Wind now cheaper than coal in Oz: Bloomberg
Let the market decide
Bloomberg has sparked a brand-new debate about clean energy in Australia, releasing a report that suggests finance for new coal-fired power is going to be scarce because wind energy is now cheaper than constructing new fossil-fuel plants – even without subsidy.
The analysis, announced here, says Australia's major banks “are unlikely to finance new coal without a substantial risk premium due to the reputational damage of emissions-intensive investments – if they are to finance coal at all”*.
CEO of Bloomberg New Energy Finance (BNEF) Michael Liebreich said that “The perception that fossil fuels are cheap and renewables are expensive is now out of date”, noting that wind farms are out-competing coal and gas in a country with “some of the world’s best fossil fuel resources”.
According to BNEF, a new wind farm in Australia can now deliver electricity at $AU80 per megawatt-hour, while electricity from a new gas baseload plant costs $AU116 per MWh, and coal-fired power arrives on the grid at $AU143 per MWh.
While those figures include the impact of the Australian government’s carbon price, the analysis suggests “wind energy is 14% cheaper than new coal and 18% cheaper than new gas”.
The sunk cost of existing power stations – most of which date to the 1970s and 1980s – means they are still the cheapest power source. Bloomberg predicts that large-scale solar PV will overtake both new coal and gas generation by 2020. ®
*Bootnote: Bloomberg's concern about "reputational damage" to banks echoes a recent story in Australia in which an anti-coal protester, Jonathan Moylan, issued a spoof press release that temporarily wiped hundreds of millions of dollars off the share price of Whitehaven Coal.
The fake release suggested that a coal investment was incompatible with ANZ Bank's corporate responsibility.
Some media were unable to distinguish between real and fake, and ran the spoof without even bothering to look at the ANZ Bank or Australian Securities Exchange Websites to see if the press release was genuine.