CSIRO says wind and solar are the cheapest sources of new electricity generation capacity in Australia.

Each year, Australia’s national science agency CSIRO, and the Australian Energy Market Operator (AEMO) estimate the cost to generate electricity for new power plants in Australia through their GenCost (PDF) report. 

This year’s report raised the bar by employing a new, more accurate approach for analysing the cost of renewables. The new approach included additional ‘integration’ costs such as storage and new transmission infrastructure, and still found solar and wind continue to be the cheapest sources of new-build electricity generation. 

The main findings include:

  • Solar and wind continue to be the cheapest sources of new-build electricity

  • Battery costs fell the most in 2020-21 compared to any other generation or storage technology and are projected to continue to fall (lower battery storage costs underpin the long-term competitiveness of renewables)

  • Pumped hydro is also important and is more competitive when longer durations of storage (above eight hours) are required

  • The new approach is a model of the electricity system that optimises the amount of storage needed, and also includes additional transmission expenditure

  • Previous reports added arbitrary amounts of storage costs and did not include transmission or other costs

This report also included hydrogen electrolysers for the first time and found that hydrogen is following a similar trajectory to more established renewables.

With increased interest in global deployment, and many demonstration projects worldwide, substantial cost reductions in hydrogen technologies are expected over the next decades.