New research put out by Bloomberg New Energy Finance shows that new wind and solar projects in Australia are cheaper than in any other Asia country, yet new coal plants are 50 per cent more expensive and would be the most expensive in Asia.
As major companies such as AGL Energy and ANZ Banking Group hedge their bets about new coal fired plants, saying they would not finance new coal unless it had (even more expensive) carbon capture and storage, and the Coalition government continues to entertain thoughts of a government-financed coal fired plant in northern Australia, the new research from BNEF shows that renewables are a much cheaper option.
This is particularly important, given that many of Australia’s coal fired generators are already operating beyond their nominated life, and new capacity will be required over the next decade.
First for solar, BNEF says that Australia can build large scale solar plants at an average levellised cost of electricity of $US88/MWh (about $A123/MWh), cheaper even than in China.
BNEF puts this down to a combination of high capacity factors and low finance costs, with the proviso that they can secure long term off-take contracts, something that has so far eluded Australian developers due to the uncertainty over policies and the “capital strike” by major utilities.
On wind, Australia also has the lowest costs in Asia, with an LCOE of $US71/MWh, compared to China’s $US77/MWh respectively. It says Australia’s strong wind resource makes the technology cheaper than China despite lower capital costs there. Some recent contracts have pointed to even lower costs in Australia, below $A80/MWh.
On coal, BNEF says new coal fired generators would cost $US123/MWh – the highest LCOE for new coal capacity in Asia.
It says this is due to the fact that it would have most expensive project costs and financing costs in the region. “Investors are reluctant to finance new coal projects due to concerns over reputation damage, carbon and long-term market risk,” it says.
Still, the Coalition government is still considering putting money from the Northern Australia Infrastructure Fund into new coal fired generation in northern Queensland, and many existing coal generators are running beyond their lifetimes.
In the UK, however, there are media reports that the conservative government will go even further, mandating the closure of the last coal fired generators, currently accounting for 28 per cent of energy demand, by 2023. This is despite the fact that it has not yet been able to restart its nuclear industry, despite promising outrageously high tariffs to the proposed $50 billion Hinkley C nuclear plant that even conservative media is describing as possibly the greatest “white elephant” in UK history.