That statement isn’t correct.
It is agreed In recent years the capital cost of renewables has decreased. Capital cost decreasing doesn’t reflect the costs of generation to the market to meet demand and provide reliable supply.
If a renewable generator was reliable and was running at generation capacity, then price a renewable generator is willing to enter the market would be lower than is currently the case.
Unfortunately renewables aren’t reliable nor will be running at capacity all the time in the future. To improve reliability of supply within the market, as outlined above, there will ge considerable generation overcapacity supported by storage. Storage will become an option when the marginal cost storage is cheaper than additional cost of renewable generation to support the network.
It is likely that multiples of demand on the network will be needed to try and flatten out the intermittent nature of renewable generation. Renewable generation also needs to be dispersed widely as many forms of renewables are affected by weather conditions (e.g. solar, wind and hydro).
As indicated above, the cost base for generation will increase greater than exists for renewables at this point of time. This translates to a higher cost base per unit of demand. This will increase electricity prices as the closer to 100% is attained.
I originally thought like you and media reports/political spin that renewables would result in cheaper electricity. A planner in the electricity industry explained it to me in a way which made sense and showed a differing view. Her explanation was something like…
Lets assume cars in the past were near 100% reliable (traditional generation). Imagine if cars from tomorrow were 50% reliable (renewables) - 50% of the time working, 50% not. New cars were half the price of an old cars. You would need at least two cars to ensure you could drive at any time (incorrect assumption which I will discuss further below). The running costs of each new car would double, with each car only covering half the distance travelled. The cost per kilometre travelled would remain roughly the same.
Reliability is a probability that it will work as needed. So two cars only really gives a average reliability of 75% (50% for first car plus 50% of 50% for the second car). So you need more than two cars. Lets assume 4 cars and you are accepting of a 93.75% reliability (say the remainder 6.25% it is cheaper to catch a taxi (storage) than buy another car). The running costs of the new cars would be roughly 2 times that of an old car. If one drives the same number of kilometres per year (demand), the cost per kilometre travelled would double (cost to enter the market).
Assuming renewables will provide cheaper electricity assumes the status quo of reliable traditional energy or replacements will be support less reliable renewables (this support is shown in the graphs you presented above, which show fossil fuel generation variable to meet shortfalls in renewables). While storage will fill some if the gap, it is very expensive for medium to long term supply and will only be used to push reliability from high 90%s to close to 100%.
There is also opportunity for hydrogen to offset some if the higher trigger prices to enter the market. Hydrogen has in some respects, the ability to lower this price in times of overcapacity, hydrogen can be produced as an additional revenue stream/use of excess electricity. Unfortunately hydrogen production is inefficient and won’t fully offset the additional costs.
Unfortunately there is a lot of misinformation about costs to transition to renewables.
It is however promising that Commonwealth and State Energy Ministers have indicated that discussions in the future will focus on capacity, which is needed to ensure the community understands what is required for long term development of a reliable electricity supply. It is also refreshing that discussions on transmission has has started to occur - which is needed to connect dispersed future generation around the country.
Edit: cost of generation presented in the media or by some pollies/vested interest groups is based on planned maximum generation at a particular location. Planned maximum generation capacity is very different to generation required to support a reliable network supply as indicated in the rest of this post.
Edit 2: The other consideration for future costs of renewable generation is that currently the lowest cost renewables are being developed (lowest hanging fruit). These are generators which are in more optimum locations (such as on average windier locations and/or close to connections to grid). As more and more renewables are developed, these will be less cost efficient than those which have developed in the past and also potentially less reliable (such as developing in less windy locations). Along with reliability issues, these will also push up the average renewable costs which will be reflected in the prices a generator will be willing to enter the market.
The car example is overly simplified as it doesn’t consider location, efficiencies or temporal costs which can impact on renewable generation. It however shows broadly in possibly an easy to understand way the challenges Australia faces in the future in relation to reliability and cost of electricity.