and some bioenergy technologies. By 2030, gas is expected to be twice the price of solar. Which would you choose to use? It’s going to be a no-brainer.
It’s clear that there is starting to be a significant change in thinking about the viability of the large-scale development of renewables, and certainly a big change to the 20th century approach to developing energy.
Do you think the assessment will turn out to be correct, or too conservative? Perhaps you think the future of energy will continue to be fossil fuels?