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Emission Control: Renewables are now cheaper than coal, and is Sussan a dirty word?

Stockhead logo Stockhead 24/06/2021 Josh Chiat
text: Emission control renewables © Stockhead Australia Emission control renewables

A new report from BloombergNEF has found new-build solar is now cheaper than coal in major markets in China, India and most of Europe.

BloombergNEF’s first half of 2021 Levelised Cost of Energy (LCOE) update showed what the consultancy has called a “major new milestone”.

Not only do they say it is cheaper to build and operate over a power plant’s decades long lifespan.

BloombergNEF says it is now cheaper in China, India and most of Europe to build and operate at utility scale than running existing coal plants.

There could be headwinds for renewables manufacturers from rising commodity prices, with the report authors warning that high steel prices could impact wind turbines while polysilicon, a major feedstock in crystalline photovoltaic cells, has tripled in price since May last year.

That saw PV modules rise in China (7%) and India (10%) over the second half of 2020, with wind turbine prices in India up 5% over the past six months.

Costs are driven more by manufacturing than materials, BloombergNEF analysts say, but chief economist Seb Hernest did caution build costs may rise if heated commodity markets persists over the course of 2021.

“The rise in commodity prices has not resulted in an increase in our global LCOE benchmarks for solar and wind just yet,” he said. “But if sustained through the second half of 2021, this rise could mean that new-build renewable power gets temporarily more expensive, for almost the first time in decades.”

According to the report authors, the global benchmark LCOE for solar and onshore wind have fallen 87% and 63% respectively since 2010 to $48/MWh and $41/MWh respectively.

In China, new-build solar cost was $34/MWh in the first half of the year, compared to $35/MWh for coal, while in India it was $25/MWh for solar and $26/MWh for coal.

Carbon prices across Europe mean solar costs of $33/MWh in Spain, $41/MWh in France and $50/MWh in Germany (an average 78% drop since 2014) are far lower than the estimated $70/MWh-plus for fossil fuels.

There are hopes from the renewable sector that green hydrogen, a technology in its infancy, will follow similar a similar trajectory in its cost curve as proponents begin to develop projects of scale.

 

Is Sussan a dirty word?

Green hydrogen was not the only segment of the enviro sector to get “Sussaned” this week, a recently-coined phrase (by us, today) that remains conspicuously absent from the Oxford English Dictionary.

It can be roughly translated to “wield one’s power to ban something based on a disingenuous expression of love for the environment.”

A deep dive of the word’s origins by Emission Control shows it can be traced to Australian Environment Minister Sussan Ley, whose decision to block the US$36 billion Asian Renewable Energy Hub before it had submitted detailed environmental studies drew cries of derision from the renewable energy sector.

They seem to suspect the Government, which this week invited the Barnaby Joyce back as its Deputy Prime Minister, may not be that sincere about wanting to reduce carbon emissions.


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For her part the minister took the unusual step of deeming the project “clearly unacceptable” because of its supposed ecological threat to the Ramsar-listed Eighty Mile Beach wetlands, a home of worldwide significance to several species of migratory shorebirds.

Hardly believable, then, that she wound up on the receiving end of a Sussaning of her own this week. UNESCO called in to say the Great Barrier Reef was in “danger“, much to the Morrison Government’s dismay.

(We know what you’re thinking. That would be beneath us and we hope you know we’re taking the high road here.)

Who was to blame? Unnamed Government sources reportedly said China, with the Environment Minister insisting – with the support of 11 friendly nations – the Great Barrier Reef is the best managed reef in the world. An arguable point, the bleached coral might say.

Quick to wrest back control, Ley dove back in for some more Sussaning on the solar industry. On Tuesday she lobbed at them a hard deadline of mid-2022 to get a plan in place to recycle wasted solar PV panels, around a week after she put them “on notice” in a National Press Club speech.

The solar industry took umbrage to the slight.

Back on the AREH issue, the WA State Government has let fly at the Feds over the decision.

As the West Australian reports, WA’s recently rebadged Hydrogen Minister Alannah MacTiernan took aim at a summit on Wednesday with her federal counterparts in the crosshairs.

“Normally we would have expected the Federal Government to do as they did with the Adani coal mine – you know, four years of working with coal to get that initial approval. But in this case, they just said ‘nah’,” she was quoted as saying.

 

More large scale renewables on the way

The Federal Government meanwhile has claimed a win despite a slowdown in large-scale renewable builds this year, with the Clean Energy Regulator saying emissions reductions from its schemes will “conservatively” reach 57Mt of CO2 equivalent this year after releasing its March quarter report.

Energy Minister Angus Taylor was quick to claim it as a demonstration of success for Morrison Government policies such as the Emissions Reduction Fund.

Australia added 7GW of large-scale renewables generation, but did not see a project reach financial close in the March quarter.

The Clean Energy Regulator predict 2-3GW of large scale generation will reach financial close by the end of the year, with up to 3.7GW backed by power purchase agreements, signed on the back on growing interest in backing renewables by major corporations like Telstra, Woolworths and Aldi.

“While the number of projects reaching financial close this quarter was modest, the pipeline of large-scale projects with a power purchase agreement, which are a leading indicator, reached a record 3.7GW over Quarter 1 2021. This suggests that investment in 2021 and beyond should remain strong,” CER chair David Parker said.

 

Little movement in listed sector

ASX-listed green energy and renewable stocks have followed the downward trend across the market this week.

 

ASX green energy stocks

Scroll or swipe to reveal table. Click headings to sort.

CODE COMPANY PRICE 1 WEEK RETURN % 1 MONTH RETURN % 6 MONTH RETURN % 1 YEAR RETURN % MARKET CAP
IRD Iron Road Ltd 0.27 0 38 59 289 $ 213,915,405.60
PRM Prominence Energy NL 0.0135 -4 23 93 74 $ 9,042,866.80
NEW NEW Energy Solar 0.89 1 9 6 -25 $ 314,528,192.88
SKI Spark Infrastructure 2.22 -2 4 2 4 $ 3,843,349,873.20
IFT Infratil Limited 7.05 0 3 2 57 $ 5,177,624,780.90
FMG Fortescue Metals Grp 22.87 0 3 -3 63 $ 69,215,131,356.64
TLT Tilt Renewables Ltd. 7.48 1 1 34 130 $ 2,788,570,741.60
AST AusNet Services Ltd 1.75 -5 1 -3 4 $ 6,633,150,490.89
PGY Pilot Energy Ltd 0.082 0 0 204 310 $ 30,003,876.83
RFX Redflow Limited 0.061 -6 0 135 154 $ 76,842,026.62
AVL Aust Vanadium Ltd 0.02 0 0 54 82 $ 58,623,176.28
PH2 Pure Hydrogen Corp 0.21 -5 0 163 312 $ 64,344,551.92
MEZ Meridian Energy 4.83 -1 0 -29 3 $ 6,034,278,641.04
MIO Macarthur Minerals 0.43 -4 -1 -20 132 $ 57,651,795.35
LIO Lion Energy Limited 0.051 -9 -4 219 264 $ 12,402,093.08
GEV Global Ene Ven Ltd 0.07 -3 -10 -13 35 $ 32,100,393.83
HZR Hazer Group Limited 0.935 -1 -11 36 134 $ 130,801,321.80
HXG Hexagon Energy 0.077 -9 -13 31 48 $ 33,005,023.20
QEM QEM Limited 0.165 -6 -13 136 50 $ 16,500,000.00
PRL Province Resources 0.13 -10 -24 900 513 $ 150,141,574.49
MPR Mpower Group Limited 0.071 -11 -25 13 223 $ 15,306,196.22
 

The biggest news came from iron ore major Fortescue Metals Group (ASX: FMG), which is giving corporeal shape to its green hydrogen ambitions with a land access agreement at its proposed 250MW Bell Bay project in Tasmania.

In the private sphere Australian Future Energy moved forward with its $1bn Gladstone Energy and Ammonia Project.

It plans to use a proven gasification process to convert coal to hydrogen fuel in ammonia and pipeline gas.

Carbon dioxide emissions will be reduced by being captured and sold on to downstream industries in the beverage and building sector.

This week AFE announced a MoU with Japan’s Itochu Corporation to invest in its project studies and down the line collaboratively explore marketing and future development opportunities, including in green hydrogen and green ammonia.

The post Emission Control: Renewables are now cheaper than coal, and is Sussan a dirty word? appeared first on Stockhead.

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