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Solar, wind, landfill to make cheapest power by 2030

Australian study says coal’s crown is slipping, thanks in part to carbon pricing

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Solar and wind technologies will be the cheapest way to make electricity by 2030, according to a new Australian Energy Technology Assessment from the Australia’s Bureau of Resources and Energy Economics.

The report, penned with help from consultancy WorleyParsons and the CSIRO, considered 40 different generation technologies and calculated a “Levelised Cost of Energy” (LCOE), “the minimum cost of energy at which a generator must sell the produced electricity in order to achieve its desired economic return” per megawatt hour.

LCOE is calculated with a fiendishly complicated equation that is explained on pages 20 to 25 of the Assessment (PDF). It’s also worth noting that Australia’s government promotes its unpopular Carbon Tax package as delivering a “clean energy future,” which may lead some Reg readers to recall Yes, Minister’s observation that one only conducts an inquiry if one knows the result in advance.

With those caveats in mind, the report’s fondness for solar bears up well as the explanation for the sun’s ascent is declining prices for photovoltaic cells. Manufacturing capacity for such devices has apparently already increased and will likely do so again and again between now and 2030, when LCEO of AUD$116 will be achievable.

Larger and more efficient wind turbines will help to blow away costs for wind generators. Wind farms will also benefit from cheap Chinese wind turbines hitting the market. Generators relying on the breeze also have low maintenance costs, as most of their installations are new and few are near end-of-life. New entrants, of which the Assessment expects to see over 100 operating at megawatt scale, will have even fewer depreciation-related problems. The result is LCOE of AUD$93.

Splitting the two between the two is landfill gas power, which will hit LCEO of AUD$99 in 2030.

Brown coal would remain cheaper than wind by 2030 – with an LCOE of AUD$92 – were it not for Australia’s carbon tax. With the tax and projected future carbon prices factored in, brown coal will hit $157. Indeed, prices for all forms of coal generation will rise, with carbon pricing a very significant factor in expected increases.

Intriguingly, the report sees little success for geothermal energy, a resource Australia possesses in considerable quantities and also one that has generated some stock market excitement. Costs for that source aren’t projected as falling significantly even in the 2050s.

The Assessment is full of caveats about future technology developments and assumptions about maintenance costs, but we feel certain it will generate a lot of hot air in days to come. ®

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