Key points:
- Renewables remain the lowest cost range of new build electricity technology
- Large-scale nuclear technology costs included for the first time
- Future wind costs revised upwards
Shaped by the highest volume of feedback since its inception in 2018, the 2023-24 annual GenCost report has been released today.
GenCost is a leading economic report by CSIRO, Australia’s national science agency, in collaboration with the Australian Energy Market Operator (AEMO) on the cost of building future electricity generation, storage and hydrogen production in Australia.
The latest report introduces a range of changes in response to stakeholder feedback, most significantly, the inclusion of large-scale nuclear for the first time.
This decision was prompted by increased stakeholder interest in nuclear following updated costings for small modular reactors (SMRs) in the 2023-24 consultation draft.
GenCost assessed submissions regarding the suitability of large-scale nuclear power generation in Australia’s electricity system and found that, while generation units of that scale are unprecedented in Australia, there are no known technical barriers.
It also determined that nuclear power was more expensive than renewables and would take at least 15 years to develop, including construction. This reflects the absence of a development pipeline, the additional legal, safety and security steps required, and weighing the evidence provided by stakeholders.
Wind power is recovering the slowest from global inflationary pressures and cost projections for both onshore and offshore wind have been revised upwards in the next decade.
Despite this, updated modelling found that renewables - including costs associated with additional storage and transmission - remain the lowest cost, new build technology.
This competitive position reflects the decade of cost reductions experienced by wind, solar photovoltaics (PV) and batteries prior to the pandemic, while costs of their more mature competitors have remained flat.
CSIRO’s Director of Energy, Dr Dietmar Tourbier, said GenCost was committed to robust stakeholder engagement, with the latest consultation attracting more than 40 written submissions and more than 200 industry webinar participants.
“The feedback provided by the energy community each year is invaluable, given that cost forecasts of future electricity generation, storage and hydrogen production can fluctuate significantly and no single technology can achieve our transition to net zero," Dr Tourbier said.
“Whether the input GenCost receives is highly specialised or simply advocating for a particular pathway, our considerations are policy and technology neutral."
AEMO’s Executive General Manager – System Design, Ms Merryn York, said that GenCost was one of several key reports that help inform the continuous design of a sustainable electricity system for Australia.
“The annual collaboration with industry to assess electricity generation costs is critical to strategic planning and policy analysis, including our Integrated System Plan,” Ms York said.
CSIRO’s Chief Energy Economist and GenCost lead author, Paul Graham, welcomed the stakeholder feedback that informed the latest report.
"GenCost is flexible to adjusting assumptions, scope and methodology in response to constructive feedback received during the formal consultation period and throughout the year,” Mr Graham said.
“For example, our approach to the inclusion of large-scale nuclear technology provides a logical, transparent and policy-neutral method of costing a potential deployment scenario in Australia."
GenCost based its large-scale nuclear cost estimations on South Korea’s successful nuclear program and adjusted for differences by studying the ratio of the costs of new coal generation in each country.
The costs estimated in the report can only be achieved if Australia commits to a continuous nuclear building program, requiring an initial investment in a higher cost unit. Similar ‘first-of-a-kind’ costs in Australia also apply to other technologies such as offshore wind, solar thermal and carbon capture and storage (CCS) but have not been reflected in the final GenCost report due to their project specific nature.
The report revised its approach to estimating solar thermal power generation costs to align with other bulk supply technologies. The new cost data indicates solar thermal is competitive with nuclear and other non-renewables that combine CCS technologies.
The updated analyses also found that:
- Inflationary pressures have considerably eased, but the impact is inconsistent across technologies
- Onshore wind costs increased by 8%, while large-scale solar photovoltaic (PV) fell by the same proportion
- Gas turbine costs increased by up to 14%
- Capital costs of other technologies were relatively steady
In response to increased feedback, the 2023-24 GenCost report includes a frequently asked questions section (in Appendix D) providing stakeholders with answers to common questions raised during current and past consultations.
Download the GenCost 2023-24 report.
