Summarising the findings from the latest Australian Energy Technology Assessment, produced by official government advisers Bureau of Resources and Energy Economics, it states that costs of energy for solar technologies are forecast to have fallen significantly by 2050.
This reflects the dramatic reduction in the cost of photovoltaic cells that have occurred during the last two years. In 2050, static — or non-tracking PV installations — are estimated to deliver electricity at around EUR42/MWh, compared with onshore wind at around EUR 58/MWh.
The cheapest form of solar thermal technology will come in at EUR 88/MWh, and the cheapest nuclear technology at around EUR 91/MWh.
Of the fossil-fuel technologies, combined cycle gas turbines will deliver electricity at EUR 66/MWh, albeit with a carbon tax, in the absence of which the cost of energy would be EUR 57/MWh, almost identical to the cost of wind energy.
In the nearer term — 2020 — wind is projected to cost around EUR55/MWh. At first sight, this is slightly lower than the 2050 price, but there is a wider range in 2050, possibly due to the need to use sites with lower wind speeds. The 2020 price is virtually identical to the estimated price for solar/coal hybrids and for supercritical pulverised coal plants in the absence of a carbon tax. The cost of wind in 2020 is likely to be similar to current costs. This suggests that the current Australian level of support, which encourages without being overgenerous, combined with good winds, is creating a stable market and leading to low prices.
Combined-cycle gas turbines are estimated to cost around EUR 62/MWh. A very wide range of technologies is included in the assessment, and nuclear is forecast to cost around EUR 84/MWh in 2020.
Offshore wind is expected to cost around EUR 98/MWh by 2020. Wave and ocean technologies are grouped together and the uncertainty over their costs is reflected in a wide range of estimates — from EUR 136/MWh to EUR 254/MWh. Although there are geothermal resources in Australia, the mid-range cost for 2020 is put at EUR 101/MWh.
The line up of technology costs for 2030 suggests that onshore wind will be the cheapest of all the technologies, closely followed by landfill gas, nuclear and non-tracking photovoltaics. It appears that PV will start to undercut wind between 2030 and 2050. A chart for 2040 confirms this, although it shows quite a wide spread of costs for PV.
While solar may well overtake wind by 2050 in terms of costs, the nearer-term projections for wind in Australia appear stable and cost-effective.
Japan tops cost of wind support
Japan, Italy and Belgium provide the highest support for wind, according to a report commissioned by the UK government's Department of Energy and Climate Change.
The Frontier Economics report looks at the cost of onshore wind energy across 26 countries, detailing support given for it, revenues from sale on the wholesale market, and other incentives. The UK features between seventh and ninth highest.
Japan provides wind energy producers with £175/MWh (EUR 211/MWh), Italy about £135/MWh, and Belgium £117/MWh. Poland, the Netherlands, and Brazil all provide about £95/MWh. The lowest levels of support are found in the US states of Texas and Iowa, where it is £40/MWh or lower.
The report compares the levelised costs of onshore wind with the support that is provided in six European states, including the UK. This shows that UK costs tend to be higher than most (with the exception of Poland) and the report suggests that UK installed costs are often £300-400/kW higher than in many other places. The analysis does not explain why this should be, although it suggests that higher construction, infrastructure and foundation costs may be an influence.
Alongside these higher costs, a higher cost of capital tends to be used in the UK — typically around 9.6% — and that, in turn, may be due to a higher level of perceived risk. Whilst the analysis did not find "strong evidence" of this, it is likely that the availability of attractive finance in Denmark and Germany, for example, at lower rates, may be a crucial factor.
Finally, the report suggests that operating costs may be higher in the UK, by £5-10/kW a year, largely due to differences in transmission charges.
Overall, there appears scope for some generation cost reductions in the UK.