Wind and solar unbeatable for low cost new electricity

Onshore wind and solar photovoltaic technologies have maintained their position as the lowest cost form of new electricity generation, despite global supply chain constraints increasing capital costs across fossil and renewable technologies.

The CSIRO and Australian Energy Market Operator today released their fifth joint annual GenCost update on the cost of generating and storing electricity in Australia.

The report explains global supply chain constraints in the wake of COVID-19 have increased capital costs for all electricity generation, depending on each technology’s exposure to material and freight cost rises.

Large scale and rooftop solar costs increased the least (at 9%), whereas onshore wind increased the most (35%). However, the report anticipates wind’s cost increases will be short-lived and will return to normal levels by 2027.

Yet despite these cost increases, in 2022-23 solar photovoltaic and onshore wind remain the lowest cost options for new electricity generation, ranging from $48 – 81/ megawatt hour (solar) and $58 – 96/MWh (wind) respectively.

Offshore wind (ranging from $149 – 194/MWh in 2022-23) remains more expensive than other renewable energy sources, but similar to fossil fuel options like coal and gas.

Nuclear (ranging from $198 – 349/MWh in 2030) and hydrogen powered gas stations (ranging from $298 – 381/MWh in 2022-23) are the most expensive options considered by the report. 

“Nuclear [small modular reactor] current costs are not reported since there is no prospect of a plant being deployed in Australia before 2030,” the report explains.

These comparisons are all based on a measure called ‘levelised cost of electricity’, which is a widely accepted method of comparing costs between different power generation sources.

AEMO’s Executive General Manager – System Design, Merryn York says the report is an important resource to inform plans for Australia’s transition to zero emission electricity.

“As coal fired power generation leaves Australia’s grids, we need investment in generation to fill those gaps,” she says.