Australia is out to prove that green energy is both affordable and competitive

Clonsurry-Solar-Farm-similar-System2Green energy is being seen as a turning point to where sustainability will become an unstoppable economic force that transforms the market. When it comes to sustainable green energy becoming price competitive with its carbon producing equal, the Bloomberg New Energy Finance reports that in Australia, solar and wind has become cheaper than new coal and natural gas.

Australia is one of the largest exporters of coal and is rich in carbon forms of energy. It is quite significant that clean energy has crossed the line where it is cheaper than its dirty while the technology is still developing.

Looking at the detailed study about new energy development “The study shows that electricity can be supplied from a new wind farm at a cost of AUD 80/MWh (USD 83), compared to AUD 143/MWh from a new coal plant or AUD 116/MWh from a new baseload gas plant, including the cost of emissions under the Gillard government’s carbon pricing scheme. However even without a carbon price (the most efficient way to reduce economy-wide emissions) wind energy is 14% cheaper than new coal and 18% cheaper than new gas.” (Bloomberg)

As the technology and techniques of green energy has become more developed, we have been advancing towards price competitive solar and wind. Australia is among the first countries to reach this goal which brings us into a new stage of development. As large scale utility investments create further challenges and economic forces drive down costs, there will be a need to tackle problems with intermittence and storage.

An argument against renewable energy has been the higher cost when compared to carbon intensive energies. They say it would mean higher energy bills and costs for business, but now with Australia testing these myths, we’ll have the opportunity to see if these economic arguments become fallacious.

“The perception that fossil fuels are cheap and renewable are expensive is now out of date”, said Michael Liebreich, chief executive of Bloomberg New Energy Finance. “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,” he said. (Bloomberg)

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The higher cost of new facilities has been linked to a number of factors. The Australian carbon pricing adds to the cost of carbon intensive energy facilities over its lifetime. The private financing of energy production also plays a part in the increased cost of carbon intensive investments.

A report surveyed Australia’s four largest banks and found they would only finance the investments with a large risk premium. Also, the cost of new gas power generation has been affected by the liquefied natural gas export market which is forcing up natural gas prices.

The withered investment costs of older coal and gas assets have been identified in the report as the main problem for new renewable energy. The costs have already been paid in the 70s and 80s. Although these assets are aging and have a limited life time, this is a problem which in time will become less problematic as they are retired and the new energy sources are needed.

“New wind is cheaper than building new coal and gas, but cannot compete with old assets that have already been paid off,” Bhavnagri said. “For that reason policy support is still needed to put megawatts in the ground today and build up the skills and experience to de-carbonise the energy system in the long-term.” (Bloomberg)

Sustainability is not just about the type of energy we use, but the amount of energy used and wasted. In the end, technology is giving us the solutions to this side of sustainability. Just as green energy is helped by becoming price competitive; it is the government subsidies which enable in part its sustained development.

As we look for solutions to energy efficiency we must remember that to create change, it first has be developed to where it replaces and surpasses the alternative… or it will remain just another idea.

2 COMMENTS

  1. Good points, yet you are missing a key point. The reason green energy is so heavily debated is not because of how cheap or expensive it may be. It’s because giant corporations make giant profits from carbon based fuels. The motto of the American business world is to make as much money as you can while you can, regardless of future consequences. Your facts are correct, yet the reason green energy has such a hard time in America is because the powers that be don’t want any dent in their profit margins. Oil, gas, and coal are institutions in America. They’re not going down without a major fight.

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