The results from BNEFs Sydney analysis team, which modeled the cost of generating electricity in Australia from different sources, predicts that the Australian economy can increasingly look forward to electricity generated from renewable energy sources, with new coal-fired plants being "just too expensive".
Additionally, the team states that unless natural gas prices in Asia-Pacific decrease, and remain low, investment in new fossil fuel power generation is likely to be limited.
The BNEF study has found that electricity from a new wind farm can currently be supplied for AU$143/MWh, compared to $143/MWh from a new coal plant, or $116/MWh from a new baseload gas plant.
While these figures take into account the cost of emissions under the governments carbon pricing scheme, BNEF says that wind is still 14% cheaper than new coal, and 18% cheaper than new gas when the carbon price is excluded.
It must be noted, however, that new wind plants cannot compete with existing coal and gas plants, adds BNEF, thus stating the case for the need for continued policy support.
In terms of photovoltaics, BNEF says that costs have fallen by 29% since 2011. By 2020, it forecasts, large-scale photovoltaics will also be cheaper than coal and gas, when factoring in carbon prices. Wind costs, meanwhile, are said to have dropped 10%.
In contrast, energy costs from fossil fuel plants are said to be rising. "It is very unlikely that new coal-fired power stations will be built in Australia. They are just too expensive now, compared to renewables," states Kobad Bhavnagri, head of clean energy research for Bloomberg New Energy Finance in Australia.
He adds, "Even baseload gas may struggle to compete with renewables. Australia is unlikely to require new baseload capacity until after 2020, and by this time wind and large-scale PV should be significantly cheaper than burning expensive, export-priced gas. By 2020-30 we will be finding new and innovative ways to deal with the intermittency of wind and solar, so it is quite conceivable that we could leapfrog straight from coal to renewables to reduce emissions as carbon prices rise."
"The perception that fossil fuels are cheap and renewables are expensive is now out of date," says Michael Liebreich, chief executive of BNEF.