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<\/a><\/p>\nIn a turn-up for the solar books, large-scale solar PV costs have been revised upwards by 8 per cent for 2025-26, compared to an 8 per cent fall in 2024-25. CSIRO says this represents a reversal of the last two years of gains but likely reflects cost volatility rather than a new trend.<\/p>\n
But it is onshore wind that has provided perhaps the biggest about-face, with capital costs charting a 5 per cent drop over the 2025-26 period and showing \u201ctentative signs of stabilising\u201d following the 35 per cent jump in 2022-23.\u00a0<\/p>\n
\u201cAs the historical data indicates, onshore wind is one of the technologies which has been most impacted by recent global inflationary pressures,\u201d the report says. \u201c[The] updated data indicates that the costs pressures are stabilising.\u201d<\/p>\n
This is a welcome development for the Australian market, where rising costs, planning delays, and\u00a0a buyers\u2019 strike from major energy retailers<\/a>\u00a0have meant no new wind projects reaching final investment decision (FID) in 2025, to date.<\/p>\n This is in stark contrast to a host of standalone battery and solar battery hybrid projects, which have benefited from falling costs and faster development times.<\/p>\n CSIRO says it expects the capital costs of onshore wind to return to their normal cost path by\u00a02035 \u201cin all scenarios,\u201d and then after 2035, to decline by a modest amount. No big plunges in cost, but no further rises, either.<\/p>\n The biggest increases in capital costs, meanwhile, have been in coal and gas open cycle technologies, reflecting general increases in gas turbine and steam turbine costs, the report says.<\/p>\n \u201cThe change in current costs over the past four years indicates an easing of inflationary pressures for solar PV, wind and batteries while coal and gas technology costs have recently increased significantly (Figure 2-2).\u201d<\/p>\n Also new this year is a revised methodology for estimating the levelised cost of electricity systems \u2013 a change CSIRO says it has made in response to stakeholder feedback.<\/p>\n The changes also address\u00a0repeated attacks from the Coalition opposition<\/a>, that have variously accused CSIRO of underestimating renewable firming and transmission needs, cherry-picking data to make renewables seem cheaper and nuclear more expensive, and of lack of transparency in the modelling.\u00a0<\/p>\n CSIRO says the new\u00a0system\u00a0levelised\u00a0cost of electricity (SLCOE)\u00a0method\u00a0estimates\u00a0a mix of electricity generation sources and their costs, along with a new CSIRO-developed Simple Electricity Model (SEM) to apply it, which is publicly available\u00a0here:\u00a0Simple Electricity Model<\/a>.\u00a0<\/p>\n Unlike the\u00a0levelised\u00a0cost of electricity (LCOE) metric, which compared costs of individual technologies, SLCOE considers the mix of technologies and transmission that deliver the lowest-cost electricity system across varying electricity emission abatement scenarios to 2050.\u00a0<\/p>\n As CSIRO explains, estimation of the 2030 SLCOE excludes all new technology deployment other than renewables and their supporting technologies. <\/p>\n This is mostly because this approach best aligns with the federal target of 82 per cent renewables by 2030, but it\u2019s also because there is not enough time for any other low emissions technology to contribute to new generation capacity in 2030.<\/p>\n For those who need reminding, high emission technologies are not factored in because they\u2019re \u201cnot relevant\u201d to achieving current 2030 policy targets. But the report notes that even if those policies were ignored, mature high emissions technologies would also be constrained by development lead times. And then, of course, the higher costs.<\/p>\n Based on a mix of solar, wind and storage, the new model finds that to\u00a0meet Australia\u2019s target of 82% renewable energy by 2030, the\u00a0electricity\u00a0cost is estimated\u00a0to be about $91 per megawatt-hour (MWh) when transmission is included, or $81\/MWh for generation alone.\u00a0<\/p>\n The 2050 SLCOE considers either mature firmed renewables only or mature firm renewables plus any of three groups of technologies: floating and fixed offshore wind, coal and gas with carbon capture and storage (CCS) and large-scale and small modular reactor nuclear. <\/p>\n As the charts illustrated, the SLCOE results show that deploying mature technology only (solar PV, wind, gas and storage) is the least cost generation mix in 2050 for all emission intensity levels modelled.<\/p>\n To deliver net zero by 2050, generation costs were projected to be $135\u2013$148\/MWh including transmission, or $114-$124\/MWh for wholesale generation costs only. This, the report notes, is slightly lower than the National Energy Market (NEM) volume-weighted generation prices of around $129\/MWh in 2024-25.\u00a0<\/p>\n CSIRO says it doesn\u2019t rule out offshore wind, and thinks there\u2019s potential for some projects to be included in the new generation mix between 2030 and 2050 and stay within the forecast cost range. <\/p>\n \u201cAustralia is not likely to deploy offshore wind before 2030 and therefore GenCost will continue to be required to rely on global sources of offshore wind cost data until then. A first of a kind premium, in addition to the costs shown, will likely apply when offshore wind is deployed in Australia for the first time,\u201d the report says.<\/p>\n The report\u00a0also\u00a0provides an important clarification\u00a0regarding\u00a0the relationship between the underlying cost of new build electricity generation and the final\u00a0retail\u00a0price paid by customers \u2013 important, particularly, for those politicians prone to fixate on the cost of electricity without understanding what drives it.\u00a0<\/p>\n \u201cCurrently,\u00a0generation\u00a0accounts\u00a0for\u00a0around 33\u00a0per cent\u00a0of retail prices,\u00a0transmission around 7\u00a0per cent\u00a0and\u00a0distribution around 35\u00a0per cent,\u00a0with the\u00a0remainder\u00a0covering\u00a0metering, retail\u00a0services\u00a0and government programs,\u201d the report says.<\/p>\n \u201cChanges in generation prices are also subject to: Supply-demand imbalance as a result of too much or too little deployment relative to demand growth and retirements; fuel price and weather volatility, [and]; the level of competition amongst suppliers,\u201d it adds.<\/p>\n \u201cThese additional drivers of generation price formation can lead to prices significantly lower or higher than the underlying cost of the system and can take many years to correct due to the long lead times for capacity deployment.\u201d<\/p>\n One of the big drivers, recently, has been the price of gas, which sent the electricity price to new heights in 2022 when Russia invaded Ukraine, and has since played a big part in keeping prices at those levels.<\/p>\n \u201cGenCost has evolved from delivering verifiable cost data on individual technologies to now also providing system modelling of the future generation mix and average cost of wholesale electricity,\u201d CSIRO chief energy economist and GenCost lead Paul Graham says.<\/p>\n \u201cElectricity systems will always require a diversity of resources to deliver all their functions and so no single technology will meet all the system\u2019s needs regardless of its relative cost position.\u201d<\/p>\n The draft GenCost 2025-26 Report is open for public consultation here<\/a>.<\/p>\n<\/a><\/p>\n<\/a><\/p>\n<\/a><\/p>\nScreenshot<\/p>\n