Australian Wind Energy Now Cheaper Than Coal and Gas

Electricity can be supplied from a new wind farm in Australia at a cost of A$80 ($84) per megawatt hour, compared with A$143 a megawatt hour from a new coal-fired power plant or A$116 from a new station powered by natural gas when the cost of carbon emissions is included, according to a Bloomberg New Energy Finance report. Coal-fired power stations built in the 1970s and 1980s can still produce power at a lower cost than that of wind, the research shows.

Relying on fossil fuels to produce electricity is getting more expensive because of the government's price on carbon emissions imposed last year, higher financing costs and rising natural gas prices, BNEF said. The cost of wind generation has fallen by 10 percent since 2011 on lower equipment expenses, while the cost of solar power has dropped by 29 percent.

"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 today.

Renewables Target

While wind energy has become more competitive, Australia's plan to get at least 20 percent 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.

Xinjiang Goldwind Science & Technology Co., China's largest wind-turbine maker, said in December that it's studying new projects in Australia, while Vestas Wind Systems A/S, the world's biggest turbine maker, said in November it expects to keep more than 50 percent of the Australian market.

Australia last year started charging its biggest polluters a price of A$23 a metric ton 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.

AGL Energy Ltd., Australia's largest developer of renewable energy projects, said in November that it expected the A$1 billion ($1.03 billion) Macarthur wind farm in Victoria state to begin operating fully this month. AGL in October suspended the development of the first stage of its 1,000-megawatt Dalton gas- fired power station in New South Wales after reviewing the economic viability for several months.

Driven by hydro- and wind-power projects, renewable energy contributed 9.6 percent of Australia's electricity production in 2011, up from 8.7 percent the prior year, according to the Clean Energy Council, an industry group.

Copyright 2013 Bloomberg

Lead image: Flag of Australia, via Shutterstock