New solar will be cheaper than old coal by 2032 | RenewEconomy

New solar will be cheaper than old coal by 2032

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BNEF says falling solar PV costs mean it will be cheaper to build a new large-scale solar than to burn coal by 2032. “And that is a tipping point for the energy system.”

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It’s no secret that solar PV is now the cheapest form of new-build utility-scale power generation around, but according to global research group Bloomberg New Energy Finance, we’re not far from the point when it will also be cheaper that incumbent fossil fuel generators.

Aerial photo of AGL’s Nyngan solar farm. (Photo courtesy of AGL/ARENA.)


Kobad Bhavnagri, BNEF’s head of research in Australia, said that prices like 2.69 US cents/kWh had ensured that solar PV was now the cheapest source of new generation in the world, and even in Australia which he said had “finally become an efficient utility-scale PV market.”

But the problem for big solar remained that “new plant still have to compete with old,” which at the moment, puts incumbent coal ahead of the game – in Australia and many other parts of the world.

But not for long. Bhavnagri says that the cost reductions of solar PV are now becoming “so significant” that BNEF can foresee a time when new solar will become cheaper than operating, existing coal.

“So, new solar is right now hands down easily cheaper than building a new coal-fired power station, and will shortly be cheaper than building a new gas-fired power station,” he said.

“However… renewables and new plant have to compete with the old. And the economics of the old, and the fact that they only have to compete on their operating costs, has blocked out competition from the new.

“However, by 2032, solar will get so cheap that it will become cheaper to build a new large-scale solar farm than it will be to burn coal. And that is a tipping point for the energy system.”

Bhavnagri says that between now and 2040, “and really for the foreseeable future,” the vast majority of Australia’s new generation capacity will be renewable.

“By our calculations, about 39 per cent of our power supply will come from renewable sources by 2030, and over 50 per cent by the year 2040,” Bhavnagri said, in spite of Australia’s recent history of climate and renewables policy uncertainty, and thanks to major policy levers like the RET and ARENA.

“The work of ARENA, largely, has really helped to build experience… and expertise to build solar at competitive rates, and that will materialise in the dominance of solar …in the remaining capacity of the renewable energy target,” he said.

Bavnagri says the amount of capacity that is forecast to come on-stream by 2020 – BNEF says about 9GW of renewables, the majority of which will be solar – will “easily compensate for the loss of Hazelwood and, therefore, put downward pressure on electricity prices.”

“The new renewables that is, thanks to the Renewable Energy Target, coming on-stream is going to save the day,” in terms of Australia’s sky-rocketing electricity prices, Bhavnagri said.

“Because that new supply will produce more competition, it will reduce our reliance on very expensive gas and will help to put downward pressure on electricity prices.

“So, it is really renewable energy target to the rescue.”

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  1. Chris Fraser 3 years ago

    Since AGL, Origin and EnergyAustralia only buy it for 6c/kWh, I suspect they already knew.

  2. john 3 years ago

    I would be extremely surprised if it takes so long for RE to be the cheaper than old generation.
    For new build the price point has been passed.
    With Repairs and Maintenance for traditional generation systems as well as the input costs of the power sources not being stable, one can only conclude that the price point even in high cost countries, like Australia, will be meet very shortly not some 15 years off.
    The experience in last few years has been ever plunging bids for new build RE Generation on every continent.

    • Brunel 3 years ago

      Obama shut down many coal power stations by cracking down on mercury emissions from them.

      I can imagine a few local governments shutting down old coal power stations for producing too much pollution or dust – even if they are 1% cheaper than solar power stations.

    • MrMauricio 3 years ago

      only so long as they can continue to externalize the social and environmental cost of their operation

  3. john 3 years ago
  4. Mike A 3 years ago

    Since this is already very much the case in the Middle East and India how could it possibly take this long?

  5. EdBCN 3 years ago

    The headline seems underwhelming.
    Do we really have to wait until 2032 for solar to fall to the level of the operating cost of existing coal plants? Moody’s came out with a paper recently in which they found that the operating costs of about 2/3rds of existing coal plants in the US was already higher than the all-in cost for new wind generation. I thought the cost of solar PV in sunny places like Australia was already approaching wind, and dropping faster. Something is off here.

    • Mike Dill 3 years ago

      Many of the coal plants in the USA require coal to be shipped in from a relatively long distance. Coal power plants at the mine are still cheap, but that also depends on the cost of digging it out of the ground.
      The coal in the Latrope valley is still cheap to extract, but the plants are shutting down as the boilers and turbines are wearing out, and the cost to replace them is too high.

  6. Craig Teller 3 years ago

    This is an important article. So important that I wish somebody would fix the minor error in the fourth paragraph.

    “Bhavnagri says that the cost reductions of solar PV are no becoming “so significant” ”
    should be be changed to “Bhavnagri says that the cost reduction of solar PV are now becoming “so significant” that BNEF can foresee a time….”

    Drop a note to Cleantech too. Again, change “no” to “now.”

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