BNEF research has found that electricity from new wind farms can be supplied at a cost of $80 per megawatt hour. This compares favorably to $143 per megawatt hour for electricity from a new coal plant, and $116 per megawatt hour from a new baseload gas-fired power plant. These calculations do include the cost of carbon emissions under the previous Gillard government carbon pricing scheme, something the new Abbott government campaigned heavily for dumping.
BNEF’s research found that the cost of wind generation in Australia has fallen 10% since 2011, and the cost of solar panels has dropped by nearly a third (29%). In comparison, the costs of extracting and burning fossil fuels to generate electricity are climbing. The research calculates that by the end of the decade, large-scale solar panel projects will be cheaper than gas and coal, when inevitable carbon prices are factored in.
Australia’s existing coal-fired power stations can only produce power at a lower cost than renewable energy now because the initial costs of construction have been depreciated – the costs have been paid off. Kobad Bhavnagri, head of clean energy research for BNEF in Australia, has said that it’s very unlikely that new coal-fired power stations will be built in Australia because they are now too expensive compared to renewables. He suggests that even gas may begin to struggle to compete with renewables.
Now, if Australia can only start to transition away from its massive coal export industry…