Solar projects built in Australia are cheaper than any of its Asian neighbours, according to new research by Bloomberg New Energy Finance, while new Australian coal plants would be 50 per cent more expensive – the most costly in Asia.
The findings are important, given how many of Australia’s coal-fired generators are already operating beyond their nominated life, meaning new capacity will be required over the next decade.
BNEF says Australia could build large-scale solar plants at an average levellised cost of electricity of $US88/MWh (about $A123/MWh), cheaper even than in China.
BNEF puts this down to a combination of high capacity factors and low finance costs, with the proviso that they can secure long-term off-take contracts, something that has so far eluded Australian developers due to the uncertainty over policies and the “capital strike” by major utilities.
On wind, Australia also has the lowest costs in Asia, with an LCOE of $US71/MWh, compared to China’s $US77/MWh respectively. It says Australia’s strong wind resource makes the technology cheaper than China despite lower capital costs there. Some recent contracts have pointed to even lower costs in Australia, below $A80/MWh.
On coal, BNEF says new coal fired generators would cost $US123/MWh – the highest LCOE for new coal capacity in Asia. It says this is due to the fact that it would have most expensive project costs and financing costs in the region. “Investors are reluctant to finance new coal projects due to concerns over reputation damage, carbon and long-term market risk,” BNEF says. © 2015 Solar Choice Pty Ltd