Stunning tipping points mean coal will never be great again | RenewEconomy

Stunning tipping points mean coal will never be great again

The global energy industry is experiencing two major tipping points for wind and solar that means that coal will never be great again, no matter how much Conservative politicians and columnists may wish it to be so.


It’s been said before, but it bears repeating, particularly given what former coal chief Ian Dunlop describes as the extraordinary stupidity of Australia’s energy debate:

The global energy industry is experiencing two major tipping points that will mean that coal will never be great again, no matter how much the likes of US President Donald Trump and Australian prime minister Malcolm Turnbull may wish it to be so. The age of wind and solar has arrived.

This was the key message from Michael Liebreich, the founder of Bloomberg New Energy Finance, in the company’s annual get-together in London last week.

The two key tipping points – the cross-over between the costs of wind and solar with new coal and gas, and the crossover between new wind and solar and existing coal and gas plants – have been noted before.

But, in the current debate in Australia, where the government is pushing for existing coal plants to be extended, despite the horrendous costs and poor reliability, and new coal plants to be built, even where they are not needed, they bear repeating.

Liebreich says the first tipping point is the one we are living now, and it’s where new wind and solar becomes cheaper than new anything else.

“That means that anything you have to retire is likely to replaced by wind and solar,” he says (if economics rather than ideology were a factor). “That tipping point is either here or close everywhere in the world.”

The second tipping point is really interesting,” he says.

“It’s when wind and solar are cheaper than existing fossil fuel plant. Suddenly your addressable market is not just incremental demand and replacements, it is everything.”

And he adds: “No one is going to make coal great again in the US. It can’t beat cheap gas, it can’t beat cheap renewables, it can’t beat cheap energy efficiency.” Even in China, new wind and solar will beat existing coal.

So, here are the graphs that he used to illustrate this. The first (below) shows utility-scale PV and onshore wind very nearly beating new coal in China, and already doing so in the US, where the main competition comes from relatively cheap local gas.

slide 92.

This tipping point is also occurring in other major energy investing countries like Japan and India. In Japan, utility-scale PV is expected to be cheaper than coal within a few years; in India it will be the same.

slide 93

The implications for Australia are obvious. New thermal coal projects will be built on the assumption that the coal market will continue to grow exponentially. But this assumes coal keeps its cost advantage – and according to Liebreich, it won’t.

And we are starting to see evidence of that in Australia in the cost of keeping old clunkers like Liddell open for an extra few years.

slide 94

It is notable that while BNEF is often seen as the most optimistic for renewable energy forecasts, the global energy consultant DNV delivered an even more stunning scenario in its report earlier this month. (See our story: This is just the start of the solar age: Seven graphs show why.)

slide 95

But what of all that disappearing baseload? Won’t the lights go out? Won’t each new megawatt of wind and solar capacity have to be backed up by an equivalent amount of storage?

Only if we fail to re-imagine the energy system, and we insist on loading up costs by trying to make wind and solar act and appear like “baseload”. There is no need to.

As any market operator will tell you, the age of large centralised baseload capacity is rapidly moving past its use-by date, to be replaced by fast, flexible and “dispatchable” capacity to fill in the gaps of variable renewables and to respond to swings in demand, and the demand peaks.

Chief among these solutions will be demand response and batteries – supplemented by other storage technologies such as pumped hydro and solar thermal.

Small-scale batteries, Liebreich suggests, will jump to more than 200GW, and utility-scale batteries will be nearly as big.

But both will be trumped by demand response – which, contrary to the nonsense you will read in Murdoch media today from future-denier Judith Sloan, does not mean enforced switching off of appliances.

slide 97

And one final note: Liebreich also took issue with noted climate contrarian Bjorn Lomborg, and his attempts to downplay the prospect that wind and solar will play any meaningful role in the world’s electricity sector.

This battle has been ongoing for years. RenewEconomy got a lot of flack, and demand for retractions, from Lomborg’s representatives when we challenged his assumption in the lead-up to and at the Paris climate talks in 2015.

But his nonsense continues to gain traction, despite new reports shedding some light on how he comes to his “numbers” – he uses the IEA description of final energy demand which, outrageously and misleadingly, includes all the energy wasted by fossil fuel plants in the process of burning fuel and boiling water.

“Using primary energy as a measure is a really stupid thing,” Liebreich says.  “Sixty-eight per cent of it is waste, and it comes from oil, gas and nuclear. You only choose primary energy if you want to make wind and solar look smaller than they really are.”

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  1. Roger Franklin 3 years ago

    Giles – a great article and a nice comment on the “extraordinary stupidity of Australia’s energy debate”. But like always – let’s not let the facts get in the way of a good FUD Campaign!

  2. Stephen Gloor 3 years ago

    LNP – la la la la – i’m not listening…….

  3. Rebecca 3 years ago

    Prime Minister Malcolm Turnbull what a shame you can’t teach old dogs new tricks. Come to think on this subject, we wouldn’t have service dogs if they were this slow.

    • Tom 3 years ago

      “Old dogs” – the deputy prime minister tried to teach Pistol and Boo a thing or two.

  4. Ken Dyer 3 years ago

    Don ‘t you just love the Canutian responses by the Australian and US dotards as they try to stem the incoming tide of clean energy? They might as well try and stop the Sun shining!

    • Peter 3 years ago

      I believe Canute’s purpose was to show his courtiers that the tide could not be held back by his royal fiat.Like the courtiers, the LNP believes it can stop the sun shining.

      • Mike Westerman 3 years ago

        I think there are some within the LNP who are flat earthers, for whom the sun actually goes out every night and is relit in the morning, hence their grave concern that one day it won’t happen.

  5. John Saint-Smith 3 years ago

    Once upon a time, deliberate misdirection like that practiced by Lomborg, would have seen him tarred and feathered by now.
    Instead the accidental alliance between professionally ‘blind’ and easily corruptible politicians and under-nourished endangered species MSM journalists ensures that fake science and economics stories pedalled by the likes of Lomborg are rarely challenged.

    • Matthew O'Brien 3 years ago

      … beheaded even.
      The reason these f**kwits can speak like they do (Joyce, Canavan, Abbott, Abetz etc etc ad nauseum) – knowing most of their statements are DELIBERATELY misleading – is that there are no consequences for them – no system of future accountability for they or their Liar Lobbyists. It just turns into a blame shifting / ignorance plea and they skive off with the loot.
      They should all be shot for the adverse affect and waste of time their efforts are causing. If the Earth were a red haired pierced pissed hippy loser from North Hobart, she would have driven a pencil clear through one of Abbott’s lying eyes.

      • Colin 3 years ago


  6. George Michaelson 3 years ago

    Stock LNP response: “if its so cheap, why does it need subsidies”

    • Carl Raymond S 3 years ago

      Stock reply – drop all subsidies, starting with those to fossil fuels.

      • neroden 3 years ago

        And for reference, the fossil fuel subsidies are huge. So until they’re stopped, solar would need subsidies to catch up with the fossil fuel subsidies.

        Better to drop the fossil fuel subsidies though

    • Steve_Ohr 3 years ago

      It makes sense to subsidize renewables because society has a compelling interest in transitioning away from fossil fuels.

      The *reasons* for solar and wind subsidies include:

      1. It helps compensates for fossil fuel subsidies. These are both direct and free externalities: the free ride polluting industries get by not having to pay for the full cost of pollution.

      2. Global warming is real, it’s happening fast, and society has a compelling interest in de-carbonizing as fast as possible.

      3. Because it drives innovation – see ‘learning rates’ for why.

      4. Because it is in our national security interest to produce our power locally, instead of importing it.

      5. Because it makes good economic sense to replace oil imports with local production. Import substitution is smart.

      6. Because it means we can stop funding tyrants in Middle East with petrodollars.

      7. We avoid vast environmental and health costs – the number of cases of black lung disease in US coal workers recently doubled. Guess who’s paying for it? Not the Coal companies..

  7. Carl Raymond S 3 years ago

    There’s another tipping point – the point where Joe Average hears Abbott say “only coal can keep the lights on” and goes “nah mate – give us solar and storage – we can’t afford your stinkin’ coal”. We appear to be at that point.

    • Mike Westerman 3 years ago

      Right! Seems to be an LNP blindspot that the number of voters owning coal mines and power stations is way less than the number owning solar power stations!

    • Matthew O'Brien 3 years ago

      “… can’t afford your stinkin’ coal …”
      …and – we don’t need no steeeenking [party political] badges – either.

    • MaxG 3 years ago

      In speaking with a climate denier, renewable denier, nuclear is the way to go guy… I was shocked that people like this do exist and truly believe in their view, without any capability of validating their views, and if put forward to them, belittle you or refuse to talk.

  8. Greg 3 years ago

    Has anybody read the full report from Bloomberg? I’m curious how they’re calculating the MWh for solar, and also if they’re accounting for the fact that any storage has to come from surplus generation.

  9. Radbug 3 years ago

    The future lies with fixed axis, perovskite PV arrays and magnesium/iron pyrite battery storage.

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