The energy transition tussle between gas and batteries is a core theme to the final 2025-26 GenCost report from CSIRO and the Australian Energy Market Operator, published on Wednesday – and is illustrated neatly in the chart below.
According to the report, growing capacity of lower cost batteries capacity is beginning to reshape electricity markets, competing with traditional gas peaking generation and contributing to lower evening peak prices.
Meanwhile, the global boom in data centre development – and the concurrent boom in new gas plants to power these data centres – is further eroding the economics of new gas in Australia, while batteries get cheaper and cheaper.
“US data centres, in particular, are going ahead with – just to get up and going faster – they’re doing their own dedicated side-by-side gas turbine deployment,” CSIRO chief energy economist and GenCost lead Paul Graham told Renew Economy in an interview this week.
“And the interesting thing … [is that] those gas turbine costs were already going up, and then this really just sustains that increase.
“So we’ve actually reached a crossover point where… it was just a rule of thumb that an open-cycle gas turbine was the cheapest thing you could deploy from a capital cost perspective. It used to be $1,000 a kilowatt, or even under that.
“But as it heads towards $2000 a kW, four-hour batteries are heading below $1,500/kW. So, yeah, it’s really has changed the competitive landscape for peaking technology, I guess. So that’s that’s quite interesting.”
As the GenCost report puts it, “this development of opposite trends in technology costs likely cements batteries as the preferred flexible generation technology in the near term.
And while GenCost modelling finds gas technologies will still play an important role in helping firm Australia’s future electricity system, it is projected to limited to around three to seven per cent of generation by 2050.
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