New Bloomberg Research Shows Wind Energy in Australia is More Cost-Efficient than Coal

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Researched by Industrial Info Resources Australia (Perth, Australia)--The cost of using fossil fuels to generate electricity has risen sharply in Australia following the introduction of a carbon tax by the Australian government last year. The amount of coal-fired power generation has decreased due to the growth of renewable energy and Australia's electricity emissions fell to a 10-year low, according to the latest data from Australia's National Electricity Market (NEM).

A 500-megawatt (MW) unit at Wallerawang C Power Station in New South Wales has been mothballed due to this changing transition within the NEM. This adds to the nearly 3,000 MW of coal-fired capacity put on hold over the past year. Simultaneously, gas-fired generation, hydro and wind generators have all increased output. Total renewable energy reached 12.1% of NEM generation in the year to January 2013; when the Macarthur Windfarm in Victoria is commissioned, wind energy will be at its highest levels.

In a joint venture, AGL Energy Limited (ASX:AGK) (Sydney, Australia) and Meridian Energy (Wellington, New Zealand) are continuing with construction on the 420-MW Macarthur windfarm. AGL and Meridian awarded the engineering, procurement and construction contract to Leighton Holdings (ASX:LEI) (St. Leonards, Australia) and awarded a turbine supply contract to Vestas Wind Systems (OMX:VWS) (Aarhus, Denmark) for the 140 wind turbine generators. The windfarm is scheduled to be completed in March 2013, and it represents a total investment value of more than $1 billion.

Wind power in Australia has become cheaper for electricity generation than the key fossil fuels of coal and natural gas, following the introduction of the carbon tax. A report by Bloomberg New Energy Finance (BNEF) (Sydney, Australia) found windfarms are able to produce electricity at a cost of $82 per megawatt hour (MWh) compared to coal-fired power plants or new natural gas-fired power stations, which supply at a rate of $146.60 and $118.90 per MWh once the carbon tax has been factored in.

Wind power's low cost relative to conventional fossil fuels proves that clean energy is going to be a game changer in Australia's power system. An increase in the price of natural gas and huge technological advancements in renewable energy are contributing factors in this transition.

The BNEF research on Australia shows that the cost of wind generation has fallen 10% since 2011. The cost of fossil-fuel energy is high and rising due to increased financing costs: the study found banks and lenders are unlikely to finance new coal because of reputational damage of emission-intensive investments. Analysts predict that by 2020, large-scale solar PV also will be cheaper than coal and gas when carbon prices are factored in.

Industrial Info is currently tracking 122 windfarm projects across Australia and New Zealand in varying stages of development totalling more than $44 billion in investment value.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.