Renewable energy sources such such as solar photovoltaic and onshore wind could generate the lowest electricity costs in Australia by 2030, according to a report released today by the Bureau of Resources and Energy Economics.
The Australian Energy Technology Assessment (AETA), which provides cost estimates for 40 electricity generation technologies, also found that the cost of combined-cycle gas was likely to remain competitive with lower-cost renewable technologies until 2050.
So what will these cost estimates mean for Australia’s energy and emissions future? The Conversation’s energy experts have unpacked the report and share their thoughts below.
Professor Andrew Blakers, Director of the Centre for Sustainable Energy Systems, Australian National University:
This is the first major government report to reflect the eye-popping reductions in the cost of photovoltaic (PV) electricity that have taken place in recent years.
PV has unlimited potential to supply most of the world’s electricity because it utilises the enormous solar resource, requires only a tiny fraction of the world’s land area, utilises only very common materials, has negligible environmental and aesthetic impact, and has minimal security and military issues.
PV is now cost-competitive with retail electricity throughout Australia - the simple payback time ranges from five to ten years compared with system lifetimes of 25 years. PV is also cost-competitive with off-peak electricity and gas for production of domestic hot water and space heat.
A solar revolution is taking place that will soon transform Australia’s energy system.
Professor Ken Baldwin, Director of the Australian National University’s Energy Change Institute:
The release of the Australian Energy Technology Assessment (AETA) is a landmark event, not only in Australia, but worldwide.
For the first time, a detailed study incorporating carbon pricing compares the levelised cost of electricity generated by 40 different technologies ranging from fossil fuels to renewables, biomass and nuclear power, and will inform decision making for the transition to a carbon-free economy all the way out to 2050.
Moreover, the process includes a number of variables, such as the market carbon price, or the investment discount rate, to enable a number of future scenarios to be played out. This provides an updatable dynamic tool that can be used for decision making by both government and industry to determine Australia’s energy future.
AETA has thrown up a few surprises. It indicates that a number of technologies – notably, nuclear energy and wind power – are already competitive, with other renewable technologies such as commercial solar cell farms joining the mix in the very near future.
The report is both technology neutral and policy neutral: it puts all technologies on the table, and enables a range of policy scenarios to be included.
This is important, as the challenge of climate change – to limit CO2 levels below 450 parts per million to keep temperature rises to two degrees centigrade – will require all the tools at our disposal. Ignoring or removing any one of them – including nuclear power - would be like fighting this challenge with one hand tied behind our back.
The AETA report shows that a range of technologies – wind, nuclear, solar and biomass – can all contribute to fossil fuel replacement, and also indicates how their relative costs play out over time and in different regions to allow informed decision making on Australia’s future energy mix.