Rising risk prices out new coal-fired plants: report

Australia is unlikely to build new baseload power stations burning coal because of tumbling prices for renewable energy and the rising cost of finance for emission-intensive fuels, according to research by Bloomberg New Energy Finance.

Even without a carbon price, wind energy is now 14 per cent cheaper than a new baseload coal-fired power station and 18 per cent cheaper than a new gas one, BNEF said in a new report.

The gap widens further when the carbon tax is added. Wind farms can now generate electricity at $80 per megawatt-hour, compared with $143 for a new coal power station and $116 for a new baseload gas power station.

In Western Australia, large-scale photovoltaic (PV) power stations are already cheaper than new coal-fired generating capacity, coming in at $157 per MWh compared with $190, BNEF said.

“It’s very unlikely that new coal (power stations) would be built in Australia,” Kobad Bhavnagri, head of clean energy research for BNEF in Australia, said.

Aside from the carbon tax – which the Coalition has vowed to scrap if elected at the September 14 election – reputational and other risks associated with coal means developers will struggle to obtain low-cost funds for any new venture. The research included a survey of the country’s big-four banks.

“Financing for coal would be made very expensive because of all the risks involved,” Mr Bhavnagri said.

“A bank would be quite conscious of financing a highly polluting asset,” he said. “That would likely make them susceptible to environmental activism.”

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