For many proponents of keeping the status quo, that is, sticking with fossil fuels for our energy needs, a common claim will be, “Fossil fuels are cheaper than renewable energy.” This may have been true twenty years ago, or even five years ago, but according to a recent report by Bloomberg New Energy Finance [BNEF], renewable energy is closing the gap. It seems that the fossil-fuel proponents need to update their information before telling the general public that we can’t afford to waste money on renewable energy.
According to BNEF’s research, in some places, renewable energy sources are actually cheaper than their fossil-fuel counterparts. Target of their most recent study, energy production in Australia looks to be expanding. The only way to expand is to build new plants, and there are a few choices. Traditional coal-fired plants, of course, are the dirtiest available. Natural gas turbine plants are cleaner, but still emit tons of carbon dioxide into the atmosphere. Renewable energy plants, such as wind and solar, are the cleanest.
“But wait,” you might say, “the dirty plants are only more costly because of the carbon-offsets they’ll have to pay.” True, but according to BNEL’s research, even without the offsets, renewable energy is still cheaper than the fossil alternatives. So, how much does energy cost in Australia?
The results that BNEL has posted are intriguing, and Michael Liebreich, BNEL CEO says, “The perception that fossil fuels are cheap and renewables are expensive is now out of date.” A new coal plant costs $143/MWh, and a natural gas plant costs $116/MWh. A wind farm, on the other hand, generates electricity for just $80/MWh.
Interestingly, banks in Australia won’t even consider financing a fossil fuel plant without significant risk premiums built into the loan. The environmental damage caused by the traditional plants is so well-known that the bank’s reputation is on the line in making such investments. Renewable energy is cheaper than the fossil-fuel alternative, is good for the environment, and just makes better business sense.