Wind, solar and storage still cheapest by far, latest CSIRO GenCost report says

Wind and solar will continue to be the cheapest sources of new electricity generation in Australia for the foreseeable future, even when the cost of storage and new network infrastructure is taken into account, the latest CSIRO GenCost report has found.

The CSIRO has published a consultation draft of its latest GenCost assessment, which estimates and compares the levelised cost of different electricity generation technologies, finding that new renewable energy technologies continue to provide the lowest cost energy.

The latest assessment shows wind and solar continue to deliver the cheapest sources of new electricity generation capacity – with each maintaining that ranking in 2030 even when new transmission network infrastructure and energy storage are taken into account.

The GenCost assessment – which is done in conjunction with the Australian Energy Market Operator – estimates that the levelised cost of new wind and solar projects will likely fall below $50 per MWh in the near future.

It estimates that the additional costs of new network infrastructure and energy storage would add – at most – a further $29 per MWh to energy costs, even under a scenario with as much as 90 per cent renewable energy penetration. In virtually all scenarios, the combined costs of renewables, storage and networks would still come in cheaper than new build gas or coal generation.

CSIRO’s chief energy economist Paul Graham says that the latest iteration of the GenCost report considered the costs of storage technologies and transmission network investment that would be needed to support the different energy sources assessed in greater detail.

“Previous GenCost reports added arbitrary amounts of storage costs, but this year we used a model of the electricity system that optimises the amount of storage needed, and also includes additional transmission expenditure,” Graham said.

“Even taking into account these extra system integration costs, solar photovoltaics (PV) and wind continue to be the cheapest new sources of electricity for any expected share of renewables in the grid — anywhere from 50 per cent to 100 per cent.

“This is projected to continue to be the case throughout the projection period to 2050.”

The CSIRO found that the continued development of solar and battery technologies would continue to drive down costs in coming decades, with wind energy also reducing in costs as turbines technologies shift to larger and more efficient models.

By 2050, wind and solar were predicted to further cement their position as the cheapest sources of new electricity generation, and the costs of battery storage and hydrogen production are also expected to fall dramatically in coming decades as demand for each continues to grow.

With little scope for further improvements to gas and coal generation technologies, the CSIRO confirmed that only negligible cost reductions in the fossil fuel technologies can be expected in coming decades – this sees the cost gap between renewables and fossil fuels continue to grow into the future.

The CSIRO considered scenarios were a carbon price was introduced, based on a situation where a future government introduces climate policies consistent with limiting global warming to a 2.7 degrees temperature increase.

The modelling shows that under a scenario where a carbon price is re-introduced, the cost benefits of wind and solar are amplified, and that the addition of carbon capture and storage to coal and gas projects would be cost prohibitive.

Nuclear energy again ranked as one of the most expensive sources of new generation capacity in Australia, driven primarily by very high capital costs to build a nuclear reactor, which was the highest of all technologies assessed.

The CSIRO noted that there is the potential for technologies like small modular reactors and carbon capture and storage to achieve cost reductions in the future, but this would require concerted investment to deploy and develop the technology, but that cheaper alternatives would make such a scenario unlikely.

With the deployment of nuclear and carbon capture and storage technologies, as well as some clean energy technologies like solar thermal and ocean energy projects, being comparatively slow, they are at risk of failing to achieve the necessary development and improvements necessary to make the technologies commercially viable.

The CSIRO has released the consultation draft, to seek feedback from stakeholders about the assumptions used and the approach taken to determine the levelised cost of different energy technologies.