Power prices for consumers could double, not fall, if new coal-fired power stations are built, according to energy experts.

Key points: Australian Industry Group says new coal comparable in price to wind and solar

Australian Industry Group says new coal comparable in price to wind and solar Bloomberg estimates electricity prices from new coal power stations could rise to $160 per megawatt hour

Bloomberg estimates electricity prices from new coal power stations could rise to $160 per megawatt hour Ai Group says coal a much worse alternative than gas as a back-up for renewables

Speaking at the National Press Club yesterday, Prime Minister Malcolm Turnbull said clean coal power stations will play a part in ensuring lower electricity prices under a Coalition Government.

"Old, high emissions coal-fired power stations are closing-down as they age, reducing baseload capacity," he said.

"They cannot simply be replaced by gas, because it's too expensive, or by wind or solar because they are intermittent."

However, key manufacturing and business lobby the Australian Industry Group and energy experts strongly disagree that coal would be cheaper or more reliable, for several reasons.

"This is not a recipe for guaranteed lower prices, in fact prices would need to be sustained at very painful levels for the life of the project for that project to make its money back," Ai Group's principle national advisor Tennant Reed told Business PM.

"Several authorities' projections, including from the CSIRO, put the price of new coal at $80 a megawatt hour and new wind and solar around the same level, but we are seeing lower prices achieved day by day [for wind and solar]."

Ai Group's research shows that the price could easily rise to $100 per megawatt hour as the increase in renewables means that coal plants cannot run at full capacity and charge accordingly.

The electricity price needed for newly built cleaner coal-fired generation is likely to be between $135-203 a megawatt hour, according to work done by Bloomberg New Energy Finance.

"The price of $80 a megawatt hour for clean coal power assumes a uniform cost of funding between wind, solar and coal and that's simply not the case," Bloomberg's Kobad Bhavnagri said.

"No Australian bank would lend on project that carries so much financial and policy risk, and most banks have ruled out funding new coal projects."

ANZ has pledged not to lend to new coal-fired power plants unless the emissions are less than 800 kilograms per megawatt hour, but most estimates show clean coal generators exceed that.

The next option would be an overseas lender, but Mr Bhavnagri argued that the risk premium the lender would build into the cost would be prohibitively expensive.

Tennant Reed agreed that private financing is highly unlikely to eventuate for new coal.

"Electricity sector investors are unlikely to finance a new coal-fired power station in Australia again," he said.

This would leave the Government to fund the project or provide some kind of guarantee, something that has not been ruled out, with Treasurer Scott Morrison telling the ABC that the Clean Energy Finance Corporation could potentially fund clean coal power stations.

Renewable energy costs falling fast

The cost of clean energy is also falling rapidly.

AGL's most recent wind project at Silverton on the NSW and South Australian border is generating power at $65 per megawatt hour.

Origin Energy's solar project in Queensland is estimated to be producing power at $80 a megawatt hour.

Former Origin boss Grant King told investors at the time of approving the project that, "solar competes with other forms of generation".

But what of the issue of baseload power?

Ai Group, a key representative of the energy hungry manufacturing sector, said baseload power is becoming less and less critical.

"The electricity market is clearly becoming very unfriendly for such inflexible generators: much of the time there is an abundance of power from solar or wind, with rooftop solar taking a lot of demand out of the market entirely," Mr Reed wrote.

When the wind does not blow and the sun does not shine, Mr Reed said coal is the worst back-up option.

"Conventional coal plants often can't respond fast enough to serve as back-up, nor can they afford to sit around waiting to be called on," he said.

Ai Group and Bloomberg suggest that gas is a better option environmentally, with half the emissions of clean coal, but that gas supply needs to increase to make it more economical.

The possibility of a price on carbon cannot be dismissed either, and Ai Group's figures indicate that price of $20 a tonne of carbon would add about $16 per megawatt hour to the cost of clean coal power, half that for gas, with renewables unchanged.