Renewables will soon overtake coal as the cheapest form of energy generation in Australia according to a recent study from CSIRO and the energy market operator.
Although existing fossil fuel plants still provide cheap power when ignoring the sunk cost of building them, investing in new energy generation will be cheapest using renewable sources; Paul Graham from CSIRO confirms “solar and wind generation technologies are currently the lowest-cost ways to generate electricity for Australia, compared to any other new-build technology”.
The analysis is based upon the levelised cost of electricity (LCOE), a relatively accurate methodology because it takes into account both the upfront capital costs, as well as the lifetime cost of generating electricity. Renewables sources such as solar tend to have higher capital expenditure per kWh of electricity generated but will also have lower operating costs.
This report launches as the Australian Energy Market Operator announces that electricity prices are forecast to fall due to new renewable resources being added into the energy mix, thereby adjusting the supply-demand ratio positively for consumers.
Other interesting findings from this report include nuclear power being identified as the most expensive form of energy and gas as the cheapest when compared with other new technologies.
The report also noted that more batteries and demand management strategies would be needed to cope with the additional renewable resources in the energy generation mix. Given that neither is yet commercially viable or widely available, government investment will likely be needed over the coming years to support this transition.
Although power prices are forecast to decrease, you can still make a significant saving on your energy bills through self-generated solar power. Contact us to receive a quote on cost savings available to your organisation by completing the form below.