Learn what is the cheapest source of energy for producing electricity, coal, gas, solar or wind.
The December 2007 Climate Change convention in Bali, Indonesia, has put the issue of global warming back on the political agenda. One of the key requirements of the political negotiations is to put an appropriate price on the carbon dioxide being emitted. This price will be expressed in the form of either a carbon tax, or a payment for the cost of reforestation to remove the gas from the atmosphere.
So before the carbon price is set, how well do the cost of new renewable energy sources compare to the traditional sources of power from coal and gas?
The short answer is, it varies, depending on your location. Different locations have different fuel prices, average wind strengths and days of sunshine. For the purpose of my analysis, however, I have reviewed the statistics for my local region, the east coast of Australia.
Australia sources 90% of all its electricity from coal fired power stations. Being a resource rich country, coal has always been considered the cheapest form of energy. So what are the economics of operating a power station? For this simply analysis I am only going to consider the cost of construction and fuel, and assume plant maintenance costs are the same across all systems.
Firstly, we must consider the units. In my calculations I have given all costs in Australian dollars. At the time of writing, one Australian dollar purchases around ninety US cents. The megawatt (MW) is a unit of power and is equal to 1000 Kilowatts ( KW). Most microwave ovens operate at about 1 KW. The megawatt hour (MWh) is a unit of energy. One MWh equates to 3600 mega joules (MJ).
The infrastructure required to generate coal fired power is enormous. The new 750MW super-critical (high efficiency) Kogan Creek coal fired generator in Queensland has a reported construction cost of $A 1.2 billion ( $US 1.08 Billion). The average cost of black coal to supply the station is around $A 50 / tonne When all the energy efficiencies are considered, the station generates electricity at around $A 15 per MWh for coal.
The cost to build the station is thus around $A 1.6 million /MW. The cost per MW over a 15 year period for the unit running non stop at full load, would be $A 3.57 million/MW.
Natural Gas Power
A gas fired power station has a much lower construction cost, but higher operating cost then a coal fired power station. The new 660 MW Colongra gas fired open cycle power station, to be constructed on the Australian East Coast in 2009, has a $A 400 million budget. This equates to a capital cost of around $A 0.68 million /MW. The cost of gas however, is around $A 120 per MWh.