The cost of renewable power generation has fallen dramatically in recent years. Building new renewable energy power stations is now cheaper than those powered by fossil fuels, and costs will keep falling.
A 2018 study by the CSIRO and AEMO found that new wind and solar projects are now cheaper than coal or gas – even when backed up with two or six hours of battery or pumped hydro storage. According to the study’s lead author, CSIRO Chief Energy Economist Paul Graham, “Solar and wind generation technologies are currently the lowest-cost ways to generate electricity for Australia, compared to any other new-build technology”.
The graph below shows the cost range of electricity from new power stations in 2020. The 5% risk premium bars show the cost of electricity from new fossil fuel power stations once climate policy risks are factored into their costs of capital. As can be seen, renewables are hands down the best option.
Going forward, the cost of new renewable power stations and storage is expected to continue falling, especially solar photovoltaics. So as our coal power stations age, replacing them with new renewable power stations is the best economic and environmental option.