Canberra concedes wind, solar to be cheapest energy by 2030

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The Australian government’s chief energy forecasting body has published a dramatic revision of its cost estimates, predicting that onshore wind and solar PV will deliver the cheapest forms of energy by 2030 – with solar PV dramatically cheaper than all other energy forms by 2050.

The Australian Energy Technology Assessment (AETA) prepared by the government’s Bureau of Resources and Energy Economics slashes its previous estimates of the cost of a whole range of renewables technologies, and in some cases doubles the predicted cost of coal-fired generation in the decades to come – with or without the addition of carbon capture and storage.

Its estimates of the cost of gas generation are relatively unchanged, around $130/MWh, but in its most controversial conclusion is says that nuclear energy currently represents the cheapest form of energy – saying that its range of costs is between $55 and $100/MWh, even though the experience in the UK is that new nuclear requires tariffs of at least $220/MW to get built.

BREE’s Professor Quentin Grafton said in the report, which was prepared in conjunction with engineering group Worley Parsons, that by 2030 some renewable technologies, such as solar PV and wind, are expected to have the lowest LCOE of all of the evaluated technologies.

“The results indicate that Australia’s energy future is likely to be very different to the present,” the report concludes. “This has profound implications for electricity networks, how energy is distributed and Australia’s ability to meet its targeted greenhouse gas emissions reductions.”

These are the first government-sponsored technology cost estimates published since the Draft Energy White Paper was released last December. That paper virtually ignored solar as a contributing element to Australia’s energy grid, but it now recognises that estimates for solar PV were wide of the mark, and its costs have fallen dramatically and would continue to do so (even though the report predicts no cost declines between 2020 and 2030).

The estimates for 2012, 2020, 2030 and 2050 are published below (you may need to click on them to enlarge and view properly). The contrast with the December predictions – published at the bottom –  is informative.

BREE suggests that solar PV will be competing with onshore wind, biomass and nuclear(!) in Australia by the end of the decade, before emerging as the cheapest technology in subsequent years. Its estimates are for a midpoint of around $224/MWh now, around $116/MWh by 2030 and a midpoint of $86/MWh by 2050, and as cheap as $70/MWh by 2020 and $30/MWh by 2050. Even brown coal, without a carbon price and CCS, is costed at around $100/MWh by 2020, nearly double that with a carbon price, and with CCS is costed between $150/MWh and $200/MWh, depending on the technology.

Its predictions for other renewable technologies may also be disputed by some technology developers.

A range of solar thermal technologies are appraised, with current costs estimated at more than $300/MWh, falling to around $200/MWh by 2025, but then making no further progress. Solar thermal developers, along with the International Energy Agency, believe costs will fall to around $100/MWh by the end of the decade. An Australian industry report released in June called “Realising the potential of Concentrating Solar Power in Australia”, suggested costs of $120-$130/MWh could be reached.

The AETA report sees the average cost of onshore wind at $116/MW (although some are being built now in Australia for around $80/MW), and while it sees this falling to the low $90s/MW by 2025, it then predicts a gradual rise in costs, which may be disputed by the industry. It says offshore wind would cost around $194/MW now, and be virtually unchanged out to 2050.

In wave power, where Australian developers predict costs coming down to around $100/MWh by the end of the decade, BREE suggests it will still cost around $222/MW by 2025, but then achieve no further cost reductions over the next 25 years.

Geothermal is expected to deliver costs of around $215/MWh (hot rocks) in 2025, and then gradually increase in costs to $222/MWh, while hot sedimentary aquifer’s will cost around $154/MWh from around 2020 and also increase in costs. Geothermal developers have previously predicted costs of around $100/MWh, although they have gone a bit quiet on these predictions recently due to a lack of progress.

Among the non-renewable technologies, BREE said combined cycle gas (and in later years combined with carbon capture and storage) and nuclear power offered the lowest LCOE over most of the projection period, and they both remain cost competitive with the lower cost renewable technologies out to 2050.

However, its forecasts for nuclear are astonishing, given the experience in the UK, which already has nuclear plant and is desperate to build more. The BREE report suggests cost for new build nuclear in 2012 in Australia would be less than $100/MWh, rising slightly to around $126/MWh in 2050. Last week, the Financial Times reported that French nuclear giant EDF is asking for £165/MWh – or $250/MWh – to build the Hinkley Point project, and a French government committee estimated the ongoing costs of nuclear plants already built would be around $88/MW by 2017, and that does not include the capital costs. The BREE report says decommissioning costs were not factored in to its calculations.

The estimates the government was relying on last December


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  • Dear Minister Ferguson, Mr Abbott, Mr Minchin, Premier O,Farell, Premier Baillieu, Premier Newman, Premier Barnett and Dr Alan Moran,

    Told ya.

    Kind regards

    The entire global solar industry.

    • Nice one Nigel.

      While this is a hugely dramatic turn around for BREE, the report still doesn’t accept the numbers for June 2012 in the market – 2011 numbers still appear to be the main measure, with dismissal of the possibility that price falls might be sustained.

      As we have all seen, a year can be a long time in terms of pricing of solar – if BREE are conceding 2030 – and the virtual standstill of the learning curve in there projections – then the prospect of delivery in half that time looms large.

    • Alastair Leith


  • Ken Winter

    Ditto Nigel

    They did however keep at least a foot in fairyland with their nuke prices. That is unless the LCOE they quote is the market cost as well as the subsidy cost!!!!

  • Steve 1

    “Its estimates of the cost of gas generation are relatively unchanged, around $130/MWh, but in its most controversial conclusion is says that nuclear energy currently represents the cheapest form of energy – saying that its range of costs is between $55 and $100/MWh, even though the experience in the UK is that new nuclear requires tariffs of at least $220/MW to get built.”
    There has been a nuclear fantasy in our federal bureacracy for decades. Just as fossil fuels are cheap if you don’t pay for the desposal of the waste products, nuclear is cheap as long as you don’t factor in the real cost of maintenance, storage and decommissioning, let alone building a nuclear power station to the engineeing standards that would ensure it could withstand an unforeseen natural disaster.

    • Phil

      Has there been a cost estimate for the Fukushima fallout? I can’t believe nuclear is part of any consideration. Surely the potential and proven collateral damage indicates this.

  • BREE cost estimates for nuclear are inline with IEA estimates (possibly the source). And to Steve 1 these costs DO include all the cost you outline. LCOE costs are always “cradle to grave” and do not cherry pick what is included.

    I really do hope that BREE is correct about the future of non-tracking solar PV. It has a valuable contribution to make for buildings both domestic and commercial. It’s place as large scale replacements for coal and gas plants is somewhat less certain. The recent demise of some PV panel manufacturers may hinder the continued falling of future prices.

    • Lachlan

      Actually Martin,
      Page 55 of the report states:
      “It should be noted that the LCOE analysis for nuclear technologies does not include disposal/
      storage of spent fuel or provision for decommissioning of plant.”
      I think that’s pretty clear cherry picking right there.

      • IEA 2010 analysis definitely did include decommissioning and the LCOEs were similar to those suggested by BREE. Because these costs are at the end of the life of the plant (which could be 60 years) the discounted contribution to current costs per MWh would be very small.

        The BREE report also suggests that the contribution of spent fuel storage is in the order of US$1/MWh.

        • Alastair Leith

          And yet no discussion of the opportunity costs of yellowcake mining is ever entered into.

          One mine in Australia alone takes as much artesian water as Melbourne does (stored rainfall) on a daily basis. We could be growing a lot of dates in the desert (v high in calories and a perfect human carb food source) with half that water and not doing all the environmental damage that’s occurring to natural hot springs — both unique habitats and sacred sites to aboriginal peoples.

  • Michael

    Well this proves that for the next 25 years we should replace coal with gas within the same network, and then move over to renewables when they become cheap enough. Isn’t this what the majority of voters have been asking for? Might just happen as soon as Labor stop subsidising the coal power stations.

    • Patrick

      Well, it proves that gas would be the cheapest thing to replace coal with.

      But unfortunately current climate science is telling us that our emissions need to peak in the next 5 to 7 years. Building gas plants would lock in an additional 20+ years of emissions and in turn, make catastrophic run away climate change more likely.

      I agree that we need to transition away from coal and stop subsidising fossil fuels, but i think we need to bite the bullet and spend a little more on renewables. We owe it to the next generation.

  • BREE’s report is a political document, so its LCOE estimates need to be considered with appropriate caution. The estimates for nukes are laughable. Not including decommissioning costs is just unacceptable. I bet they didn’t include the cost of insurance and loan guarantees either. And I bet they used a dodgy discount rate, lower than that used for renewables.

  • wombat

    ” UK, which already has nuclear plant and is desperate to build more”

    First I’ve heard.

    Hunterston A is mothballed (but not decommissioned – even before the GFC that was too expensive) with Hunterston B due to close in 4 years time.

    Meanwhile on the moors above them, the wind turbines are multiplying like mushrooms (only a lot taller).

  • The problem with IEA reports is data lag – IEA reports from 2010 will generally based on pre 2008 data – in the case of nuclear that’s pre GFC, and particularly pre Fukushima, and subsequent changes in risk evaluation by the planet.

    To quote from the BNEF paper Baziliana et al. “Re-considering the Economics of Photovoltaic Power” – ‘The LCOE for PV c-Si has declined by nearly 50% from an average of $0.32/kWh early 2009 to $0.17/kWh early 2012, while that for PV thin film experienced a drop from $0.23/kWh to $0.16/kWh in the same period. According to BNEF, the current (Q1, 2012) levelized cost ranges from $0.11/kWh to $0.25/kWh.’

    So the BREE report puts solar at 22.9 c now while BNEF says 17 c now – BREE’s estimates don’t hit 17 c until around 2018…

  • I share your astonishment, Giles, at the nuclear energy costs. The capital cost of two reactors planned for Florida is estimated at USD9000/kW (overnight cost, including interest, assuming someone will lend you the money). As UBS points out, capital is about 75% of energy costs for nuclear. This corresponds, then, with about USD190 per MWhr.

    Why would building here be cheaper? The BREE number seems outrageously optimistic.

  • Vic

    Just wondering how much weight people would give to these figures? Some of them are certainly heartening, however when they are so wildly wrong regarding nuclear etc, it does call into question the validity of the rest of the modelling.

    Who else is doing this modelling for Australia more accurately?

  • The most difficult part in modelling rapidly emerging technology costs is that they are rapidly emerging. Arguing the minutia isn’t the issue here (IMHO).

    What IS important is that arguably the most conservative body in Australia has MASSIVELY adjusted their expectations on renewable energy. Its a given that they are conservative, a little out of date and might have the quantum wrong in some cases, either plus or minus.

    What matters is that the correction we have been arguing for, for so long, has been made at least to some degree. Those in the renewable space know that we will deliver more at lower cost and faster.

    And those not in the space will surely have their eyebrow’s raised.

  • Bref

    When I looking into this 5 years ago, the cleanup cost in Britain for their decommissioned nuclear reactors was estimated at 70B pounds (and rising every year). The problem is so vast that they literally don’t know what to do about it; and about half their current crop of reactors were “shut down for maintenance”.

    With alternative energies finally emerging into use, who in their right minds would even think of nuclear energy. The most promising alternative energy I think is the newly developed CETO pumping system from Carnegie in Perth, WA. It works just offshore, underwater, unseen, unheard, 24/7. It doesn’t affect shipping, uses off-the-shelf technology onshore for electricity generation and/or desalination and can be installed almost anywhere around Australia.

    As usual they’re getting more interest from overseas than here.