GenCost FAQs

The GenCost report is one of several studies used by business leaders and decision-makers to plan and build reliable and affordable future energy solutions and help us achieve net zero emissions by 2050.   

Each year, CSIRO publishes GenCost in collaboration with the Australian Energy Market Operator (AEMO). It’s an unbiased, accurate and up-to-date economic report that provides cost estimates of building new electricity generation and storage projects, and hydrogen technologies, up to the year 2050.  

These technologies include coal, natural gas, solar photovoltaics, onshore and offshore wind, solar thermal, nuclear, bioenergy, pumped hydro, hydrogen electrolysers and batteries.  

The GenCost process is highly collaborative and draws on the deep expertise and knowledge of a large number of energy industry stakeholders. It includes engagement and consultation with members of the energy community to review the work and provide pre-publication feedback to improve its quality.   

For more detail watch this animation explaining the GenCost process.

GenCost reports are developed over an annual cycle and actively provides opportunities for government, industry, the private sector, and economic specialists to ask questions and provide feedback.

Each year a large number of organisations provide input, ensuring a diverse range of perspectives and deep industry knowledge contribute to refining the report.

GenCost receives unprompted feedback throughout the year, but specifically targets the December and January period for invited consultation.

The project maintains a mailing list to share draft outputs which is open to all. To request inclusion, visit www.csiro.au/en/contact. On CSIRO’s behalf, AEMO also circulates the report to its Forecasting Reference Group mailing list and hosts a consultation web page which outlines the submissions period and procedures. 

The consultation is over a six-week period. The input and feedback gathered during consultation shapes the final report, which is released mid-year. Greater weight is given to input provided that is fact-based and includes verifiable data.

For more detail go to the draft GenCost 2024-25 Report section 1.1: Scope of the GenCost project and reporting on page 14.

GenCost projects the cost of electricity generation and storage for a wide range of technologies up to the year 2050.  

To do this, the report includes two types of data: capital costs and levelised costs.  

Capital costs provide the investment cost for each technology, but not the running costs. They are updated with input from an engineering firm.  

Levelised costs represent the per-unit cost of building and operating a generator over its lifetime. This provides a standardised measure for comparing the cost of electricity production across different technologies.  

For more detail go to the draft GenCost 2024-25 report, section 3: Current technology costs; and section 6: Levelised cost of electricity analysis.

Levelised cost of electricity (LCOE) is a simple and widely used metric for comparing the cost of different technologies.   

Levelised costs combine capital costs with running costs such as operating, maintenance and fuel, in units that enable us to compare technologies side by side.  

The costs to maintain reliable renewable energy supply, known as ‘firming’ costs, are factored in from the current year forwards.  

For an investor, LCOE indicates the average price of electricity they would need to receive over the design life of their investment to recover all their costs and make a reasonable return on investment. The technology with the lowest LCOE is considered the most competitive.  

LCOE is only meaningful as a quick guide to competitiveness. Investors will need to carry out more in-depth modelling to support investment decisions and more complex questions such as policy analysis also require deeper modelling approaches.  

For more detail go to the draft GenCost 2024-25 report, section 5: Levelised cost of electricity analysis from page 57. You can also read the Understanding the Cost of Australia’s Electricity Transition explainer.

‘Firming costs’ is a term often used to describe the investments needed to make variable renewables a reliable source of electricity for our power system. In the GenCost report our preferred term is ‘integration costs’.  

Integration costs include investments in storage, peaking generation, transmission and system security devices such as synchronous condensers. Modelling determines the most cost-effective combination of these investments.  

Pre-2030 integration costs were first incorporated in the 2023-24 consultation draft in response to stakeholder feedback. While this change led to higher cost estimates, renewables were still found to have the lowest cost range of any new build technology. 

For more detail go to the draft GenCost 2024-25 report, section 6.2.1: Framework for calculating variable renewable integration costs on page 58. The Frequently Asked Questions Appendix, D.4.7 and D.4.8 from page 101 are also helpful.

Some stakeholders believe GenCost is obligated to provide a system cost to society analysis. The stated purpose of GenCost is to provide essential capital cost information for the modelling community to use in their own system cost studies. There are several Australian researchers and consultants capable of delivering such studies.

CSIRO has significant experience in conducting whole of electricity system studies and can therefore say with confidence that such a study would increase the annual budget of GenCost by around five- to ten-fold. It is therefore not a simple extension.

Substantially expanding the scope of GenCost or creating a new separate project to accommodate stakeholder interest in whole-of system studies is not planned at present. However, CSIRO does operate in this field and new separate research of this type is likely to be available in the future.

At the request of several consultation submissions, the 2023-24 GenCost Report (released in May 2024) included the first detailed costings for new build large-scale nuclear electricity generation in Australia. As Australia has never deployed nuclear power, applying overseas costs to large-scale nuclear projects here is not a straightforward process. There are significant differences in labour costs, workforce expertise, governance, and standards, so the data source must be carefully selected.

GenCost used South Korea’s successful nuclear program as a basis for its large-scale nuclear cost estimates. It adjusted for differences between Australian and South Korean deployment costs by comparing the ratio of new coal generation costs in both countries.

GenCost's method offers a logical, transparent, and policy-neutral approach to estimating the costs of large-scale nuclear deployment in Australia. However, the reported costs can only be achieved if Australia commits to a continuous building program after constructing an initial higher-cost unit. The first unit of any new technology in Australia is expected to be impacted by higher costs, with a first-of-a-kind cost premium of up to 100 per cent, which GenCost estimates do not include.

The final GenCost 2023-24 report provides a detailed discussion of the method for estimating large-scale nuclear costs in section 2.5.

It's standard practice that the financing period for an asset is less than its full operational life, similar to a car or house loan. 

For power stations, warranties expire and refurbishment costs increase around the 30-year mark. As a result, we use a 30-year lifespan for financial planning.

For more detail go to the draft GenCost 2024-25 Report, Frequently Asked Questions appendix, D.4.1 on page 97 and D.4.14 on page 107.

The draft GenCost 2024-25 report has calculated the potential cost advantages of long life for the first time.

It finds that there are no unique cost advantages arising from nuclear technology’s long operational life. Similar cost savings are achievable from shorter-lived technologies, even accounting for the fact that shorter lived technologies need to be built twice to achieve the same project length.

This is because shorter-lived technologies are often available at lower cost on the second build.

The lack of an economic advantage for long lived nuclear is also due to substantial nuclear re-investment costs required to achieve long operational life. Without new investment, it cannot achieve long operational life.

Also, because of the long lead time in nuclear deployment, cost reductions in the second half of their operational life are not available until around 45 years into the future, significantly reducing their value to consumers compared to other more readily deployed options.

For more detail go to the draft GenCost 2024-25 Report, section 2.1: Nuclear capital recovery period and long operational life on page 15.

The UAMPS Carbon Free Project in the USA provided the most reliable and transparent cost data available, making it the best source for GenCost’s nuclear SMR cost estimates. 

This decision was based on several key factors:

1. Reliable cost data
   The UAMPS Carbon Free Project provided open, verifiable cost data for a real nuclear SMR project. Other SMR cost estimates have been based on theoretical costs from vendors and are not considered reliable because they aretend to be too optimistic.
2. Project commitment
   The UAMPS project was a serious venture with real financial stakes. Developers had to provide accurate cost estimates upfront due to a subscription model for power production. Underestimating costs would have resulted in financial liabilities. 
3. Limited available data
   No other SMR project offers reliable, real-world cost data. Other suggested costs have been from vendors who have not committed to building or operating the projects themselves. 

For more detail go to the draft GenCost Report 2024-25 Frequently Asked Questions Appendix, D.3.3 on page 94.

Baseload plants are power stations that provide a continuous and reliable electricity supply. In Australia, the average capacity factor for baseload black coal plants is 60%, with only a few reaching around 90%.

High performance is only possible if the plant is the lowest cost generator. In Australia’s electricity markets, the lowest cost plants get priority to generate electricity. Currently nuclear is unlikely to outbid cheaper options like existing coal or renewables. Despite this, GenCost allowed for a capacity factor range of 53% to 89%, based on historical data for baseload plants. 

For more detail go to the GenCost Report Appendix D.3.1 on page 104.

No. To keep calculations simple and transparent across all technologies, GenCost excludes costs that won’t significantly affect a technology’s competitive position. 

The common cost factors we include for each technology are: 

• generation capital
• capacity factor
• construction time
• operating and maintenance costs
• fuel efficiency
• fuel cost.

For more detail on cost factors included in LCOE calculations go to the draft GenCost Report 2024-25 Frequently Asked Questions Appendix, D.4.4 on page 99 and D.4.10 on page 105.

Nuclear power generates 9% of the world’s electricity, with 15 countries producing over 91% of this energy.

But only 4% of these countries rely on nuclear as their main energy source. Some, like Germany, are even phasing out nuclear in favour of renewables. 

The nuclear share of global electricity generation has not significantly changed since the turn of the century. The International Atomic Energy Agency projects that, at most, nuclear generation’s share of global electricity generation could increase to 13% by 2050. However, it also projects the share of generation could fall to 7%.

As a country rich in renewable energy resources like solar and wind, Australia faces a range of challenges in adopting nuclear energy:

• Cost: Nuclear power is not the most cost-effective option for reducing emissions in our electricity sector.
• Time: Development times of more than 15 years and an empty project pipeline mean nuclear would not be able to play a major role in reducing emissions in our electricity sector.
• Expertise and skills: The absence of a local nuclear industry and workforce mean Australia would initially need to rely on offshore construction and operating experience.
• Community acceptance: Nuclear projects have not yet undergone local development approval processes, making community acceptance uncertain. 
• Regulation: Nuclear power generation is prohibited under federal and state laws in Australia. 

More information on why countries may have low cost nuclear overseas is at the draft GenCost 2024-25 report, Frequently Asked Questions appendix, D.4.18 on page 109.

Public discussion on nuclear deployment in Australia often confuses total development time with construction time.

Total development time includes not only construction, but pre-construction activities such as:

• site selection and acquisition
• technology design and engineering
• grid connection and impact studies
• environmental and technology permits
• sourcing fuel and water
• accessing project financing development and construction teams.

All developmental steps must be completed before construction can begin. Given Australia’s lack of a nuclear development pipeline and additional legal, safety, and security requirements, the first nuclear plant will face significant delays. Subsequent plants could be built more quickly once a pipeline is established. 

The draft 2024-25 GenCost Report highlights that global median construction times have increased from 6 to 8.2 years over the last five years. Furthermore, only countries with a low level of democracy have achieved construction times less than ten years. Of the democratic countries, Asian democracy have shortest construction times. Western democracies have the longest with recent construction times being 17 and 21 years in Finland and the US.

These construction times do not include the pre-construction activities listed above and the regulatory and legislative changes that would be required prior to commencement of any planning and approval processes.

For more information on nuclear development times, visit the draft GenCost 2024-25 report, section 2.3: Nuclear development lead times.

ANSTO was a reviewer of the GenCost report, however details of their involvement is not public information as it was part of standard consultation between government bureaus.

Written submissions made to GenCost during the AEMO-hosted consultation phase can be viewed on the AEMO website.

The levelised and capital costs for offshore wind are included in the GenCost report.  

GenCost only calculates the levelised cost of 60% to 90% variable renewable energy (VRE) shares for the years 2024 and 2030. Offshore wind was not included in these calculations as there was none in 2024, and AEMO has not projected offshore wind for 2030.

These considerations are detailed in the draft GenCost 2024-25 report, section 5.3.12: Fixed and floating offshore wind on page 49.

For the seventh consecutive year, renewables are assessed to have the lowest cost range of any new-build electricity generation technology.

The latest report highlights wind power’s slower recovery from global inflationary pressures, resulting in upward revisions for onshore wind costs in the past year. At the same time, costs for solar PV and batteries fell.

Despite this, updated analysis reaffirms that renewables, including associated storage and transmission costs, remain the lowest cost, new build technology.

This competitive position reflects a decade of cost reductions in wind, solar photovoltaics (PV) and batteries before the pandemic. This is in contrast with costs of mature competitors which have remained flat.

CSIRO does not recommend 100 per cent solar and wind for the electricity or energy sector. While technically feasible, it is not the most cost-effective solution for our energy transition.

For the electricity sector, CSIRO’s modelling shows the lowest cost path to net zero emissions by 2050 includes retaining a small amount of firming generation fuelled by natural gas, for times when storage and renewable generation is running low and offsetting those emissions from gas through land abatement or other measures.

It is possible, as the relevant technologies improve, we may be able to substitute natural gas for lower emission fuels such as green hydrogen or renewable gas to reduce electricity emissions closer to zero. However, on present knowledge, natural gas remains the lowest cost option.

GenCost calculates the breakeven costs needed for investors to recover their capital, fuel and operating costs, including a reasonable return on investment.   

This is an indicator of what electricity prices need to be to encourage new investment, but it does not control the electricity price. Electricity prices are controlled by the balance of supply and demand. If supply is tight relative to demand, then prices go up. If supply is significantly more than demand, then prices go down.   

In 2022, global natural gas supply constraints, triggered by sanctions on Russia due to the Ukraine war, together with unplanned coal plant outages, caused a price spike. This is still reverberating through the electricity system.   

The Australian Electricity Market Commission provides a ten-year outlook for electricity prices based on continuing deployment of renewables.   

More information is in the draft GenCost report, Frequently Asked Questions appendix, D.4.17 on page 108.

Traditionally, our electricity system was thought to rely mainly on steady baseload power from coal, supplemented by gas and hydro to meet varying demand throughout the daily cycle. 

This view oversimplifies the historic reality; only a few of the very low-cost coal plants operated consistently at full capacity, most ramped up during the day and backed off at night.   

For many decades the average capacity factor of coal plant in Australia has been around 60 per cent, not the idealised 90 per cent.   

In moving to variable renewables, the capacity factor of our main energy source will be even lower at around 30 per cent and supply will be more intermittent.   

Operating an electricity system with intermittent resources in a reliable way can be achieved with increased deployment of storage and the continued use of peaking generation technology powered by natural gas or its lower emission substitutes such as biogas or hydrogen.   

Fortunately, the low cost of solar PV and wind and the declining costs of storage make this approach to operating a reliable electricity system economically viable whilst delivering lower emissions to address climate change.   

For more detail go to the draft GenCost 2024-25 report, section 6.3 Storage requirements underpinning variable renewable costs on page 67.