Solar and wind power remain the cheapest options for energy generation, according to the latest GenCost report. Find out the cost of new build energy in Australia with these graphs.
Key points:
- The report presents the levelised cost of generating electricity using sources such as solar and wind.
- Renewables are the cheapest option by far, with large-scale solar having experienced an eight per cent drop in capital costs.
- Although wind can be more expensive than solar, it can supplement solar capability.
The CSIRO’s GenCost, touted as Australia’s most comprehensive electricity generation cost projection report, provides an annual update on how much it will cost to harness solar, wind, hydrogen and other technologies to support Australia’s energy needs.
The latest GenCost report, covering 2023-2024, reflects a fall in the cost of certain technologies following a spike in inflation and freight costs caused by COVID, while other technologies have experienced an increase.
Renewables are the lowest cost option for new build technology to 2050, even when considering storage and transmission costs.
The graph below outlines the change in capital costs of selected technologies relative to GenCost 2022‐23.
Large-scale solar photovoltaic (PV) technology has decreased by eight per cent, while onshore wind has increased by the same proportion.
This next graph compares the costs of technologies in 2023 and 2030, using a metric known as the levelised cost of electricity (LCOE). This is a measure of the total costs recovered by a generator to ensure a return on investment.
According to the report, taking out of the equation high-emission generation options such as black coal, the “most competitive” technology options include solar thermal, solar PV and wind, and gas with carbon capture and storage (CCS).
The cost of each of the shown technologies drops between 2023 and 2030, across both high- and low-emission options.
Unbeatable solar
The data sends a clear message as to the viability of renewables, according to Engineers Australia Senior Policy Advisor Grant Watt.
“Despite the changes made to the GenCost methodology over the years, renewables are still clearly the cheapest form of new build electricity,” he told create.
And it’s possible those costs will drop even further. The Australian Renewable Energy Agency (ARENA) outlines a vision for ultra low-cost solar in Australia whereby the country achieves a 30 per cent solar module efficiency and an installed cost of 30 cents per watt by 2030.
“You can’t make solar much more efficient, but the learning curve on solar is still there,” Watt said.
Solar power can be seen as the core component of the energy transition and replacement of traditional energy generation methods, around which everything else fits into place.
“Nothing is going to beat solar for cost,” Watt said. “We have to think about cost in terms of the value that the generation source brings. Wind is more expensive, but it can support solar when solar isn’t possible.”
“LCOE is not intended to be a measure of the cost of individual projects; it is a metric of relative competitiveness of generation technologies – and for that reason is very important.”
Read Watt’s take on how the introduction of fuel efficiency standards will bring Australia into line with other countries.
Industry perspective
Electrical engineer Christopher Scanlon MIEAust CPEng, who is a member of the Engineers Australia Newcastle Division Committee, told create that there is an imperative for Australia to ensure an appropriate mix of technologies in the right locations.
“Australia has a diverse climate and sparse population not located in optimum generation areas,” he said. “Transmission lines and other infrastructure costs are therefore required to balance the share of energy.
“Regardless of the technology utilised, changes to the network cost money. In the short- to medium-term the cost to the consumer is likely to continue to increase, despite the reduced prices associated with solar and wind turbine energy.”
Power quality is extremely important in maintaining a stable network, Scanlon said.
“Although wind and solar appear to be dropping the price of electricity, the costs still appear to be more reflective of renewable energy being injected into a very ‘robust’ system that maintains good control over frequency and power quality,” he explained. “Storage for renewables is expensive and carries future risks associated with waste if the wrong technology is utilised.
“The use of appropriate technology and system design is critical to ensuring the expenditure is going to provide the stable network that we require under all environmental conditions and times of the use.”
At all times, Scanlon stressed the value of a breadth of integrated energy production and storage systems.
“The GenCost report is not designed to cover all combinations of energy production and consumption, and as a result should be taken as a high-level guide rather than a final document,” he said. “A good mix of generation can produce lower costs for consumers, as can be seen when wind and solar are combined.
“There are, however, significant advantages to other forms of energy production and storage. Solar thermal or even hydrogen have a number of very strong advantages that should not be overlooked. Redox batteries, as another example, have extremely low fire risk when compared to other forms of battery technology.”
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Engineers Australia was once an august body that produced monthly publications of technical merit.
Such material was written directly by experienced and knowledgeable engineers, both industry and academic practitioners.
Now we have generalised interpretations of ill-defined reports generated in a political context.
It is past time we reverted to rigorous analysis based on well defined assumptions.
Until then, as long-experienced engineers we are entitled to question the validity of material produced by our institution.
I’m concerned that Engineers Australia is putting its weight behind the CSIRO’s GenCost Report, which is an unprofessional, naive report. I believe it’s a mistake to be associated with the report, let alone support its conclusions, which potentially damages Engineers Australia’s standing.
If we are to perform an economic analysis of competing engineering solutions, we must take into account the lifecycle costs of the solutions proposed, not simply the capital costs. The GenCost Report does not consider the lifecycle support costs and indeed, in respect of the major capital costs of the wind and solar transmission lines required for renewables, describes these costs as “out of scope”.
So we have an assessment that “Renewables are the lowest cost option for new build technology to 2050, even when considering storage and transmission costs” when the transmission costs are not included.
Better to point out the failings of this report rather than support its findings.
Gordon Hearn
MIEAust CPEng(Ret)
Once again, this contains no engineering analysis and just belongs in a newspaper. Why is there debate about the CSIRO report and why did Mr Bowen have to defend it with an article in The Australian? Does his analysis make sense? Does Judith Sloane’s counter argument make sense? We are technical people, we expect technical articles in our technical magazine.
It is a shame that CSRIO is towing the government line, for funding perhaps?
Same ideology self-justification, no mention of life-span comparison or transmission infrastructure construction and transmission losses cost to get the power from the new remote solar and wind projects.
Question, if solar and wind are so cost effective, why residential electricity prices have jumped 91% over the past five years nationally? (source: the Australian Energy Regulator, and my own electricity bills)
Submissions to the original GenCost report draft and the AEMO ISP draft tell a whole other story from this politically correct journalistic effort. It is worth noting that publication of the majority of submissions was delayed until after the final reports were published presumably to avoid embarrassment. They are now available on the AEMO site. Members of Engineers Australia deserve a more intelligent review by suitably qualified engineers given the importance of the subject.
I like Lachlan’s passions. He needs to place this report in context. Gencost is flawed because it doesn’t really address delivered costs (allowing adequately for the total costs of transmission) and its assumptions inter alia favour low capital sources. He doesn’t mention nuclear generation and one would have expected EA in particular to support moving in that field. The unreality of the current direction of decarbonisation is coming home to the general public when groups that have gone with the flow are getting stranded. The current time frames are unrealistic and again it’s a pity EA doesn’t make that point strongly. An opportunity to lead has been lost.
Lachlan. In representing Engineers Australia on Create, you need to always give a balanced coverage to all major electricity supply issues. This report lacks balance in how electricity supply actually operates. .Putting energy into an interconnected electricity grid needs to consider the necessity of continuity, stability and frequency control provided by base load generation. Intermittent energy sources may well be low cost,for a few hours but not 24 hrs a day without reliable storage back up. Stable grid operation has always needed to combine continuous
generation with intermittent generation to cover load variations, and this report does mot give sufficient coverage to these challenges. Changing energy sources can always be incorporated into an operating AC grid , but only gradually combining continuous and intermittent sources with carefully planned testing and integration – this point must always be emphasized.
Submissions to the original GenCost report draft and the AEMO ISP draft tell a whole other story from this politically correct journalistic effort. It is worth noting that publication of the majority of submissions was delayed until after the final reports were published presumably to avoid embarrassment. They are now available on the AEMO website. Members of Engineers Australia deserve a more intelligent review by suitably qualified engineers given the importance of the subject.
Not nearly enough addressed in studies about freebies from greenish governments, and true cost of transmission lines and 24/7 backup. Particularly when China is adding more coal-fired power than we have ever had, why do we even bother with renewables, apart from coercion from countries with other fish to fry.
The CSIRO Gencost report has been discredited with a clear exaggerations of the cost of alternative sources of energy and by not including the real cost to provide a secure100% available energy supply required not just by industry boy expected by the community in the 21st century. It is shameful that Engineers Australia is not questioning such a flawed report but backing its claims.