New analysis shows renewable energy is becoming the cheap and reliable option, while the uncertainty of gas requires a roll of the dice.

A study from the University of New South Wales suggests renewable investment is likely to become cheaper and lower risk for Australia, while rising and uncertain gas prices make base-load gas-fired electricity high risk and high cost.

The modelling compared the risks and uncertainties in using gas-fired electricity or renewable technologies as part of a low-carbon transition.

“We've explicitly incorporated uncertainty and risk in the model,” said lead researcher, Dr Jenny Riesz.

“It significantly affects the results and gets neglected in most studies.

“Although the use of gas-fired electricity on the east-coast of Australia is modest at present, some parties are promoting this as a serious option for reducing greenhouse emissions and cleaning up our power sector.”

But the models showed electricity portfolios with heavy reliance on base-load gas-fired generation could have 40 per cent higher wholesale electricity costs.

For a typical Australian household with four people, this could equate to an additional cost of almost $500 a year.

“The risk and cost of gas-fired electricity is high primarily because of the uncertainty and potentially high cost of purchasing gas in the future. By contrast, renewables are a sure bet,” Dr Riesz says.

“Domestic gas prices will be linked to international gas prices... [and] no one really knows what international gas prices are going to do in the future, or how precisely our domestic prices will be linked. This means that relying on gas is a big gamble.”

Dr Riesz urged decision-makers to consider these effects in the critical review of the Renewable Energy Target scheme now underway.

The modelling suggests electricity costs will be lower and more certain with a diverse portfolio of renewable sources including wind, solar photo-voltaics, hydro-power, and others.

“Gas electricity can provide useful backup supply, but we're probably looking at higher costs if we use it for base-load energy,” Dr Riesz says.

“Renewables can provide bulk power more cheaply and at lower risk.”

Dr Riesz said Australia has options.

“We have a huge fleet of coal-fired generators in Australia,” she said.

“Analysis in the United States suggests some coal-fired generators can be very flexible and shift to operating as peaking generators.

"If we can use our existing coal-fired generators in a peaking role to back up renewables, we can reduce our greenhouse emissions at low cost, and low risk, without having to invest in gas-fired electricity. We need to better understand what those coal-fired generators are capable of.”

The full report is accessible in PDF form, here.