It's actually not a particularly brave or extreme target.
AGL's new wind farm at Silverton, near Broken Hill, will deliver electricity at A$65/MWh. AGL said that the cost of solar is around A$70/MWh. The company estimates that the cost of new (black) coal power stations is A$110/MWh. According to Lazard, the total cost of wind in the USA has been falling by 14% per annum since 2009, and solar by 24% per annum. According to Origin Electricity, the cost of renewables in Australia (solar and wind) has halved over the last 5 years, a compound rate of decline of 13% per annum (the difference with Lazard's data is partly due to movements in the A$.)
Meanwhile the cost of fuel in Oz coal generators is rising as old contracts expire. AGL disclosed that its cost of generation was $37/MWh in 2016, but this is based on old long-term contracts. As these expire, the cost of fuel alone will rise towards $60/MWh. And the cost of maintenance of the older generators is rising too. I don't know what maintenance cost for aging coal power stations are, but AGL mentioned $900 million over ten years for Liddell, which is about $7/MWh on generous output assumptions. So right now, the cost of existing coal-powered electricity is close to the costs of new renewables. But renewables will go on getting cheaper, while coal won't. In a couple of years, the economic pressure to shutter older coal generators, even without a carbon tax, will be intense.
What about the variability of wind and solar, you say? Well, battery costs are falling rapidly too. They have halved over the last 3 years, which is a cumulative rate of decline of 30% per annum. Let's assume that this rate of decline slows down to 20% p.a., though with 12 battery gigafactories being built round the world, it probably won't.
Tesla's South Australia's battery bank cost US$50 million, for 129 MWh of storage. Assuming (conservatively) a 10 year life, that works out at US$106/MWh delivered, or A$141/MWh. The CSIRO estimates that we would need less than 5 hours storage at 80% penetration. So, being cautious, let's do the costs for 6 hours of battery storage at 50% renewables penetration. 6 hours of li-ion battery storage added to wind or solar would add A$35/MWh to the underlying cost of the energy--which is $65/MWh for wind, & $70/MWh for solar--taking total cost (power plus storage) to A$100/MWh and A$105/MWh respectively.
But .... the costs of wind, solar and batteries will go on declining. Look at the table below:
(Notes: The total renewables cost assumes 50% wind and 50% solar with a conservative 6 hours of li-ion battery storage. The fuel cost of coal is assumed to rise to $60/MWh as cheap coal supply contracts expire. The coal price is assumed to remain flat, and the A$ is assumed to remain unchanged. The cost of new coal is assumed to remain at A$110/MWh. I've ignored the high probability that some form of carbon tax/cap and trade is introduced. A $20/tonne carbon tax adds about $20 to the cost of coal-generated electricity. I've ignored the profits that battery storage could make from arbitraging fluctuations in the wholesale electricity price over the day, which would reduce their cost.)
- New coal power stations are already more expensive than a portfolio of new renewables with 6 hours of storage.
- By 2022, new coal will be almost twice as expensive as the renewables portfolio
- By 2020, new renewables will be as cheap as the fuel cost of coal, before maintenance. Let me repeat that: the cost of a brand new portfolio of wind, solar and batteries will be cheaper than the running cost of coal power stations by 2020. And the differential will only widen thereafter.
- Coal power stations are 25 or 30 year investments. They are already more expensive than renewables. Within 3 years their fuel cost on its own will be more expensive than renewables. Why would anyone rational build a new coal power station? And after 2020 or 2021, why would anyone keep an existing coal power station going when renewables are so much cheaper?
- I've used the example of li-ion batteries which are currently the most expensive commercially available storage options. However, there are already cheaper options. Pumped hydro storage costs vary a lot depending on the site it's located at, but I've seen estimates of A$30 per hour. The CSP plant at Port Augusta has a PPA of A$75/MWh, which includes the cost of power and storage, little more than solar without storage, but that prolly assumes some profits from arbitrage.
- I haven't even included household/small business solar with behind-the meter batteries. These by themselves could contribute the equivalent of a couple of hours of grid-level storage.
Labor won't have to push very hard to get 50% renewables by 2030. Market forces are already rapidly driving electricity generation that way. The people who are "utterly mad" in this whole imbroglio are the right-wing coal spruikers in the "Liberal" Party, and the ill-informed hacks of the Murdochcracy. Their passion for 19th century technology when cheaper, cleaner, and better replacements exist is, frankly, demented.
My numbers will certainly be wrong, but the trend is crystal clear.