Chapter 356 - The Case for Renewable Energy: Levelised Electricity Costs Under Alternative Abatement Scenarios

Abstract

This chapter presents a study that compares the relative cost performance of a number of conventional, clean coal, and renewable energy technologies under three alternative carbon abatement costs possible in an Australian domestic emissions trading scheme. The three carbon abatement scenarios, each of which assumes different carbon abatement costs are as follows: (1) $10/t-CO2eq (Best Estimate); $25/t-CO2eq (Pessimistic Estimate); and $50/t-CO2eq (Worst Estimate). The costs of producing electricity from renewable sources vary significantly. However, under favorable conditions, the imposition of a carbon cost on conventional technologies has the potential to make certain sustainable energy technologies that are cost-competitive with the conventional coal-fired generation, and in some instances, cost-leaders. Of the various technologies assessed in the study, the direct combustion of bagasse biomass, the commercial utilization of coal bed methane, direct and co-firing of biomass, and large-scale wind power generation are the most cost competitive. Under the more onerous abatement scenarios they are the cost leaders as compared with conventional technologies.