Double-digit cost reductions for battery storage have made the some forms of the technology cheaper than gas when it comes to supporting renewable energy, according to the 2025–26 release of a leading annual report exploring cost estimates for new electricity generation.
Produced by CSIRO and the Australian Energy Market Operator each year since 2018, the GenCost report is touted as Australia’s most comprehensive electricity generation cost projection report. It is designed to offer accurate, policy and technology-neutral cost estimates for the energy economy.
Adding to the endorsement of battery storage’s cost-effectiveness, the 2025–26 GenCost reiterates the finding from previous reports that photovoltaic solar and onshore wind continue to form the basis for Australia’s lowest-cost new-build technology through to 2050.
According to Australian National University Professor Lachlan Blackhall FIEAust CPEng EngExec, a member of the Engineers Australia Board, these cost reductions are highlighting the generation and storage technologies that are playing a critical role in shaping the lowest cost future energy mix for Australia.
“Certain types of batteries are becoming cheaper for peaking than gas, and that’s really the first time that’s been so clearly articulated,” he said.
“Ultimately, we need to ensure energy reliability and security. Gas has been one of the ways that we’ve been able to support renewables to ensure viability and security, and that certain types of batteries are now becoming cheaper than gas is a really critical evolution.”
Blackhall predicts that lower costs will continue to drive greater adoption of battery storage to support renewables such as PV solar and onshore wind.
“We are still reasonably early in the grid-scale battery technology cycle, so costs will continue to be driven down by the volume adoption of storage,’ he told create.
“Improvement in battery technology is critical to the cost of generation coming down and also critical to the adoption of renewable generation, particularly the supply of renewables. To me, this is a really important and exciting trend in getting towards a future energy system that is decarbonised, but also one that is lowest cost.”
As battery costs are falling, the report notes that gas turbine costs are rising due to data centre growth around the world, demonstrating the ramifications that global technology trends can have on the local energy market. In previous years, for instance, inflation and freight costs resulting from COVID shaped trends locally, while global disruption such as the war in Iran continues to drive energy uncertainty.
“The cost of energy generation is not determined in isolation here in Australia, nor anywhere else in the world,” Blackhall said.
“We’re all subject to global supply chains, global macroeconomic factors and geopolitical shocks, and so this highlights the challenge of producing a report like this and the value of systematic analysis like this being done on a regular basis.”
An unpredictable future
Looking forward, the report puts generation costs at $80/MWh to $90/MWh by 2030, down from $104/MWh in 2025 and well below the 2022 peak of $189/MWh, which CSIRO attributes to high gas prices resulting from the Russian invasion of Ukraine. That near-term figure is drawn from National Energy Market electricity futures prices rather than modelling – a change made this year in response to stakeholder feedback.
For the longer term, the report uses system-levelised costs, which add storage, firming and transmission to generation. A 2050 mix making an efficient contribution to net zero would cost $141/MWh to $152/MWh with transmission, or $120/MWh to $130/MWh without – figures CSIRO presents as an upper bound.
No new-build option comes in under $100/MWh by 2050, which reflects the cost of replacing a retiring fleet, not the technology chosen to replace it.
“What has been particularly important over the past seven or eight years of the GenCost report is the focus on providing apples to apples comparisons of different energy generation technologies. It’s very hard to compare technologies like coal and gas, which have higher capacity factors, to renewable energy, which is more variable in nature,” Blackhall said.
“But it is critical that we’re able to compare gas and coal with renewables backed by storage and flexible generation and this GenCost report continues to provide that comparison alongside a new measure of system levelised cost of electricity.”
Considering nuclear
Since the 2023–24 report, GenCost has considered the potential of nuclear energy for Australia’s energy mix. According to the most recent findings, “nuclear power does not currently provide the most cost competitive solution for low emission electricity in Australia,” and the length of development lead times would likely prevent the technology from making a significant contribution to achieving net zero emissions before 2050.
“Certainly, there are examples globally where nuclear generation is providing a significant source of electricity generation which highlights the technical feasibility of nuclear generation. However, GenCost is clear about the economics of nuclear generation, particularly in the Australian context,” Blackhall said.
“Solar and wind are a success story in Australia and around the world, and the economics of renewables firmed by storage and flexible generation are likely to improve as we continue to manufacture and deploy these technologies at scale globally,” he said.
Grid solar might seem competitive now but I’m concerned about life time costs –wind is very marginal and does not pass the life maintenance test- they have a short life, high maintenance, wreck the environment and are a disposable nightmare. Batteries do not generate energy, only store it, so don’t compare them with coal, gas or hydro all of which have a much longer working life. They may have a place in storage but currently last only 20 years as Pumped Hydro is far better giving a 100 year life . Nuclear is a must do for long term –don’t play down the lack of previous experience– we have nuclear submarines coming. and we have had a small nuclear generator at Lucas Heights Sydney for 50 odd years! Training for expansion will happen.
In the last round of Federal parliamentary hearings on this subject both CSIRO and AEMO when challenged on the dubious quality of their work clearly stated that they simply follow government policy in all of their energy analysis. Consequently they have both lost all independent credibility on the subject of energy analysis and policy. Simply read the Hansard or watch the video records if they are still available and make up your own mind. Better still read the submissions made by members of this institution and other subject matter experts to get a clear picture of the emerging crisis and the fundamental issues.
Reference – Inquiry into Energy Planing and Regulation