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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The upcoming Climate Smart Engineering Conference 2024 (CSE24) brings together some of the profession’s best thought leaders to navigate the clean energy transition.