Utility-scale solar to be competitive with new coal by 2020

Large-scale solar will be cost competitive with new coal-fired power stations in Australia by the end of the decade, the head of the Australian Renewable Energy Agency has predicted.

ARENA CEO Ivor Frischknecht said there was no doubt coal was currently the cheapest form of generation in wholesale markets, but that was because many of the plants were old and fully depreciated.

But as Australia’s old coal generators exit the market, the cost of new generation would be the new benchmark.

According to market analysis (including from Bloomberg New Energy Finance) wind energy is already cheaper than new coal, and solar is expected to hit this mark by 2022. 

But according to Frischknecht, solar parity would come quicker than that, by 2020.

“I think they have got it wrong on solar,” Frischknecht told an energy forum at the Brisbane Global Café, an event leading up to the G20 meeting this weekend. “They are too conservative. They underestimate the amount of price decline (that will happen in coming years).

“(Parity with coal) is going to happen by 2020. Technology Innovation is going to be bringing down the cost quickly.”

Frischknecht cited the recent results of the solar auction in Brazil, where project developers such as Spain’s FRV, which is building the Moree solar plant in NSW, and built the Royalla plant in the ACT, bid a price of just $US87/MWh for a solar plant. Similar results have been achieved in India and the US.

Prices had not yet fallen anywhere near this level in Australia because the supply chains did not yet exist, contractors could not predict construction costs, and mainstream financing was not yet available.

Frischknecht noted that rooftop solar would be popular, for homes and businesses, as well as large-scale solar because it eliminated fuel price risk.

In remote, off-grid areas, where solar competes with diesel, it was already a far cheaper option, he said.

Northern Territory and Queensland spend around $200 million a year subsidizing electricity in these remote communities.

Top image via Wikipedia

© 2014 Solar Choice Pty Ltd

Giles Parkinson

Giles Parkinson regularly contributes unique content to Solar Choice News. Giles is the founder and editor of clean energy industry news service RenewEconomy. He is a journalist of 30 years experience, a former Business Editor and Deputy Editor of the Financial Review, a columnist for The Bulletin magazine and The Australian, and the founding editor of Climate Spectator.
Giles Parkinson