Comparing least cost scenarios for 100% renewable electricity with low emission fossil fuel scenarios in the Australian National Electricity Market

Policy makers face difficult choices in planning to decarbonise their electricity industries in the face of significant technology and economic uncertainties. To this end we compare the projected costs in 2030 of one medium-carbon and two low-carbon fossil fuel scenarios for the Australian National Electricity Market (NEM) against the costs of a previously published scenario for 100% renewable electricity in 2030. The three new fossil fuel scenarios, based on the least cost mix of baseload and peak load power stations in 2010, are: (i) a medium-carbon scenario utilising only gas-fired combined cycle gas turbines (CCGTs) and open cycle gas turbines (OCGTs); (ii) coal with carbon capture and storage (CCS) plus peak load OCGT; and (iii) gas-fired CCGT with CCS plus peak load OCGT. We perform sensitivity analyses of the results to future carbon prices, gas prices, and CO2 transportation and storage costs which appear likely to be high in most of Australia. We find that only under a few, and seemingly unlikely, combinations of costs can any of the fossil fuel scenarios compete economically with 100% renewable electricity in a carbon constrained world. Our findings suggest that policies pursuing very high penetrations of renewable electricity based on commercially available technology offer a cost effective and low risk way to dramatically cut emissions in the electricity sector. (C) 2013 Elsevier Ltd. All rights reserved.