WindEconomics: Wind and PV beat coal and gas in Australia

A report by the Commonwealth Scientific and Industrial Research Organisation (CSIRO) of Australia compares the generating costs of all electricity-generating technologies currently in use, plus nuclear, not currently utilised in the country. The work was carried out in conjunction with the Australian Energy Market Operator.

The report also examines how costs might change to 2050 and looks at the implications of linking the variable renewables with either battery or pumped hydro storage, or both, to make them "dispatchable".

This concept was discussed in the report reviewed in the January issue, which examined the costs of "dispatchable renewable generation".

The CSIRO report includes estimates of how much storage is required as the amount of variable renewables increases, and the resulting extra costs.

The report suggests that solar photovoltaics can deliver slightly cheaper electricity by 2020 than wind — possibly because of the favourable levels of solar insolation in Australia.

From 2020 to 2050, PV becomes progressively cheaper than wind. Whereas our annual review last month suggested that there was some overlap between wind and gas prices on a world scale, in Australia wind is already competitive with gas-fired generation.

Wind will cost around $42-52/MWh in 2020, compared with gas at $50-84/MWh (the wide range is mainly due to uncertainty over the price of gas).

The cheapest coal in 2020 will cost $60-81/MWh. If a carbon price is taken into account, gas and coal become significantly more expensive than wind or PV.

The addition of carbon capture and storage pushes up gas and prices up — by about $35/MWh in the case of gas — widening the gap with wind and solar.

The report quotes a nuclear price for 2020 of $174-227/MWh, even though it would not be feasible to build one in time.

These prices stay the same through to 2040. The costs apply to small modular reactors, seen as the most likely option Australia might pursue.

Although the "low" price of solar thermal falls from around $94/MWh in 2020 to $72/MWh in 2040, it stays well above wind.

There is emphasis on firm power in new legislation introduced last October. However, this latest report notes that "little or no storage would be required up to 50% variable renewable energy share".

Even with 50-75% variable renewables, only two to three hours storage is required.

These estimates result from a new method of calculation that produces lower estimates than several other studies and puts the "variability cost" at around $10/MWh with 50% variable renewables.

Changing picture

With plentiful supplies of cheap coal and gas in most Australian states, renewable-energy development has progressed slowly.

However, during the past few years, and with some support from central government, the picture has started to change.

The latest energy statistics (see table, below) show that wind supplies 5% of Australian electricity overall, but 35% in South Australia.

After a period of uncertainty the government announced a new package of measures for the energy market in October 2018.

The aim is "to attract new investment in reliable generation to increase competition, reduce electricity prices and improve reliability and security.

It will increase the level of firm or firmed capacity in the system, that is, the amount of energy generation that can be available when needed."

At a glance – This month’s report conclusions

GenCost 2018, Graham, P W et al, Commonwealth Scientific and Industrial Research Organisation of Australia, December 2018

Comprehensive analysis of the costs of electricity generating technologies currently in use in Australia.

Solar PV is projected to be slightly cheaper than wind by 2020 and increasingly so to 2050. No other generation sources can beat wind and PV on price.