Introducing FlexCost
FlexCost is a new CSIRO framework that helps answer a critical question for Australia’s energy transition: What does it cost to use demand-side resources to support the electricity system?
Demand‑side resources include technologies and behaviours that shift or reduce electricity use, such as smart charging of electric vehicles, flexible use of home appliances, home batteries and energy efficiency upgrades. These can play an important role in reducing pressure on the electricity system during periods of high demand or limited supply.
FlexCost provides a transparent, evidence‑based method to estimate and compare the cost of these demand‑side options. By doing so, it helps assess when they can deliver value alongside traditional investments in electricity generation, storage and networks – supporting more balanced system planning and policy decisions.
Release approach
FlexCost is being released in two stages:
- Stage 1 sets out the methodology, developed by CSIRO with support from Energy Consumers Australia.
- Stage 2 will deliver the full report and results, with support from the Department of Climate Change, Energy, the Environment and Water (DCCEEW).
CSIRO maintains full independence in the design, analysis and reporting of FlexCost.
FlexCost Stage 1 Methodology Report
Explore the foundations of CSIRO’s new framework for costing demand‑side energy resources.
Why demand-side costs matter
Australia’s energy transition is often described through the energy trilemma – delivering electricity that is reliable, affordable and sustainable.
Electricity is an essential service and a fundamental input to the economy. Its cost affects household bills, business competitiveness and broader cost‑of‑living pressures, and shapes public confidence in the energy transition.
While the costs of electricity generation, storage and networks are well understood, demand‑side resources have lacked a nationally consistent and transparent cost framework. This has made it harder to assess their role alongside supply‑side options in planning and policy decisions.
FlexCost addresses this gap by supporting a clearer understanding of:
- when demand‑side resources can relieve pressure on the electricity system,
- how they perform during periods when the system is most constrained, and
- what it costs to make additional demand‑side resources available beyond business‑as‑usual uptake.
By enabling demand‑side resources to be valued on a comparable basis with supply‑side investments, FlexCost supports more informed decision‑making. This helps ensure all options are considered to maintain reliability, moderate costs for consumers, and support emissions reduction.
What's next
The FlexCost Stage 1 Report establishes the methodological foundation for estimating the costs of demand‑side resources for the residential and small business sectors.
Stage 2 will apply this methodology to produce the first FlexCost Report. This work will focus on validating and refining the approach, applying it to structured cost data, and generating comparable cost estimates supported by sensitivity analysis.
A broader consultation process will be undertaken during Stage 2 to test assumptions and review draft outputs. Stage 2 will conclude with publication of the first FlexCost Report in the third quarter of 2026 and will inform potential expansion of FlexCost to additional sectors in future updates.
As Australia’s electricity system becomes more decentralised, distributed and flexible, better visibility on the cost and role of demand‑side resources will be increasingly important for managing reliability and affordability through the transition.
Introducing FlexCost
FlexCost is a new CSIRO framework that helps answer a critical question for Australia’s energy transition: What does it cost to use demand-side resources to support the electricity system?
Demand‑side resources include technologies and behaviours that shift or reduce electricity use, such as smart charging of electric vehicles, flexible use of home appliances, home batteries and energy efficiency upgrades. These can play an important role in reducing pressure on the electricity system during periods of high demand or limited supply.
FlexCost provides a transparent, evidence‑based method to estimate and compare the cost of these demand‑side options. By doing so, it helps assess when they can deliver value alongside traditional investments in electricity generation, storage and networks – supporting more balanced system planning and policy decisions.
Release approach
FlexCost is being released in two stages:
- Stage 1 sets out the methodology, developed by CSIRO with support from Energy Consumers Australia.
- Stage 2 will deliver the full report and results, with support from the Department of Climate Change, Energy, the Environment and Water (DCCEEW).
CSIRO maintains full independence in the design, analysis and reporting of FlexCost.
FlexCost Stage 1 Methodology Report
Explore the foundations of CSIRO’s new framework for costing demand‑side energy resources.
Why demand-side costs matter
Australia’s energy transition is often described through the energy trilemma – delivering electricity that is reliable, affordable and sustainable.
Electricity is an essential service and a fundamental input to the economy. Its cost affects household bills, business competitiveness and broader cost‑of‑living pressures, and shapes public confidence in the energy transition.
While the costs of electricity generation, storage and networks are well understood, demand‑side resources have lacked a nationally consistent and transparent cost framework. This has made it harder to assess their role alongside supply‑side options in planning and policy decisions.
FlexCost addresses this gap by supporting a clearer understanding of:
- when demand‑side resources can relieve pressure on the electricity system,
- how they perform during periods when the system is most constrained, and
- what it costs to make additional demand‑side resources available beyond business‑as‑usual uptake.
By enabling demand‑side resources to be valued on a comparable basis with supply‑side investments, FlexCost supports more informed decision‑making. This helps ensure all options are considered to maintain reliability, moderate costs for consumers, and support emissions reduction.
What's next
The FlexCost Stage 1 Report establishes the methodological foundation for estimating the costs of demand‑side resources for the residential and small business sectors.
Stage 2 will apply this methodology to produce the first FlexCost Report. This work will focus on validating and refining the approach, applying it to structured cost data, and generating comparable cost estimates supported by sensitivity analysis.
A broader consultation process will be undertaken during Stage 2 to test assumptions and review draft outputs. Stage 2 will conclude with publication of the first FlexCost Report in the third quarter of 2026 and will inform potential expansion of FlexCost to additional sectors in future updates.
As Australia’s electricity system becomes more decentralised, distributed and flexible, better visibility on the cost and role of demand‑side resources will be increasingly important for managing reliability and affordability through the transition.
FAQ: FlexCost
Demand‑side resources are technologies and measures that help manage how electricity is drawn from the grid, and when it is used, stored or exported.
They include options that:
- reduce electricity use through improved efficiency,
- shift electricity use to times when the system is less constrained or electricity is more abundant, or
- generate electricity locally.
Examples include:
- Smart EV charging
- Home batteries
- Energy efficient heating and cooling
- Insulation
- Smart control of appliances
The term demand-side resources largely overlaps with consumer energy resources (CER). However, it has a broader scope, encompassing improvements in end-use energy efficiency and applications across both households and businesses.
Energy Consumers Australia commissioned CSIRO to develop the FlexCost method in order to value the efficient and flexible energy resources in consumers’ homes and businesses.
The FlexCost method was developed through a targeted consultation process, informed by stakeholder input while maintaining CSIRO’s independence in all final decisions.
The approach draws on lessons from the GenCost project and CSIRO’s experience supporting national energy planning processes, including AEMO’s Integrated System Plan.
For Stage 1, CSIRO published a draft methodology for review, sought technical feedback from key experts, and updated the approach where appropriate and within scope.
Consultation will be central to FlexCost, reflecting the diversity of demand-side resources across technologies, customer types, locations and time. Early engagement with technical experts, government and industry will help strengthen the methodology, improve practical application, and build confidence in the underlying assumptions.
While stakeholder input informs the work, CSIRO retains responsibility for all methodological choices to ensure FlexCost remains independent, transparent and scientifically robust. Ongoing consultation will support future updates and continuous improvement.
GenCost estimates the costs of electricity generation, storage and hydrogen production technologies. FlexCost complements this by estimating the indicative costs of demand‑side resources, including technologies and measures that shift, reduce or better manage electricity use.
Together, GenCost and FlexCost provide a more complete picture of the costs of different ways to meet Australia’s electricity needs.
FlexCost Stage 1 (the FlexCost Method Report) focuses on residential and small business technologies, including:
- home batteries
- electric vehicles with smart charging and vehicle‑to‑home or vehicle‑to‑grid capability
- storage water heaters
- heating and cooling upgrades
- appliance efficiency
- insulation and building efficiency improvements
CSIRO is planning to expand the scope of FlexCost to include larger commercial and industrial sectors in its future work.
Australia’s electricity system is changing rapidly, with more wind and solar capacity in the energy grid increasing the need for flexible demand. Understanding and valuing that flexibility is now essential to maintaining reliability and managing costs.
The growing adoption of electric vehicles and other electrification means growing demand for electricity, so improving energy efficiency is also crucial for moderating this rising demand.
FlexCost is being developed at a time when these demand-side are becoming critical to putting downward pressure on electricity costs for consumers and supporting the energy transition.
The FlexCost method will be used to develop the first FlexCost Report, to be released in late 2026. The first FlexCost Report is intended to establish a baseline, with future iterations improving over time - similar to CSIRO’s GenCost Reports, which have been refined since their introduction in 2018.
Like GenCost, FlexCost focuses on costs. Benefits such as avoided investment, emissions reductions or health outcomes are acknowledged but not quantified within the framework.
Instead, the framework provides cost inputs that can be used in downstream analysis to assess these benefits and compare broader system benefits.
FlexCost is designed for use across the electricity sector to support practical decision-making.
- Governments can use it to inform policy design by identifying which demand‑side investments deliver the greatest system benefit and when incentives are most effective.
- Regulators and market bodies can use it to compare demand‑side options with traditional supply‑side solutions when addressing system reliability and affordability.
- Industry, including retailers, network businesses and service providers, can use it to understand how demand‑side resources can be valued, accessed and deployed to reduce costs during periods of system constraint.
- Consumers can get a better picture of options available to them to support energy flexibility on the grid, how they could be part of the solution to reduce electricity costs and what benefits they could draw.
FlexCost is being delivered in two stages with support from different partners.
Stage 1 (the methodology) was developed by CSIRO with support from Energy Consumers Australia.
Stage 2 (the report and results) is being delivered with support from the Department of Climate Change, Energy, the Environment and Water (DCCEEW).
CSIRO retains full independence in the design, analysis and reporting of FlexCost.