https://theconversation.com/factcheck-does-coal-fired-power-cost-79-kwh-and-wind-power1502-kwh-44956
FactCheck: does coal-fired power cost
$79/kWh and wind power $1502/kWh?
July 23, 2015 1.37pm AEST
Author
Dylan McConnell
Research Fellow, Melbourne Energy Institute at University of Melbourne
Reviewer
Alan Pears
Sustainable Energy & Climate Researcher at RMIT University
Disclosure statement
Dylan McConnell received funding from the AEMC's consumer advocacy panel.
Alan Pears AM provides advice to a range of sustainable energy and community groups. He and
his superannuation funds own shares in the renewable energy industry. He sometimes receives
funding from sustainable energy industry organisations and individual companies although, at
present he is not receiving such funding. He is a member of ARENA’s advisory panel.
Broadcaster Alan Jones said on Q&A that the cost of wind power far outstrips the
cost of coal power. AAP Image/Lukas Coch
80% of Australian energy comes from coal, coal-fired power, and it’s about $79 a
kilowatt hour. Wind power is about $1502 a kilowatt hour. That is unaffordable. If
you take that power and feed it into the grid, then every person watching this
program has electricity bills going through the roof. – Broadcaster Alan
Jones, panel discussion on Q&A, ABC TV, July 20, 2015
Alan Jones has told The Conversation by email he acknowledges this comment was
made in error and is not correct, saying:
I think you have rightly highlighted a ridiculous mistake that I made… why I said
kilowatt-hours and not megawatt-hours and where the 1502 comes from, I have
absolutely no idea. What I can tell you is that I’ve used figures for some time now
on this issue to merely confirm that renewable energy is many multiples dearer
than coal-fired power[…] I previously used that $79 figure but as you can imagine,
it’s based on the price of coal. Wind has always been, in my words, three or four
times dearer than that.
[…] But if I’ve said that, that is wrong, and I’ll be writing to the ABC to that effect. I
have no comment to make other than to thank you for pointing this out to me. I
guess we all make mistakes and I’m always happy to correct them when I’m told
about them.
Electrical energy is usually measured in kilowatt-hours (kWh) or megawatt-hours
(MWh). Kilowatt-hours are the unit generally used for metering and charging
residential electricity consumption, and represents the amount of energy a device
drawing one kilowatt of power would use in an hour. A megawatt-hour is 1000 times
larger, and is typically used to measure large loads or generators. The price quoted
(A$79/kWh) is about 300 times more expensive than the typical retail price of
electricity paid by residential customers around Australia (and about 2000 times
more than current wholesale prices).
Mr Jones' error in saying kilowatt-hours instead of megawatt-hours is an easy
mistake to make.
A$79 per megawatt-hour is consistent with the range of costs reported by the
Electric Power Research Institute for new coal-fired electricity in 2010, without
carbon capture and storage or a price on emissions.
However, even with the right units, the figure of $1502 for wind power did not make
sense. Mr Jones was not able to say from what source he got that figure of $1502 for
wind power. So I decided to investigate.
The claim that coal-fired power energy costs $79 a kilowatt-hour and wind power
costs $1502 a kilowatt-hour pops up a few times on websites of groups opposing the
renewable energy target, climate sceptics, and even in Hansard. Mostly, this claim is
referenced to an unnamed Productivity Commission report released in 2010.
The source of the $1502 figure on sceptic sites may be a now-corrected Paul Sheehan
opinion piece published by Fairfax in 2011. The correction there reads:
Correction: An earlier version of this piece misquoted energy figures. The
Productivity Commission said the cost of electricity generated by wind was $150 to
$214 per megawatt-hour, not $1502; and solar was $400 to $473 per MWh, not
$4004.
So what did the Productivity Commission actually say?
The 2011 Productivity Commission report that the Fairfax correction appears to refer
to was titled “Carbon Emission Policies in Key Economies”.
Box 4.1 of that report, titled “The costs of electricity sources” is about the “levelised
cost of electricity” (LCOE), a widely-used measure of the cost of electricity generation
technologies energy that includes all lifetime costs and factors in the lower utilisation
rates of wind power. Box 4.1 says:
The Electric Power Research Institute (2010) reported estimates of the LCOE of
various sources of electricity in Australia, including:




coal-fired electricity (without carbon capture and storage) — A$78–91/MWh
combined-cycle gas turbines (without carbon capture and storage) — A$97/MWh
wind — A$150–214/MWh
medium-sized (five megawatt) solar PV systems — A$400–473/MWh.
Without being certain, my best guess is that some of the groups or websites using the
figures of $79 per kilowatt-hour for coal-powered energy and $1502 per kilowatthour for wind powered energy may have based their figures on the now-corrected
Paul Sheehan opinion piece.
There is no credible economic analysis that reports wind power costs at A$1502 a
megawatt-hour.
As he has readily acknowledged, Alan Jones' figures on the cost of wind energy are
not correct.
Are those Productivity Commission figures up to date?
The Commission’s report said that in 2010, the Electric Power Research Institute
estimated that the levelised cost of coal-fired electricity (without carbon capture and
storage) was between A$78 and $91/MWh. For wind, the figure was between A$150
and $214/MWh. At the time the Commision’s report was released (May 2011), these
figures were already higher than other reported costs for renewable energy
technology.
More recent costs for new coal plants have been estimated by the former Bureau of
Resources and Energy Economics in their Australian Energy Technology
Assessment.
This report provides a measure of the cost of a large range of generation
technologies, now (or rather, in 2012 when the most recent report was published)
and into the future. Using data from Table 5.2.1 of that report, the table below shows
the “levelised” cost of energy for some coal and wind technologies.