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

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.

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.