RENEWABLE energy costs are likely to be far cheaper than forecast by the government's energy white paper, new research has found, offering new options for the nation's future energy mix.
Bloomberg analysis suggests the official figures issued last week overstate the cost of solar power threefold and windpower by 50 per cent.
But at the same time the paper warns that the government has underestimated the price tag for geothermal energy.
The energy white paper forecasts that as much as 46 per cent of electricity will come from renewable sources by the middle of the century.
Up to 15 per cent is expected to come from wind, 23 per cent from geothermal and 3 per cent from solar.
The Bloomberg research suggests the government's capital costs calculations for renewables are wrong, creating distorted predictions on future energy sources.
"White paper modelling overestimates the current and future costs of most renewable technologies," Bloomberg analyst Kobad Bhavnagri said.
"Our analysis of the technology experience curves suggests that costs are likely to decrease much faster than the white paper modelling assumes."
The Bloomberg research suggests that because of consistently falling prices for solar generation - which have dropped 34 per cent since 2009 - forecasts that use outdated starting points will be inaccurate.
"Overestimating current and future capital costs is likely to have produce an unrealistically conservative cost of energy," Mr Bhavnagri finds.
His research also suggests that the government modelling may not have taken into account the effects of increasing wind turbine efficiency.
"Our expectation is that wind will be one of the least-cost generation options from 2030-50 and that wind energy's share of generation will be higher than the white paper projections," the paper says.
The analysis is less optimistic about the place of geothermal energy.
"Having been beset by a string of technical challenges, the cost of geothermal is currently several times higher in Australia than overseas and significantly more than the industry had predicted," the paper warns.
Greens deputy leader Christine Milne warned against inflated estimates for costs of wind and solar.
"Because renewables have no fuel cost and the technologies are improving all the time, their costs are coming down rapidly while the cost of fossil fuels can only ever keep rising," she told The Australian.