Coal-fired electricity can't compete with renewables, says study

Researchers at the University of New South Wales (UNSW), modelling a range of fossil-fuel scenarios against the cost of 100% renewable energy in 2030, have found that coal-fired electricity may have little or no economic future in Australia - even if carbon capture and storage (CCS) becomes commercially available.

The team used hourly electricity demand and solar and wind data from 2010 to determine the appropriate technology mixes for each scenario that would balance electricity demand and supply to achieve the same reliability as the existing National Electricity Market (NEM). They state in their discussion paper that their three fossil fuel scenarios are: “(i) a medium-carbon scenario utilising only gas-fired combined cycle gas turbines (CCGTs) and open cycle gas turbines (OCGTs); (ii) coal with carbon capture and storage (CCS) plus peak load OCGT; and (iii) gas-fired CCGT with CCS plus peak load OCGT.”

The researchers - PhD candidate Ben Elliston and his supervisors, Associate Professor Iain MacGill and Associate Professor Mark Diesendorf - used government estimates for different generation technologies and fuels in 2030, along with a wide range of possible future carbon prices and CCS prices, “which appear likely to be high in most of Australia”, they said.

The results show that coal-with-CCS scenarios are likely to struggle to compete economically with 100% renewable electricity in a climate-constrained world, even if the system is commercialised. They said “only under a few, and seemingly unlikely, combinations of costs can any of the fossil fuel scenarios compete”.

Meanwhile, while the gas generation scenario could potentially be competitive at current gas prices, the study showed this would not be the case if domestic gas prices reached export parity. Currently, gas prices are increasing substantially.

Associate Professor Diesendorf said there is “no need to invest in new, expensive, unproven, high-risk, fossil fuel technologies”, as “policies pursuing very high penetrations of renewable electricity, based on commercially available technologies, offer a reliable, affordable and low-risk way to dramatically cut emissions in the electricity sector”.

CCS involves capturing the CO₂ emitted by fossil-fuelled power stations, compressing and transporting it by pipeline, and burying it in repositories deep underground. Many governments and fossil-fuel industries have said it is a suitable method for mitigating emissions, but Associate Professor Diesendorf says “the technology has turned out to be more complicated and expensive than was initially appreciated”.

“While some small pilot plants have been built, large-scale carbon capture and storage systems for electricity generation still haven’t been demonstrated and appear to be years - likely decades - from possible commercial deployment.”

Electricity generation in the NEM is responsible for about a third of national emissions. Cutting emissions in other areas - such as transport and agriculture - is expected to be more difficult.

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