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GenCost 2022-23: wind and solar remain the lowest cost new build energy generation sources despite inflationary pressures

Renewables, led by wind and solar, maintain their position as Australia’s cheapest new-build electricity generation despite a 20 per cent average rise in technology costs.

The 2022-23 report marks the first time that all technology costs have increased from the previous year since GenCost commenced in 2018.

GenCost 2022–23 Final report July 2023

GenCost is an annual collaboration between CSIRO and the Australian Energy Market Operator (AEMO) that actively consults industry stakeholders to revise domestic electricity generation and storage, as well as hydrogen production costs.

The latest report highlights industry concerns that the rapid pace of the global energy transition will contribute to escalating cost pressures. This is attributed to the immense scale of manufacturing, raw materials and labour required to develop and deploy clean energy technologies consistent with net zero goals. 

Technology costs surge

The COVID-19 pandemic has resulted in lingering global supply chain constraints which impacted the prices of raw materials required in technology manufacturing as well as freight costs.  

The Ukraine war exacerbated the global supply chain inflationary pressures by raising energy input costs for all industries.

GenCost modelling projects that technology cost pressures felt in Australia will revert to normal levels by 2027 but are delayed to 2030 in global scenarios where the speed of the energy transition is highest.

GenCost analyses also found that:

  • Technology cost rises were not uniform due to variations in material inputs and exposure to freight prices 
  • Globally, renewables led by wind and solar are the fastest growing energy source 
  • Batteries are set to play a crucial role in supporting both variable renewable generation in the electricity sector and the rapid expansion of electric vehicle deployment in transport.

Download the GenCost 2022–23 report

The final report encompasses updated current capital cost estimates commissioned by AEMO and delivered by Aurecon.

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