Even without subsidies, it will be cheaper to replace retiring coal-fuelled power stations with renewables, Bloomberg predicts

This article is more than 5 years old

This article is more than 5 years old

Renewable energy will supply the majority of Australia’s electricity by 2040, even without any additional government policy, according to predictions by energy analysts.

It will account for 59% of Australian electricity generation by 2040, as retiring coal and gas plants are replaced by wind and solar, according to New Energy Outlook 2015, which was published by Bloomberg New Energy Finance on Tuesday.

The study said a continued fall in renewable energy prices would fuel the shift, and that Australia’s power sector would fundamentally change regardless of government policy.

Kobad Bhavnagri, the head of Australia’s Bloomberg New Energy Finance, told Guardian Australia the current take-up of rooftop solar power installations by households and businesses already more than met energy demands posed by retiring fossil-fuel plants.

However, a substantive shift from fossil fuels to renewable energy would not happen until the mid-2030s, when a large number of Australia’s fossil-fuels plants are due to retire. Prior to that, by 2030 it was forecast there would be only a 9% fall in emissions compared with 2014.

When required it will be cheaper to replace retired fossil-fuel generators, which have a 40-50 year lifespan, with large-scale wind or solar farms than new coal projects, Bhavnagri said, even without government subsidies.



New mining projects, such as those in Queensland’s Galilee Basin, supplied coal only for export and it had been “quite some time” since a new coal power station had been built in Australia, he said.

The area where government policy had an important role to play was the extension of the life of coal power plants. Of 20GW of retiring coal capacity, 8GW had the potential to be refurbished, prolonging their retirement for roughly 15 years.

Bhavnagri said with Australia’s existing policies, coal generators that might be 50 years old and “highly polluting” would nonetheless be “run for as long as is physically possible”.

The renewable energy target was “the only policy currently operational that will have an impact on the power sector”, Bhavnagri said.

A “far more robust and comprehensive power sector policy, in particular one that deals with with coal closure” was needed if Australia wanted to reduce greenhouse gas emissions.



And successive governments would need to make “much deeper cuts in emissions” than those that had been forecast in the study if Australia was to meaningfully contribute to global efforts to contain climate change.

Andrew Blakers, the director of the centre for sustainable energy systems (CSES) at the Australian National University, said it was clear from the report the question of whether Australia would extend the lives of fossil-fuel stations, or shorten them, was largely a political one.



Should restrictions, such as a carbon price, be placed on fossil-fuel power stations, Australia would be able to reach 100% renewable energy by 2040, Blakers said. And if a switch to electric transport, including cars, trams and trains, was added the country would be on track to achieve greenhouse neutrality a decade later.

“And it would be in everybody’s medium- and long-term interests to do so,” he said.