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How 100 Percent Renewable Energy Could Be Cost-Effective For Australia By 2030

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"How 100 Percent Renewable Energy Could Be Cost-Effective For Australia By 2030"

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A new study published in Energy Policy, and flagged by Wired, suggests that a bold-but-not-extreme carbon price could make providing all of Australia’s electricity needs cost-effective by 2030. This would meet all of the country’s electricity demand as of 2010 (that demand will remain at that level is an optimistic, but not unrealistic, assumption according to the study) and would maintain the established reliability standards of the grid.

The current Australian government established a carbon tax in July of last year. Any firm has to acquire a permit to emit more than 25,000 metric tons of carbon dioxide per year. The price of those permits — effectively, the price of carbon dioxide — currently stands at $23 per metric ton in Australian dollars, and the Australian Treasury expects it to gradually rise over the next four decades. The study ran a number of simulations — drawing on regional hourly demand, technology data, and weather data as of 2010 — to figure out when a national electrical supply provided entirely by renewables would become cheaper than one provided by fossil fuels.

The discount rate — the economic term for how much we worry about future costs — also had an effect. A lower discount rate means greater concern over the future costs of carbon emissions, and a higher rate means lower concern. The study ran its models at a rate of both 5 and 10 percent.

The study concluded that at a 5 percent discount rate, 100 percent renewables become cost-effective between 2030 and 2034, with a CO2 price of $50 to $60 in Australian dollars (U.S. dollars are roughly equivalent). At a 10 percent rate, its between 2035 and 2045 with a CO2 price of $70 to $100.

Carbon price (red line) -- shaded areas show threshold beyond which 100% renewable electricity is cost-effective.

The path of the carbon price itself is what the Australian Treasury thinks would be necessary to keep the country’s emissions in line with goal of stabilizing global carbon emissions into the atmosphere at 550 parts per million. It should be said the International Energy Agency has estimated a much higher carbon price ($120 in 2035 compared to the $74 estimated in this study) to hit the lower goal of 450 parts per million. Australia’s carbon price was also recently linked to that of the European Union, and the latter hasn’t exactly behaved reliably as of late. So whether these projections for the path of Australia’s carbon price hold is open to debate.

The standard assumption is that CO2 emissions should be priced around $25 per ton at the moment, though various studies have pegged the number as high as $85, or even $266 per ton.

Wind power is the most technologically mature form of renewable power currently in operation, and when that’s combined with Australia’s climate and geography, the study found it would provide around half of the electricity generation. Much of the rest would be provided by both residential and commercial solar power, with limited use of hydroelectricity and biofuels filling in the remaining gaps. And it turns out wind power is already cheaper in Australia than coal or natural gas, even before considering the carbon price.

All told, this is good news for Australians and an added incentive for the country to keep pushing forward with renewable energy, given that climate change hasn’t been kind to them recently.

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13 Responses to How 100 Percent Renewable Energy Could Be Cost-Effective For Australia By 2030

  1. Merrelyn Emery says:

    I don’t trust these trading schemes and hope there will be a change of heart here but at the moment, it is a vain hope, ME

  2. Paul Klinkman says:

    A real 100% renewable energy goal is a dubious goal without peak load planning. Most solar and wind displaces perhaps the first 40% of fossil fuel production of electricity.

    Hardly anybody thinks in terms of having solar replace the end uses of electricity. That’s where the efficiency lies. Concentrated solar arrives directly on your property and can reach any desired temperature up to perhaps 2000 degrees Fahrenheit. Heat can often be stored using the rocks (or whatever you have) found on your property.

    • Daniel Coffey says:

      The value of long-lived batteries cannot be overstated. We have all the technology now needed to transition, but we lack the understanding of how necessary is such a move. At 550 ppm we are so screwed there will be nothing left to do except perish. Those who would ask bean counters the answer clearly do not understand the gravity of the situation, nor its scale, scope, intensity and duration. And the latter includes most environmentalists who believe that merely saying the words is enough.

  3. Mulga Mumblebrain says:

    All talk of ‘discount rates’ and other econometric gobbledegook is besides the point, as is constantly manipulated by the denialist industry to its nefarious purposes. No replacement of fossil fuels, as fast as possible, means no human civilization, no (God help us!) economy and possibly no human species. The world is awash with money extracted from human labour and natural resources over centuries, and we only need extract a small proportion from the hereditary parasites who have misappropriated it over generations, to achieve total decarbonisation (and much more besides).

  4. Omega Centauri says:

    Well, thats 100% for electricity, not all energy. Still quite a ways to go to become carbon neutral. Isn’t Scotland planning to be there by 2020. I think New-Zealand is also pretty close. Also Iceland.

    Of course we should count any coal exports against this.

    • Ed Leaver says:

      A judiciously applied carbon tax should fix the export problem. ‘Course, with Asian coal prices north of $100/ton and mining cost around 10, such tax would have to be a bit steeper than $23/ton CO2. $50-$60/ton should suffice.

  5. fj says:

    The most encouraging part is that people are starting to think in ramp up rates that can effectively address climate change.

    The economics and benefits are many times better than those provided by a carbon tax which seems to be necessary to start the conversation.

    Ultimately, the conversation will move to “well if we do the right thing we get to survive and build our future and it will be great.”

    The end of this decade 2020 must serve as the goal post for major net zero achievements.

    • Superman1 says:

      1. “The end of this decade 2020 must serve as the goal post for major net zero achievements.” Based on what?

    • Superman1 says:

      2. 2020 is a nice round number, as is Kevin Anderson’s 2 C. If one believes, as I do, that we are in Anderson’s Extremely Dangerous regime today, at 0.8 C, then 2020 and 2 C are both meaningless. ‘Any’ – repeat – ‘any’ further addition of CO2 to an already overloaded atmosphere only puts us further out on thin ice.

  6. Leif says:

    Put Americans to work, not polluters on bimbo yachts.