The CSIRO annual GenCost report has once again confirmed – as it has done since its launch under the Coalition government in 2018 – that integrated renewables are by far the lowest cost option for Australia as it seeks to replace its ageing fleet of coal and gas fired generators.
The draft version for the 2024/25 edition of the report – released on Monday – notes prices of both solar PV and battery storage have fallen again, and are now lower than they were before the global price spikes caused by the Russia invasion of Ukraine.
Battery storage has shown the most dramatic cost reductions – down 20 per cent in the last 12 months alone – while solar has fallen another eight per cent. Wind prices continue to rise, but the increases have slowed to just two per cent in the last 12 months, and CSIRO expects prices to peak soon.
“The draft report found renewables continue to have the lowest cost range of any new-build electricity-generating technology, for the seventh year in a row,” the CSIRO says in its statement.
It also found inflationary pressures continue to ease but the impact on each technology’s unique raw material inputs and supply chains remains mixed. Gas prices were estimated to have risen, but this is because most new gas generators are being made “hydrogen ready”, which has added to costs.
The director of energy at CSIRO, Dr Dietmar Tourbier, said GenCost provides objective cost benchmarks using the best available and verifiable data.
“GenCost’s annual update delivers data-based forecasts that support informed decision-making across the energy sector,” Tourbier said in a statement.
“We ran the numbers to see what renewables would look like when we include all the sort of firming costs around transmission, storage, system security, spilled energy, and we sort of stack all those costs up and see how that looks,” CSIRO chief energy economist says in the latest episode of Renew Economy’s Energy Insiders podcast.
“And because we’ve had, like a bit of an increase in wind, but some decreases in solar and batteries, the cost of renewables with firming is still sitting around that sort of $120 a megawatt hour in the short run, and sort of $82 a megawatt hour towards 2030.
“And that still puts them at the lowest cost range of all the technologies that we look at.”
Graham says the next cheapest technology would be unabated coal and gas, but that would be problematic because of their emissions.
.”Obviously, if you’re going to use that for the bulk of your energy and we’re trying to reduce emissions in the sector, we’re probably not likely to build those.
“The next cheapest technologies are sort of coal and gas with some abatement, so with carbon capture and storage, although, to be honest, there aren’t a lot of plans to build those in Australia. The next most costly (are) the nuclear options.”
Graham makes some interesting observations about the role of storage in the calculations by CSIRO.
“Some of the really early estimates of firming up renewables used to be very high, you know, several hundred dollars a megawatt hour,” he tells Energy Insiders.
“What we’ve learned is that that’s not really the best way to treat those low renewable production periods. What you want to do is have some storage for sure, and then you want to bring in peaking plant to cover those really long periods of low renewable production.
“And that tends to put a cap on the cost of integrating renewables at sort of around about it tops out at sort of 100 bit over $100 a megawatt hour, once you get towards sort of 80 pct, 90 pct variable renewable share.”
Interestingly, the costs of battery storage are coming down so much that the CSIRO is now modelling longer duration batteries, even out to 48 hours – not that it has any real expectation that the technology will that particular gap, but they wanted to put it into the model.
The other interesting aspect is the increased prominence of solar thermal, and particularly its perceived value in providing both storage and low temperature industrial heat.
But most attention will, of course, go to a technology that few believe can be built in Australia before 2040 – nuclear, which is being pushed with some force by the federal Coalition, the fossil fuel lobby, right wing so called “think tanks” and the Murdoch media.
The draft GenCost sets aside a remarkable amount of space assessing a technology not currently available in Australia, and specifically to address the complaints against it brought by federal Coalition leader Peter Dutton and the nuclear boosters.
It assesses each of the claims and dismisses them all, in some detail, as we report here in a separate story.
See also: CSIRO patiently and methodically slaps down Peter Dutton’s nuclear nonsense
The bottom line is that, according to Graham, large scale nuclear is sitting one and a half to two and a half times the cost of firmed renewables and small modular reactors are about four to six times higher. And that’s not including the anticipated 100 per cent premium for a first of its kind build in Australia.
Federal energy and climate minister Chris Bowen says the latest draft GenCost report confirms what energy experts had been saying for a long time – the most affordable path to deliver reliable energy in future is with new renewable generation and storage, firmed by gas and pumped hydro.
“The former Coalition Government left Australians with a power system in need of urgent repair – and too exposed to offshore price shocks,” Bowen said in a statement.
“They ignored the experts and refused to take advantage of our abundant sun and wind, leaving households paying the price of having a grid that’s too reliant on expensive, unreliable, ageing coal.
“Now, under the guise of Peter Dutton’s nuclear scheme they continue to try and keep our energy grid in the dark, by promising to build the most expensive form of energy 20 years from now. It’s not fair to consumers and it’s not a serious solution to keep the lights on and bring prices down this year, or this decade.”
