Australian Low Cost Wind Energy — Graph

January 16, 2014 by  
Filed under Green Energy News

Clean Power

Published on January 15th, 2014
by Giles Parkinson


Originally published on RenewEconomy

Given that the renewable energy target is going to be the subject of yet another review, and pages and pages of press speculation, commentary and, sadly, misinformation, we thought that these graphs might be useful.

They come from a report prepared by Frontier Economics for the UK government last year, which wanted to know how its support mechanisms for onshore wind energy compared with other countries. There are a couple of key factors at play – the cost of wind energy in any particular location, which can vary due to the amount of wind, construction costs, manufacturing etc, the average cost of electricity in the wholesale market, and the size of the subsidy needed to bridge that gap.

What’s interesting is that it shows that Australia has one of the lowest rates of subsidy of wind energy in the world, and one of the lowest costs of wind energy. Not surprising, given that even the government’s economic advisor, the Bureau of Resource and Energy Economics recently conceded that wind power was now competitive with new build fossil fuel plants.

This first graph shows how Australia competes on wind subsidies compared to other countries. It would largely be made up of the price of the renewable energy certificate. The first graph is calculated on different currencies and their “purchasing power parity” – or PPP – the second is based on market rates.


And the second …


These graphs below give an indication of the total cost of wind power, known as total support. Those countries that do not have a “market value” component are those with feed in tariffs, where the entire cost of wind energy is deemed a subsidy, which could be misleading because it merely reflects the structure of their tariffs.

But the interesting point here is that of the 26 leading wind countries assessed, Australia has the cheapest wind power based on PPP, and one of the cheapest based on market rates.

The full report can be found here.



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About the Author

is the founding editor of, an Australian-based website that provides news and analysis on cleantech, carbon, and climate issues. Giles is based in Sydney and is watching the (slow, but quickening) transformation of Australia’s energy grid with great interest.

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  • The “net support” graphs are pretty meaningless. In Brazil say, the entire PPA price for wind electricity is treated as subsidy, which is absurd. Wind is now competitive in Brazil with any alternative for new capacity. The comparison with electricity from old, amortised hydro plants like Itaipu is irrelevant; they can’t be replicated. New dams like the very controversial Belo Monte are on much less favorable sites.

  • I’m surprised to see that Australia has the cheapest wind power. I would have thought that our higher than average for a developed country interest rates would have caused our wind power to be more expensive. But then we do have excellent wind resources and land is cheap.

  • Further evidence that the specifics of incentives for renewable energy are very important for countries to get right at this point of the game.

    Policies need to incentivize market competition and lowered installation cost and effective production.

    This being one reason that I preferred the wind PTC versus solar’s ITC. You start getting perverse situations such as solar lease companies inflating installation cost to Pad their bottom line.

    Look to countries with large successful markets with lowest install costs as models. But be mindful that policies that were needed 5 years ago may be inappropriate now.

    The danger being that improper incentives will create an unsustainable market as well as provide legitimate fodder for RE opponents to claim the technology is unsustainable without inappropriate subsidy.

    Which is why I think Japan will need to be aggressive with their tariff reductions.

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