Solar vs wind

A large-scale solar project in Australia needs around $160/MWh, leaving it completely uncompetitive relative to wind at $90. However, more than half the cost gap is explained by financiers unfamiliarity with solar PV and perceptions of higher risk. If you take that away, then solar’s cost per megawatt-hour is close to $124. It’s claimed that in USA, the cost is getting close to $100/MWh.

The cost difference is due to Australian banks being unprepared to finance as large a proportion of a solar project’s cost relative to wind power. Australian banker’s risk aversion to solar accounts for one third of the price difference between the USA and Australia. This adds a lot of cost because bankers charge a much lower interest rate (very roughly 7 per cent) on their finance than equity financiers (very roughly 14 per cent).

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