Australian wind and solar to overtake coal and gas from 2026

Analysts predict radical growth as 200GW of wind, solar and storage capacity are expected to replace decommissioned coal-fired plants in the coming years

by Andrew McCorkell 14 September 2020

Australia's power generation (pic credit: Rystad Energy)

Onshore wind farms and solar PV arrays will generate more power than coal and gas in Australia by 2026, according to new analysis by Rystad Energy.

The combined operational capacity of the two main renewable energy sources will overtake that of coal and gas even earlier — from 2023, as new wind and solar projects are built while fossil-fuel projects are taken out of service

These changes will largely be driven by wind and solar’s cost-competitiveness, as well as state – rather than federal government – policies, Rystad noted.

However, limitations on transmission will prove to be a barrier to electricity produced from clean energy sources reaching cities and urban centres in the near-term, analysts at Rystad Energy believe.

Wind and solar also have lower capacity factors than coal and gas, meaning that the actual power generated from the renewable sources is less.

David Dixon, Rystad Energy’s senior analyst, said: “The challenge will be to successfully shift from a centralised grid to one that is inverter/weather-based. Also, the lack of new transmission capacity is likely to be an obstacle.

“Most areas rich in solar and wind resources in Australia are located inland and far away from urban centres and cities. Currently, the transmission system is fixed from coal generators to the cities and is weak to areas inland."

Australia has historically relied heavily on fossil fuels to generate most of its electricity. However, in the past few years, renewable power generation has been flourishing in some states to become a serious competitor to conventional energy sources.

Rystad Energy estimates combined wind and solar capacity will reach 41.4GW in 2023, up from 26.4GW at present.

Meanwhile, it predicts coal and gas capacity will likely shrink to 35.3GW in 2023 from 39.1GW, due to plants being switched off. About 200GW of PV, wind and storage projects are lined up to replace decommissioned coal-fired plants, Rystad added.

The analysis firm forecasts wind and solar generation to grow to 140TWh in 2026, up from 55TWh in 2020.

It also expects coal and gas generation to decline from 189TWh in 2020 to 134TWh in 2026.