January 15th, 2023GenCost report finds renewables increasingly important as technology costs surge

Renewables remain the cheapest new-build electricity, but technology costs are surging across the board a new report shows.

CSIRO’s annual GenCost report, released recently as a draft for public consultation, has found technology cost increases averaging 20 per cent for new-build electricity generation in Australia.

Despite these cost increases, the report remained consistent with previous years, showing that renewables (onshore wind and solar PV) remain the lowest cost technologies.

GenCost is an annual collaboration between national science agency CSIRO, and the Australian Energy Market Operator (AEMO), taking input from industry stakeholders to update electricity generation, storage and hydrogen production costs.

The 2022-23 consultation draft examines a range of future scenarios to analyse global technology deployment and associated costs for each pathway.

Modelling released last month 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: “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.”

The 2022-23 consultation draft found that renewables are the fastest growing energy source globally, led by wind and solar.”