Solar, onshore wind and gas backup is (still) the cheapest way to power Australia: new report |
What’s the cheapest way to power Australia? Every year, CSIRO researchers and modellers seek to answer this very large question in their GenCost report.
On one level, the answer in the draft 2025–26 report is unsurprising: solar and wind are the cheapest form of generation.
However, this report has gone further by modelling the cheapest cost across the grid, including different power generation options, energy storage, transmission lines and gas backup. Here, solar and wind still come out on top for generation, with batteries to play a larger role than previously estimated, given plunging prices.
In Australia, large-scale battery prices fell 20% over 2024–25 and a further 15% is anticipated over 2025–26. Surging electricity demand to support electrification and to power AI data centres means costs have spiked for anything to do with turbines – coal, gas and nuclear – and delays are long.
If renewables reach 82% of grid generation by 2030 as the government plans, the report suggests this would result in wholesale power costs of A$91 per megawatt hour – about a third lower than today’s $129/MWh. Both figures are in current dollars. By 2050, prices would head back to levels a bit higher than present day ($135–148/MWh) to cover the cost of retiring coal plants, building new transmission lines and energy storage.
The 2050 figures should be viewed as current best estimates based on prudent assumptions, rather than committed forecasts. Modelling power prices a quarter of a century in the future depends on many variables.
CSIRO’s report concludes natural gas generation is the best form of backup, even though it produces emissions. This is because other forms of backup would be more expensive than cutting the same volume of emissions elsewhere in the economy.
One of the most interesting things about this........