Australian Wind Power Growth Hinges on MRET

The Australian Wind Energy Association (AusWEA) released a report which indicates that Australian wind power will rival fossil fuel costs before 2020. However, the Association has stated that this will happen only if the industry is given room to grow through an increase in the Mandatory Renewable Energy Target (MRET), which the Howard Government recently indicated would not happen.

Melbourne, Australia – June 17, 2004 [] The report, Cost Convergence of Wind Power and Conventional Generation in Australia, is a review of the latest national and international information on future fuel and technology costs for coal, gas and wind generated electricity. “The results from government and industry sources in the USA, Europe and Australia are all forecasting ongoing price declines for wind energy of between 30 and 50 percent over the next 15 years. With continuing economies of scale in Australia, wind projects installed in 2020 can expect to be cost competitive with fossil fuel energy supplies.” said Dr Karl Mallon, co-author of the report. But he warned — the “wind industry will have met the current Mandatory Renewable Energy Target for 2010 by 2007, so there will need to be a substantial increase the MRET target to stay on track.” Libby Anthony, CEO of AusWEA, stated in response to the reports findings, “This report highlights basic economics: when you buy something in bulk, it costs less. If we commit to more power from renewables like wind energy, we will keep driving down the costs until we compete head on.” “This report provides a clear rationale to the Federal Government to substantially increase MRET, because the incremental costs for wind energy will continue to get smaller and smaller. For an industry with eight billion dollars worth of projects on the table in regional Australia, all this government talk of cash give-aways is of no interest. We need a solid renewable energy market. We need an increased MRET. Unless MRET is increased this industry will come to a halt in 2007, it is that simple,” said Ms. Anthony. In Australia, the current difference in generation costs between wind power and thermal generation from fossil fuels is significant. Coal generation costs about 3.5 to 4 cents per kilowatt hour (KWh), gas between 4 to 5 cents per KWh, and wind costs about 8 cents per KWh. However, the report shows that this gap is steadily narrowing. Provided that wind industry growth in Australia keeps up with international growth, Australia can expect the price of wind energy to overlap with gas prices between 2008 and 2016, and start to overlap with coal prices from 2016 onwards with prices for wind dropping further thereafter (see diagrams). The research also shows that half of the cost reductions will come from industry becoming more experienced in project development, regulation and financing. “The cost of electricity from wind turbines has already declined to a quarter of the price it was in the 1970s — the last oil shock. The price decline is mostly due to the increasing size and efficiencies of wind turbines,” said Dr Karl Mallon. “The next price drops will come from increasing industry experience in developing projects and from technology trends for more power from the same size machines. Turbines can extract more energy from less windy sites. This is good news for sites inland from the Australian coast.”
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