Coal-fired plants can't compete
AUSTRALIA is unlikely to build new coal-fired power stations because of tumbling prices for renewable energy and the rising cost of finance for emission-intensive fuels, according to research by Bloomberg New Energy Finance.
Even without a carbon price, wind energy was 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 in a report.
The gap widens 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-powered station and $116 for a new baseload gas-powered station.
In Western Australia, large-scale photovoltaic (PV) power stations were already cheaper than new coal-fired generating capacity, BNEF said.
"It's very unlikely that new coal [power stations] would be built in Australia," the head of clean energy research for BNEF in Australia, Kobad Bhavnagri, said.
Aside from the carbon tax, which the Coalition has vowed to scrap if elected on September 14, 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 big four banks.
"Financing for coal would be made very expensive because of all the risks involved," Mr Bhavnagri said. "A bank would be quite conscious of financing a highly polluting asset. That would likely make them susceptible to environmental activism."
BNEF estimates the cost of wind generation has fallen by 10 per cent and that of solar PV by 29 per cent since 2011. It believes more technological advances will drive prices lower.
Wind power's cost per MWh will drop to $70 by 2020 and by $66 by 2030. The cost of large-scale solar PVs would 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, continued to trend lower, with usage in NSW at 10-year lows and in Victoria at eight-year lows for this time of year, according to data for the December-January period, the director of the Melbourne Energy Institute, Mike Sandiford, said.
"Nobody in their right mind would be building coal-fired power plants now," Professor Sandiford said.