Australia unlikely to build new coal-power stations
Even without a carbon price, wind energy is now 14 per cent cheaper than a new baseload coal-fired power station and 18 per cent cheaper than a new gas one, Bloomberg New Energy Finance said.
The gap widens further when the carbon tax is added. Wind farms can now generate electricity at $80 per megawatt hour, compared with $143 per MWh for a new coal power station and $116 for a new baseload gas power station.
In Western Australia, large-scale photovoltaic (PV) power stations are already cheaper than new coal-fired generating capacity, BNEF said. "It's very unlikely that new coal [power stations] would be built in Australia," said Kobad Bhavnagri, head of clean energy research for BNEF in Australia.
Aside from the carbon tax - which the Coalition has vowed to scrap if it wins the September 14 election - reputational and other risks associated with coal means developers will struggle to obtain low-cost funding for any new venture. The research included a survey of the country's big four banks.
"Financing for coal would be made very expensive because of all the risks involved," Mr Bhavnagri said.
BNEF estimates the cost of wind generation has fallen by 10 per cent and the cost of solar PV by 29 per cent since 2011, and further technology advances will drive prices lower.
By 2020, wind power's cost per MWh will drop to $70 and then to $66 by 2030. The cost of large-scale solar PVs will drop to $97 for an equivalent amount of electricity and then to $87 10 years later, Mr Bhavnagri said.
The presumed advantage of gas, including its relatively low carbon emissions compared with coal, have been largely nullified by the liquid natural gas export boom, which will force prices for the fuel higher.
Demand for power, meanwhile, continues to trend lower, with use in New South Wales at 10-year lows and Victoria at eight-year lows for this time of year, according to data for the December-January period, said Mike Sandiford, director of the Melbourne Energy Institute.
Electricity demand in the National Electricity Market is running about 16 per cent short of the amount regulators in the middle of the last decade expected current levels to be.
"Nobody in their right mind would be building coal-fired power plants now," Professor Sandiford said.
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Research from Bloomberg New Energy Finance (BNEF) says tumbling renewable energy prices and higher financing costs for emission-intensive projects make new coal uneconomic. Wind and large-scale solar are already cheaper per MWh than new coal, banks view coal projects as higher-risk, and demand for electricity is trending lower — all factors that make new coal builds unlikely.
BNEF found wind farms can generate electricity at about $80 per MWh, compared with $143 per MWh for a new coal power station and $116 per MWh for a new baseload gas plant. In parts of Western Australia, large-scale photovoltaic (PV) projects are already cheaper than new coal capacity.
According to BNEF, wind power costs are expected to fall to around $70 per MWh by 2020 and about $66 per MWh by 2030. Large-scale solar PV costs are forecast to drop to roughly $97 per MWh and then to about $87 per MWh a decade later, as technology improves.
BNEF says the cost gap widens when a carbon price is added — making wind and solar even more competitive relative to coal. Even without a carbon price, renewables are already cheaper, so a carbon tax would further discourage new coal investment. (The article notes the Coalition has vowed to scrap the carbon tax if elected.)
The BNEF research included a survey of Australia’s big four banks and concluded developers would struggle to obtain low-cost funding for coal because of reputational and other risks. That makes financing for new coal plants 'very expensive' compared with cleaner alternatives.
BNEF estimates that since 2011 the cost of wind generation has fallen about 10% and the cost of large-scale solar PV has fallen about 29%, with further technology advances expected to drive prices lower.
The article says the liquid natural gas (LNG) export boom has pushed up prices for gas, largely removing gas’s presumed advantage over coal in lower carbon intensity. Higher fuel prices make new gas-fired baseload plants less economically attractive versus renewables.
Electricity demand is trending lower: use in New South Wales was at 10-year lows and Victoria at eight-year lows for the December–January period cited. Demand in the National Electricity Market is running about 16% below levels regulators expected in the middle of the last decade — reducing the need for new baseload generation such as coal plants.
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