The only way for renewable power prices is down
Last year, Origin Energy stunned the market by signing a long-term deal to buy electricity from the Stockyard Hill windfarm being developed west of Ballarat in Victoria, reportedly at less than $55 a megawatt hour.
That set a new benchmark. AGL swiftly followed suit at its Coopers Gap windfarm project in south-east Queensland, which is set to be the largest wind farm in Australia.
A wholesale price for wind energy has been established at between $50 and $60 a megawatt hour.
A series of similar deals followed, firmly establishing a wholesale price for wind energy at between $50 and $60 a megawatt hour.
Electricity from large-scale solar power plants is now similarly priced, after dramatic declines in the costs of production for solar modules.
"The numbers right now are between $50 and $60 a megawatt hour," says David Leitch of ITK Services, an independent energy analyst with decades of experience, who has previously worked for major investment banks.
How does the price of new coal power compare?
Given Friday's events, it's worth briefly recapping our national energy policy over the past 20 years.
The Australian Parliament has proven itself unable to reach consensus on climate change policy, even when the parties are close enough to touch. It's a familiar tale, writes Annabel Crabb.
At market rates of financing, the lowest cost of electricity from a new coal generator using so-called "high-efficiency, low-emissions" technology would be more than $150 a megawatt hour, according to Bloomberg New Energy Finance.
In the absence of big government subsidies and underwriting, analysts say a new coal generator would need a price of more than $80 a megawatt hour for its electricity just to cover the costs of its operation.
Meanwhile, the only way for renewable power prices appears to be down.
The cost of solar power modules has fallen by up to 30 per cent this year alone, according to recent analysis by Bank of America/Merrill Lynch, with huge supply from China driving prices down.
With new solar panels now available that you can simply print and stick on your roof, the likelihood is that prices will plummet in the future.
The reality is new coal power is not the answer
According to Goldman Sachs, wind and solar power prices will fall by between one-third and 43 per cent by 2025. Some analysts consider this a estimate conservative.
There is a caveat — because renewable energy sources are variable, there will be a future need for "balancing" or stabilising technologies to maintain adequate electricity supply 24/7 as the penetration of renewable energy increases.
But the cheapest way to do this, according to the Australian Energy Market Operator and most analysts, is a combination of battery storage (likely to fall in price as production scales up), pumped hydro and electricity from gas-fired power plants to meet peaks in demand — not coal.
