I'm not going to pretend I don't relish the irony here: Australia is, bar-none, the largest coal-exporting nation in the world. The Aussies ship dank and dirty lignite to China, Japan, Europe, and anywhere else that wants it—doing its part to fuel the power plants that happen to be the number one cause of global warming on the planet.
And now, in purely economic terms, wind power is a better investment in Australia than coal. That’s right—if you’re investing in energy projects down under, it’s actually a more financially sound move to go with wind over coal. In fact, you'd have to be insane to start building a coal plant in Australia right now; wind is just so much cheaper.
The analysts at Bloomberg New Energy Finance just discovered as much in their latest report:
Wind is now cheaper than fossil fuels in producing electricity in Australia … Electricity can be supplied from a new wind farm in Australia at a cost of A$80 ($84) per megawatt hour, compared with A$143 a megawatt hour from a new coal-fired power plant or A$116 from a new station powered by natural gas when the cost of carbon emissions is included.
Got that? Wind power isn’t just cheaper, it’s way cheaper. Nearly half the cost that building a new coal plant would be.
Now, this is partly because Australia’s government recently enacted a carbon pricing system that docks coal for, well, being about 100% carbon. But here’s the kicker: Even if you removed that carbon tax, wind would still be cheaper than coal. How can that possibly be the case?
Well, there’s a great deal of uncertainty in the coal market right now, and justifiably so, since the stuff is frying the planet. That makes it more difficult, and riskier, to attract new financing. Meanwhile, scaled-up production and increased competition in the wind industry have lowered costs significantly—according to BNEF, the cost of wind generation has fallen 10% over the last two years alone.
Now, it should be noted that the comparison only concerns new coal versus new wind—it’s still cheaper to buy power from the same dirty old plants that were built decades ago. But this is still a huge development. It means that right now, there is absolutely no incentive to build another coal plant in Australia. We may have just witnessed the death of domestic coal power on the doorstep of the world’s primo fossil fuel dealer.