Key points
- GenCost is one of several analysis documents that contribute to future low emission electricity planning in Australia.
- Since 2018, the GenCost report has shown wind and solar are the cheapest forms of newly built electricity generation.
- Gas with carbon capture and storage (CCS) and large-scale nuclear follow as the next lowest cost options.
This explainer was updated on 29 July 2025 with the release of the Final 2024-25 GenCost Report.
Electricity generation accounts for about a third of Australia’s greenhouse gas emissions and presents our nearest-term opportunity to cut emissions in line with 2030 and 2050 targets.
Decarbonisation is needed across all sectors, but transitioning electricity first allows other industries, such as transport and manufacturing, to use renewable electricity as they transition.
That’s why understanding the costs of different generation technologies – renewables, nuclear or gas – is central to guiding Australia’s electricity transition.
The GenCost report is a key cost analysis document that contributes to this planning. It is developed in consultation with industry and stakeholders to ensure the data meets user needs.
Over time, GenCost has become a trusted and widely referenced source – though its findings are sometimes selectively interpreted in public debate.
GenCost is policy and technology neutral, and complex. Let's explain GenCost’s use of industry standard modelling on costs, which attracts public interest.
What is the GenCost report?
GenCost is a collaboration between CSIRO, Australia's national science agency, and the Australian Energy Market Operator (AEMO) to update the costs of electricity generation, energy storage and hydrogen production. GenCost reports are developed over an annual cycle and includes opportunities for government, industry, the private sector, and economic specialists to ask questions and provide input. Each year more than 100 different organisations do.
GenCost was first published in 2018 to create a common data set that could be used across the energy sector to enable standardised electricity system modelling. GenCost responds to the question: what will it cost to build different electricity generation technologies now and in the future?
New cost projections are released to government and industry via a draft consultation report in December each year. The capital costs of technologies are updated each year with input from an engineering firm. The final report, released mid-year, reflects the feedback and input received.
As well as referencing a range of relevant national and international energy reports, stakeholder consultation and input is a critical part of the process to analyse and update GenCost’s data and projections.
How GenCost calculates costs
GenCost provides two sets of data for current and projected costs:
- Capital costs: the upfront cost of building a generation or storage asset.
- Levelised cost of electricity (LCOE): the average cost to build and operate a generator over its lifetime, expressed per unit of electricity.
GenCost’s current and projected capital costs for electricity generation and storage technology are a necessary and highly impactful input into electricity market modelling studies, such as those conducted by AEMO. Governments, regulators, and private industry use capital cost data for a range of planning and forecasting purposes, such as evaluating new investments and consideration of alternative policies.
LCOE on the other hand, is a simple, widely used metric that provides a quick way of comparing the competitiveness of alternative sources of electricity generation. LCOE is useful for comparing generation costs across technologies but should not be confused with whole-of-system costs which consider the broader impacts of integrating different energy sources into the grid.
What can levelised cost of electricity (LCOE) tell us?
LCOE is useful starting point for comparing the average generation cost of different technologies such as solar, wind, coal or gas – either now or in the future.
It works like calculating the average cost of making any product. You add up the costs to build and run the technology over its lifetime, then divide by how much electricity it’s expected to produce. This gives a standard cost per unit of electricity, making it easier to compare options.
A lower LCOE suggests a technology is more cost-competitive, but it doesn’t tell the whole story. Investors still need to assess local factors like site conditions, market rules, and integration with the wider grid.
Because LCOE shows the break-even price needed to justify new investment, it can also indicate the electricity price required to bring new capacity online and keep supply secure.
Are renewables still the cheapest low-emission energy option?
Yes. Since GenCost began in 2018, it has consistently found renewables to be the lowest-cost source of new low-emission electricity, even after accounting for integration costs.
Integration costs refer to the additional investments needed to support variable renewable energy (VRE) sources like solar and wind, which generate electricity intermittently. This includes costs for storage, backup generation and new transmission infrastructure to ensure a reliable electricity supply.
These costs are low when VRE makes up less than 50 per cent of the electricity system, as existing infrastructure can manage variability. However, they increase at higher levels of VRE, when purpose-built integration and transmission upgrades are needed.
Even with these costs included, renewables remain the lowest-cost option for new low-emission electricity generation.
What is AEMO's Integrated System Plan (ISP)?
AEMO’s Integrated System Plan, uses GenCost’s capital cost data, along with other inputs, to model the least-cost pathway to reliably supply electricity while supporting Australia’s net zero transition.
The ISP examines the best mix of:
- Generation technologies
- Storage options
- Transmission infrastructure.
AEMO’s modelling consistently shows that variable renewables will provide the bulk of Australia’s future electricity, supported by a mix of storage, transmission and flexible generation to ensure reliability.
The bottom line
GenCost provides independent, up-to-date cost data for electricity generation, storage and hydrogen technologies, and is a key input for energy planners, investors and policymakers as Australia’s electricity system evolves.
The report doesn’t advocate for specific technologies or policies. Instead, it offers a transparent, evidence-based view of current and projected costs, tested through consultation with over 100 stakeholders each year. That’s what makes GenCost a trusted reference point across industry and government.
While costs and technologies will continue to shift, renewables remain the lowest-cost new-build option, and the report recognises the ongoing need for a mix of technologies to ensure reliability and support emissions reduction goals. GenCost will continue to track these developments, delivering updated insights each year to help inform Australia's energy transition.