The CSIRO\u2019s annual GenCost report reaches a stark conclusion<\/a>: existing coal-fired power stations are helping to keep electricity prices lower because much of their capital cost was paid off decades ago.<\/p>\nAs those ageing generators retire, replacing them with a new electricity system will inevitably cost more.<\/p>\n
\u201cExisting coal generation capacity is helping to keep generation cost lower than the full cost of their replacement but cannot be extended indefinitely,\u201d CSIRO chief energy economist Paul Graham told The Australian.<\/p>\n
As ageing coal generators are retired, he said, Australians should expect generation costs to rise beyond 2030 as the full cost of replacement is reflected in prices.<\/p>\n
The report projects those costs will sit between $80 and $90 per megawatt hour this decade.\u00a0<\/p>\n
However, they will climb to an average of $125 per megawatt hour by 2050 under a net zero pathway.\u00a0<\/p>\n
That finding sits awkwardly beside Bowen\u2019s repeated suggestion that wind and solar amount to cheap\u2014or virtually free\u2014energy.<\/p>\n
To be fair, the methodology used in GenCost has serious limitations.<\/p>\n
Its preferred measure, the Levelised Cost of Energy (LCOE), compares individual generation technologies but cannot fully capture many of the costs consumers ultimately bear in building and operating a reliable electricity system.<\/p>\n
Yet even within those generous assumptions, the economics have deteriorated markedly since Labor came to office.<\/p>\n
The cost of installing onshore wind turbines has risen by around 50 per cent in four years, making commercial financing increasingly difficult without higher guaranteed returns or government support.<\/p>\n
Offshore wind, already roughly twice as expensive as onshore generation, has become an even more distant commercial proposition.<\/p>\n
CSIRO also reports that booming electricity demand from AI data centres is driving up gas turbine costs, with prices expected to continue rising for another two years as manufacturers struggle to keep pace with demand.<\/p>\n
Transmission has become another major source of escalating costs.<\/p>\n
Five years ago, planners commonly assumed new high-voltage transmission lines could be delivered for only a few million dollars per kilometre.<\/p>\n
Today, major Australian 500-kilovolt projects typically cost between $8 million and $12 million per kilometre, while flagship projects such as HumeLink and VNI West have seen estimated costs more than double since their original business cases were prepared.<\/p>\n
Even the Australian Energy Market Operator now acknowledges that these costs will be reflected in consumer electricity bills, a reality the government has consistently sought to downplay.<\/p>\n
When the hard data is separated from the political spin, the explanation for rising electricity prices becomes much clearer.<\/p>\n
Two decades of government intervention designed to reshape Australia\u2019s electricity system around emissions reduction have been a major driver of household electricity bills, which have risen by almost a quarter in the past 12 months.<\/p>\n
Electricity would almost certainly be cheaper today had governments allowed capital markets to determine which technologies offered the best returns rather than directing investment towards politically preferred forms of generation.<\/p>\n
Bowen has had remarkably little to say about the latest GenCost report.<\/p>\n
![\"'Energy](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/07\/ddb799248bd5f6b753adf89961209e85.jpeg\")
<\/p>\n
His comments have largely been confined to Instagram, where last week he claimed that \u201crenewables backed by batteries are the lowest-cost, most reliable source of power\u201d.<\/p>\n
Even on the most generous reading, the CSIRO report says much more than that.<\/p>\n
It concludes that the lowest-cost way to meet the government\u2019s legislated emissions targets is a system dominated by solar and wind but supported by hydro, storage including batteries, extensive new transmission, and firm generation from gas or hydrogen.<\/p>\n
With public support for international climate agreements weakening around the world, the cheapest route to net zero risks becoming about as relevant as the cheapest airfare to Timbuktu.<\/p>\n
Meanwhile Australians continue paying the bill.<\/p>\n
The latest ABS figures show electricity prices across the capital cities have risen by almost one-third during Bowen\u2019s time as Energy Minister.<\/p>\n
Yet even those bills capture only part of the true cost.<\/p>\n
Consumers also fund the growing costs of transmission, storage and system security.<\/p>\n
![\"\u2018Best](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/07\/d965a8bf75c34438007d8ec4de156852.jpeg\")
<\/p>\n
Beyond that sit billions of dollars in explicit and implicit subsidies, concessional finance, underwriting arrangements and off-budget government support that future taxpayers will ultimately have to carry, reducing the resources available for priorities such as health, education and defence.<\/p>\n
Cheap energy was once one of Australia\u2019s greatest competitive advantages.<\/p>\n
Few developed nations possess Australia\u2019s abundance of coal, gas and uranium.<\/p>\n
We remain a world leader in mining technology and resource development.<\/p>\n
With sufficient effort, Australia could be largely self-sufficient in oil as well.<\/p>\n
Yet that natural advantage has been steadily squandered\u2014first gradually, then rapidly as governments embraced the idea that rebuilding the electricity system around intermittent generation carried little economic cost.<\/p>\n
The AI revolution will be built where electricity is abundant, reliable and cheap.<\/p>\n
Data centres do not run on ministerial slogans; they run on enormous quantities of continuous power.<\/p>\n
Australia should be one of the natural winners from that boom.<\/p>\n
Instead, we are competing in a global market for increasingly expensive gas turbines, paying close to $15 a gigajoule for gas and building transmission infrastructure at several times the cost assumed when the transition was first designed.<\/p>\n
The tragedy is not merely that households will pay more. It is that the industries of the future may be built elsewhere.<\/p>\n
The great energy transition will have succeeded in turning a land of abundance into a nation of government-enforced scarcity.<\/p>\n
Nick Cater is a senior fellow at Menzies Research Centre and a regular contributor to Sky News Australia<\/p>\n","protected":false},"excerpt":{"rendered":"There are two reasons your electricity prices are going up, and neither can be blamed on the 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![\"Chris](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/07\/6d68608a00647bf3a31a6385e8bd63ab.jpeg\")
<\/p>\n