A new study from the Australian National University suggests that a 100% renewable energy electricity grid for Australia is not only possible, it would be a significantly cheaper option than the current coal and gas-powered network.
The study, by energy experts Andrew Blakers, Bin Lu and Matthew Stocks, proposed a mix of solar PV and wind energy, backed up by pumped hydro as the cheapest option for Australia.
The report said: “Much of Australia’s coal power stations will reach the end of their economic life over the next 15 years. It will be cheaper to replace these with renewable energy.”
Wind power currently costs about $64/MWh and solar $78/MWh, but the costs of both technologies are falling fast. In contrast coal now costs about $80/MWh. Some estimates, which add factors such as the cost of finance risk, expect it to rise much higher.
Blakers and his team did not need to add the expected higher price of coal or a carbon price into the equation to come down on the side of renewables. “We don’t include a risk premium or carbon pricing or fuel price escalation or threat of premature closure, because renewables doesn’t need any of this to compete,” he said.
Nor do they include future cost reductions in wind and solar, because “there is no end in sight to cost reductions”.
The report suggests that the additional cost of balancing renewable energy supply with demand on an hourly basis throughout the year is relatively small and less storage is needed than previously thought. The optimum amount of pumped hydro is 15–25 GW of power capacity with 15–30 hours of energy storage.
The modelling does not include technologies that are in their infancy or have not been deployed at scale — battery storage, solar thermal and storage, geothermal or ocean energy. Nor does it take into account opportunities such as contractual load shedding — as occurred in Tomago aluminium smelter and BHP’s Olympic Dam recently — or demand management, where consumers agree and sometimes are paid to reduce their load at critical moments for the grid.
So, how much would it cost to replace all of Australia’s coal and gas-fired power stations? The report estimates $184 billion, or $152 billion at future prices of wind and solar. While this does sound like a lot, the ANU team point out that this system would have no fuel costs in the future.
And it would help save the planet.