Australia’s national science agency, CSIRO, in partnership with the Australian Energy Market Operator (AEMO) today released the GenCost 2025–26 Final Report, finding renewable energy supported by storage is helping to protect Australia against global energy shocks and continues to provide the lowest cost pathway for Australia’s electricity system to achieve net zero emissions.
The report finds electricity generation costs are expected to continue falling in the near term as battery storage costs reduce and capacity expands, while fossil generation technology costs are increasing due to global data centre demand.
Now in its eighth year, GenCost provides Australia’s most comprehensive annual assessment of the costs of new-build electricity generation, storage and hydrogen technologies.
Key findings
- Technology costs: Battery technologies continue to deliver cost reductions while rising demand for gas turbines to power US data centres is increasing costs for gas-based technologies.
- Short-term costs: Growing capacity of lower cost batteries capacity is beginning to reshape electricity markets, competing with traditional gas peaking generation and contributing to lower evening peak prices.
- Lowest-cost pathway: Renewables supported by storage remain the lowest-cost generation investments for Australia’s future electricity system to achieve net zero, with solar PV and onshore wind projected to supply 93 per cent of electricity by 2050.
- Long-term costs: By 2050, all new electricity generation technologies are projected to cost more than $100/MWh as ageing assets are replaced across the system.
Battery storage is playing an increasingly important role in Australia’s electricity market, with lower costs and significant new capacity beginning to compete with traditional gas peaking generation, contributing to lower peak evening electricity prices.
The average National Electricity Market (NEM) generation price reached approximately $104 per megawatt-hour (MWh) in 2025, down from a peak of $189/MWh in 2022, driven by high global gas prices. Market expectations based on electricity futures prices indicate generation costs could fall further to between $80 and $90/MWh by 2030.
Batteries changing the game
CSIRO Chief Energy Economist and GenCost Project Leader Paul Graham said understanding how global events and technology markets influence electricity generation capital costs is a key part of GenCost’s role.
‘As battery costs continue to fall and gas technology costs rise, batteries are increasingly becoming the preferred flexible generation technology in the near term,’ Mr Graham said.
‘However, GenCost modelling finds gas technologies will still play a limited but important role in helping firm the electricity system, contributing around three to seven per cent of generation by 2050.’
The report also finds that while some non-renewable technologies, such as new black coal, are potentially cost-competitive with renewables, their use would require higher cost carbon abatement elsewhere in the economy to achieve Australia’s net-zero goals.
Growing global demand for gas turbines is emerging as a key driver of higher costs for gas-based generation. According to the International Energy Agency, US data centres are now among the world’s largest sources of gas turbine demand, contributing to sustained cost increases that are expected to continue.
Solar and wind
Solar PV and onshore wind remain the backbone of a least-cost future electricity system.
Under a net zero scenario, these technologies are projected to supply 93 per cent of Australia’s electricity by 2050, supported by hydro, storage, transmission and flexible generation such as gas and hydrogen.
Looking further ahead, no new electricity generation technology is expected to deliver electricity below $100/MWh. As today’s generation fleet retires, future electricity costs will increasingly reflect the cost of building replacement infrastructure.
CSIRO Chief Energy Economist and GenCost Project Leader Paul Graham said, ‘Each year GenCost, with the help of stakeholders, seeks to understand how electricity technology markets are changing. The impacts of the Iran war and data centre demand for gas turbines are currently the strongest drivers of uncertainty.
‘This year’s report incorporates extensive stakeholder feedback, including new use of market data for near-term projections and open-source modelling tools that improve transparency, enabling industry and researchers to engage more deeply with our results.’
Nicola Falcon, AEMO Executive General Manager System Design, said ‘GenCost continues to be a respected example of collaboration between CSIRO and AEMO, providing trusted, independent insights that support planning for Australia’s future electricity system.’
Dr Dietmar Tourbier, CSIRO Director of Energy, said ‘Consultation remains central to GenCost, ensuring the report reflects diverse perspectives and the best available evidence to support transparent decision-making across the energy sector.’
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