GenCost 2022–23: renewables increasingly important as technology costs surge
Each year, Australia's national science agency CSIRO, and the Australian Energy Market Operator (AEMO), work with industry to give an updated cost estimate for large-scale electricity generation in Australia.
They consider a range of future scenarios to understand the mix of technologies that may be adopted and project costs for each of these possible pathways.
The 2022-23 report found that renewables (onshore wind and solar PV) are the lowest cost technologies, despite cost increases averaging 20 per cent for new-build electricity generation in Australia.
This confirms past years' findings that wind and solar are the cheapest, even when considering additional integration costs arising due to the variable output of renewables, such as energy storage and transmission.
The rise of technology costs
Modelling found that global supply chain constraints and inflation have placed upward pressure on technology costs following the COVID-19 pandemic.
Rises, as low as 9 per cent for solar PV and up to 35 per cent for wind, were not uniform due to variations in material inputs and exposure to freight prices.
Modelling suggests that the inflationary cycle is likely to peak in 2022 and 2023, returning to normal cost levels by 2027.
CSIRO Chief Energy Economist Paul Graham said: “Innovation in electricity generation technology is a global effort that’s strongly linked to climate change policy ambitions.”
“Technology costs are one piece of the puzzle, providing critical input to electricity sector analysis. To limit emissions, our energy system must evolve and become more diverse.”
Download the GenCost consultation report 2022–23
The consultation report encompasses updated current capital cost estimates commissioned by AEMO and delivered by Aurecon.