This week the federal Coalition government decided to dump 90 per cent of the coal projects that had been submitted to its big underwriting program, and chose instead a shortlist dominated by renewables backed by battery storage and pumped hydro, and some gas and just one coal upgrade.

The choice may have been driven more by politics than economics, given the project developers were asked for only a broad outline of their proposal and there is an election just a few weeks away.

But when the final detailed tenders come in later this year – assuming the program survives the upcoming election campaign – the economic case for favouring renewables and storage projects should be crystal clear, if the latest numbers from global analysts BloombergNEF are anything to go by.

The stunning fall in the costs of wind, solar and storage – estimated on a global scale – has already put the fossil fuel industry on notice, as we reported earlier this week.

Now, we can publish the BloombergNEF cost estimates for Australia, and they reveal an even more devastating outcome for the fossil fuel industry and their cheer leaders in politics and the media.

This graph above prepared by BloomberNEF shows how.

The headline number is the cost of “bulk energy”, where unsubsidised solar and wind easily beat coal and gas. Even the highest priced wind and solar is cheaper than the lowest cost estimate for coal, so the Coalition might as well save $10 million to taxpayers funds and stop the feasibility study for the new Queensland coal generator now. We already know it makes no sense.

But the BNEF numbers tell us a lot more, and reinforce the cost estimates produced by the CSIRO and the Australian Energy Market Operator last year, that found that wind and solar, even backed by hours of storage and fully dispatchable, still beat the fossil fuel generators.

The graph above shows the cost of “bulk energy” on the left, and in the middle is what BloomberNEF describes as “dispatchable” generation, which includes what is usually described as the “base-load” coal and gas generators, and onshore wind and solar PV “firmed up” by storage to make them dispatchable.

To the right is what BloombergNEF refers to as “peaking plants”, and it is where it groups technologies like pumped hydro, open cycle gas, fast-start gas reciprocating engines and stand-alone batteries.

These two columns under dispatchability and flexibility deserve further explanation, because when the cost wind and solar plunged so dramatically in the last decade, and turned the tables on coal and gas on the cost of bulk energy, the fossil fuel spruikers have been hanging on to this idea of “baseload” and “back-up” to argue that the “intermittents” are still more expensive.

Not so, says the BloomberNEF data, along with that of the CSIRO and AEMO.

As BloombergNEF’s head of energy economics Elena Giannakopoulou observes, batteries in Australia are already cheaper than gas plants in providing peaking services.

In the right hand column, the comparison Bloomberg makes (on a $/MWh basis) is between stand-alone batteries and technologies that have been offering peaking services, namely open-cycle gas turbines (OCGTs) and gas reciprocating engines.

“And we see that there are markets today like Australia, U.K. and Japan where batteries are already cheaper than gas plants in providing peaking services,” she tells RenewEconomy by email.

The middle column is also interesting.

These costs reflect the combined system, wind or solar plus the battery, and include capex, and operating and maintenance costs for the power generating asset (ie solar or wind) and the battery.

The range in estimated costs for wind and solar plus storage reflects the number of hours of storage.

The cheapest is one hour, and the more expensive four hours. The reason why the batteries appear cheaper when paired with wind and solar, rather than stand-alone, is because they source the electricity for charging for free, as part of a combined asset.

“There is no charging cost here as batteries are charging from the renewable energy asset,” Giannakopoulou says. “The storage capacity here (ie output in MW and duration in hrs) is determined by the amount of electricity generated by solar/wind you want to “firm” ie ensure that is available when it’s not sunny or windy.

“These systems can now offer what we call “dispatchability” ie give solar and wind plants access to high value hours when they might otherwise be offline. As a result they compete with thermal plants that provide bulk electricity ie combined -cycle gas plants and coal plants.

“Already, in a number of major markets like Germany, the U.K. and the U.S., new solar and wind-plus-battery systems with, say, four hours of storage sized at 50 per cent of the generating plant capacity, can compete with new coal and gas plants on an unsubsidized cost-of-energy basis.

“In Australia, a wind-plus-battery system with 100 per cent dispatchability is already beating new coal and CCGT plants. And even in China, new solar- and wind-plus-battery systems with a low degree of dispatchability have reached cost parity with low-cost coal plants.”

Of course, not every wind and solar farm will need to have its own batteries or pumped hydro and match each MW of output with an equivalent in storage. Like the gas plants that have long provided back up for the fleet of coal generators, this is best provided on a system-wide basis.

And that is what is going to make the results of the government underwriting tender very interesting. On these estimates, it will be hard to see how the five fossil fuel plants beat the renewables plus storage proposals on costs.

Some of these proposals may depend on a “system” case, and the three pumped hydro projects in South Australia, for instance, are competing for what is for now a narrow window. (i.e. there is probably not room for all three.

But so far the government hasn’t bothered to seek advice of the Australian Energy Market Operator, which has put together its Integrated System Plan.

Even so, with costs of renewables and storage continuing to fall, as BloombergNEF reported earlier this week, they have fallen by between 10 per cent and 35 per cent just this past year – the argument for a new coal generator becomes even more a fantasy than it was at the start.

Finally, it should be noted that the headline on this story says that these cost falls will stun the fossil fuel industry. Actually, they won’t. They know full well that their technology is no longer competitive, as the heads of all the major utilities, and even their peak body, has admitted.

The only people that don’t know, or won’t accept, are the ideologues and ill-informed who insist on taking the Catweazle approach to modern technologies. One day, they may wake up, and they will be stunned by what they see.