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A new report by the Commonwealth Scientific and Industrial Research Organisation (CSIRO) has shown that renewable energy options would remain the cheapest new-build electricity generation option in Australia, although inflation and supply chain disruptions will likely put cost reductions on hold for the next year.

In its latest GenCost report, the CSIRO and the Australian Energy Market Operator (AEMO) confirm that wind and solar are the cheapest source of electricity generation and storage in Australia, even when considering additional integration costs arising owing to the variable output of renewables, such as energy storage and transmission.

CSIRO CEO Dr Larry Marshall noted that the detailed scientific and engineering analysis reported on in GenCost provided important insights into the electricity market, helping industry and government navigate Australia’s energy transition.   

“Australia’s energy sector faces a number of unique challenges as we navigate the transition to net-zero emissions. GenCost is a rigorous analysis to help inform decision-makers with detailed insights to support the decarbonisation of Australia’s energy system.

“The latest report shows renewables are holding steady as the lowest-cost source of new-build electricity.

“With the world’s largest penetration of rooftop solar, unique critical energy metals, a world class research sector and a highly skilled workforce, Australia can turn our challenges into the immense opportunity of being a global leader in renewable energy,” he said. 

Projections in the report assume that cost reductions for all technologies will stall for the next 12 months as tight global supply chains will require more time to recover from the pandemic. 

However, after the current inflationary cycle ends, solar, wind and batteries are all projected to keep getting cheaper.

CSIRO chief energy economist Paul Graham said researchers had observed year-on-year cost reductions for most technologies and this year’s report was no exception.

“What will be different in the next year is that we will have a confluence of factors impacting project costs. The war in Ukraine has resulted in fossil energy price inflation which flows through to all parts of the economy through transport and energy costs. We also have tight supply chains that are still recovering,” he said. 

The final 2022 report also includes an update on costs of hydrogen electrolysers which are experiencing rapid cost reductions and could support a faster transition to green hydrogen, particularly in the current context of high natural gas prices.

“This important report underlines the need for Australia and the world to invest heavily in renewable energy sources to put downward pressure on power prices,” Minister for Climate Change and Energy Chris Bowen said .
“The government is determined that Australia will lead the way in reducing emissions and this report shows that renewable energy is the most cost-effective way to achieve that.” 

Bowen pointed out that the report considered a range of future scenarios to understand the mix of technologies that may be adopted and costs for each of these possible scenarios.
The status of nuclear energy has not changed in this year’s report, as after extensive consultation, the report concludes there was no prospect of any domestic nuclear projects this decade, given the technology’s commercial immaturity and high cost.