Australia, one of the world’s most coal-dependent economies, will rapidly transition towards cleaner and more cost-effective sources of energy over the next two decades, according to a major new report.

Released earlier this week, the Australian Energy Technology Assessment (AETA) report from the government’s Bureau of Resources and Energy Economics analyses 40 different energy technologies and concludes solar and wind energy will provide the lowest levelised costs for electricity generation by the mid-2030s.

Professor Quentin Grafton, executive director and chief economist at the Bureau, said that relatively low carbon technologies, such as combined cycle gas, carbon capture and storage systems, and nuclear plants, would also “offer the lowest levelised costs of electricity generation over most of the projection period, and remain cost competitive with the lower cost renewable technologies out to 2050”.

The report echoes a host of industry studies that suggest solar and wind farms located in regions with high levels of solar radiation and good wind profiles could compete with coal power on cost within the next five to 20 years.

The projections also raise the prospect of a major shake-up in Australia’s energy sector, which currently relies on coal power for around 80 per cent of its electricity generation, resulting in the country boasting one of the highest level of per capita emissions among industrialised nations.

“Australia’s energy future is likely to be very different to the present,” said Grafton in a statement. “Australia will experience an energy transformation over the coming decades that will have a profound impact for electricity networks, how energy is distributed and on Australia’s ability to meet its targeted greenhouse gas emissions reductions.”

The findings were welcomed by the Australian government following months of criticism from the media and opposition over its controversial decision to introduce a carbon tax designed to drive investment in greener sources of energy.