Fossil fuels have a limited time as viable sources of energy, purely in economic terms.
That’s the finding of a report from Australian macroeconomic source MacroBusiness.
Analysing current global market conditions, the report says coal, gas and oil are on a “scarcity curve”. The more we use the less there is, and the more expensive it becomes.
In contrast, “Solar and battery power is on a technology curve: the more the world produces, the cheaper it becomes.”
The economic realities of electricity production
The report compared the prices in US dollars per kilowatt hour of wholesale energy from common generation sources. This is the amount it costs to generate before being sold on to customers.
- Solar: About $0.04. Higher in less sunny areas.
- Solar + battery: If you just want to shift some of the daytime into the evening peak then about $0.07. To get round the clock, around $0.09.
- Coal power: About $0.07 to $0.08. Only moderately sensitive to the coal price.
- Gas power: About $0.04 to $0.08. Very sensitive to the gas price.
- Oil power: About $0.23 from a small-scale diesel generator. Was generally useful as backup/remote region power, but batteries and solar power have all but killed this market.
For coal-fired power plants, the report noted that operating costs are “about half the cost”. This means solar power in sunny climates is almost cheaper than the operating cost of existing coal plants.
The report also noted how environmental issues inform ethical investment. Super funds and other investors are no longer investing in high-impact fossil fuel-based industries.
Batteries key to a solar-powered future
If solar power is on a technology upcurve linked to decreasing prices, battery technology is crucial, the report states.
“This is greatly aided by the fact that a few billion people want a longer battery life for a device they carry with them everywhere and stare at constantly,” it adds.
“So the best minds that money can buy are pretty focused on the task. Battery prices will continue to fall.”
The report finds that for investors, “the main game is solar”.
It also issues a warning: “don’t sleep on rooftop solar + batteries”. “There is a decent chance rooftop solar + battery users going off-grid start a ‘death spiral’ for electricity transmission.”
In other words, as more people use less grid power, retailers will increase their cost to meet their overheads.
To save on power bills and reduce emissions, consider installing solar panels and/or a battery. Contact our solar experts for a discussion on the best way to get solar power into your home or business.