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Renewables now cheaper than fossil fuels, says BNEF

8th Feb 2013

New analysis by Bloomberg New Energy Finance (BNEF) has shown that fossil fuels really are the dinosaur of the energy sector.

BNEF researchers have shown that electricity generated from new renewable energy sources is actually cheaper than that generated from new fossil fuel sources like coal and gas.

"The perception that fossil fuels are cheap and renewables are expensive is now out of date," said chief executive of BNEF Michael Liebreich in a statement issued February 7.

He said the fact that renewables were now more cost-effective than coal and gas in a country that boasted such impressive fossil fuel resources was "a game changer".

BNEF's study showed that electricity supplied from a new coal or baseload gas plant would cost $143 per MWh and $116 per MWh respectively. By contrast, electricity generated at a new wind power plant would cost only $80 per MWh.

And this was even the case when the carbon price was taken out of the equation. In that scenario, wind energy came out 14 per cent cheaper than coal and 18 per cent more affordable than gas.

By 2020, the analysts predicted that large-scale solar PV would also become cheaper than coal and gas, with carbon pricing factored in.

BNEF expects that with the cost of solar PV falling by 29 per cent since 2011 - and the cost of wind power by 11 per cent - that it is "very unlikely" that new coal-fired power stations will be built in Australia.

"They are just too expensive now, compared to renewables," said head of clean energy research for BNEF Australia Kobad Bhavnagri.

"By 2020-30 we will be finding new and innovative ways to deal with the intermittency of wind and solar, so it is quite conceivable that we could leapfrog straight from coal to renewables to reduce emissions as carbon prices rise."

Posted by Mike Peacock

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