Renewable energy sources, wind and solar power, will soon be cheaper than the existing cost for coal fired power, a recent report claims.
The construction of new solar and wind plants will soon cost less across the world in all the large markets than to continue running an existing coal fired power plant. This comes from a recent report which has raised new concerns over the medium term credibility of the $26 billion Australian thermal coal export industry.
Whilst countries are developing at different speeds, a climate finance thinktank, Carbon Tracker Initiative, through its analysis found that it was cheaper to use renewable power than to build new coal fired power plants in every major market, including Australia. It was also found that the price of the renewable energy would be cheaper than coal power by the end of this decade at the latest.
Wind farms and solar photovoltaics are currently already producing cheaper electricity than around 60 per cent of coal fired power stations, this included about 70 per cent of the Chinese coal fleet and 50 per cent of the Australian power plants.
In Japan, which is where Australia exports almost half of its thermal coal to, wind power was in fact found to be cheaper than new coal fired power plants and was expected to have lower costs than any existing coal fired plants by 2028. Alternatively, solar power was found to be cheaper than new coal fired power plants by 2023 and existing plants by 2026.
South Korea and China both showed similar tends to Japan, and both nations take up around 15 per cent each of Australia’s thermal coal exports. In China, coal power is already more expensive than the wind alternative and the forecast for solar power suggests that it will be the cheaper option by the end of this year. In South Korea, it is expected that both wind and solar power will cost less than the existing coal fired power plants within the next 2 years.
The recent report did also acknowledge that the trend does not necessarily mean that coal power will no longer be in use by the end of this decade. The report noted that some governments are essentially making coal power more lucrative for investors or helping new coal fired power plants through regulatory programs meaning that coal operators are directly subsidised, or the higher cost would end up being passed on to the consumer.
However, it was found that coal power would not succeed in the market if the markets are priced fairly. The group have demanded governments to stop new coal fired projects and start phasing out any existing coal fired plants; this would be done by changing regulations so that renewable energy can can fairly compete against coal.
One of the co-authors of the report from Carbon Tracker, Matt Gray, has said that the currently proposed coal investments are at risk of becoming a stranded asset that is stuck in an increasingly expensive power source for decades to come. It was found that developers could end up wasting over $600 billion if all the planned coal fired power plants end up being built.
The markets are pushing for a low carbon energy transition into using more renewable energy sources and to move away from using coal. However, governments are not listing to the markets and are still planning on investing more into coal fired power plants. It would make more economic sense for governments to stop and cancel any new coal projects as soon as possible as well as phase out any existing coal fired power plants whilst simultaneously investing more into renewable power options to aid the transition..