According to data compiled by the Bloomberg newsagency wind is now cheaper than fossil fuels in producing electricity in Australia, the world’s biggest coal exporter.
Electricity can be supplied from a new wind farm in Australia at a cost of $80 per megawatt hour, compared with $143 a megawatt hour from a new coal-fired power plant or $116 from a new station powered by natural gas
The Bloomberg New Energy Finance report shows that coal-fired power stations built in the 1970s and 1980s can still produce power at a lower cost than that of wind.
BNEF said relying on fossil fuels to produce electricity is getting more expensive because of the minority Australian Labor government’s price on carbon emissions imposed last year, higher financing costs and rising natural gas prices.
The cost of wind generation has fallen by 10 per cent since 2011 on lower equipment expenses, while the cost of solar power has dropped by 29 per cent.
“The fact that wind power is now cheaper than coal and gas in a country with some of the world’s best fossil fuel resources shows that clean energy is a game changer which promises to turn the economics of power systems on its head,” Michael Liebreich, chief executive officer of Bloomberg New Energy Finance, said in a statement.
While wind energy has become more competitive, Australia’s plan to get at least 20 per cent of its power from renewables by the end of the decade is still required to drive investment because of weak energy demand, the report said.
Australia last year started charging its biggest polluters a price of $23 a tonne for their carbon emissions to discourage the use of fossil fuels and fight climate change. Natural gas prices in Australia may triple by 2030, BNEF said.
“The low and falling costs of renewable energy and high and rising costs of coal- and gas-fired plants suggest that much of Australia’s new generating capacity is likely to be renewable,” Sydney-based Bloomberg New Energy Finance analyst Kobad Bhavnagri wrote in the report.
Driven by hydro- and wind-power projects, renewable energy contributed 9.6 per cent of Australia’s electricity production in 2011, up from 8.7 per cent the prior year, according to the Clean Energy Council, an industry group.