Australia’s national science agency, CSIRO, and the Australian Energy Market Operator (AEMO) have today released the draft GenCost 2025-26 Report for public consultation.
The report continues to provide the cost of new build electricity generation in terms of capital costs and comparative costs of delivered electricity from individual technologies.
It also introduces a new method that examines the electricity generation mix and the average cost of electricity for achieving Australia’s 82 per cent renewable energy target by 2030 and reaching net zero emissions by 2050 under different electricity emission intensity scenarios.
In both cases solar PV and onshore wind form the basis for the least cost generation mix.
Key findings from the draft report
- Capital cost trends: Battery technologies continue to show significant double digit cost reductions; large scale solar has a first cost rise in three years; onshore wind costs show tentative signs of stabilising; while nuclear, coal and gas open cycle cost trends increase due to higher steam and gas turbine technology costs.
- 2030 generation costs: To meet Australia’s target of 82% renewable energy by 2030, the electricity cost is estimated to be about $91 per megawatt-hour (MWh) when transmission is included, or $81/MWh for generation alone.
- 2050 generation costs: To deliver net zero by 2050, generation costs were projected to be $135–$148/MWh including transmission, or $114-$124/MWh for wholesale generation costs only. This is slightly lower than the National Energy Market (NEM) volume-weighted generation prices of around $129/MWh in 2024-25.
- Electricity sector emissions: To deliver net zero by 2050, the efficient electricity sector emissions intensity is estimated at 0.02–0.05 tCO₂e/MWh, compared to the current level of about 0.5tCO2e/MWh. The report found eliminating all electricity sector emissions would be more costly than reducing emissions elsewhere in the economy. However, if electricity emissions intensity was higher than 0.05 tCO₂e/MWh, it would make achieving net zero more expensive overall.
In response to stakeholder feedback a more comprehensive method has been introduced.
The new system levelised cost of electricity (SLCOE) method estimates a mix of electricity generation sources and their costs, along with a new CSIRO-developed Simple Electricity Model (SEM) to apply it.
Unlike the levelised cost of electricity (LCOE) metric which compared costs of individual technologies, SLCOE considers the mix of technologies and transmission that deliver the lowest-cost electricity system across varying electricity emission abatement scenarios to 2050.
The SEM is designed to give industry users such as data scientists, engineers and academics more efficient and greater access to the electricity system modelling tools and data sets, which includes all renewable integration costs, used to derive GenCost’s conclusions. This technical model is publicly available here: Simple Electricity Model.
The report also provides an important clarification regarding the relationship between the underlying cost of new build electricity generation and the final retail price paid by customers. Currently, generation accounts for around 33 per cent of retail prices, transmission around 7 per cent and distribution around 35 per cent, with the remainder covering metering, retail services and government programs.
It notes key factors – such as supply and demand imbalances, global fuel price and weather volatility, and market competition – can significantly influence outcomes that ultimately impact electricity bills.
Collaboration
CSIRO and AEMO have collaborated on the annual GenCost report since 2018, delivering a policy-neutral and technology-agnostic assessment that provides industry decision makers with cost data for a range of new-build electricity generation and storage technologies to support electricity system modelling and planning for Australia.
The report is underpinned by a transparent and collaborative approach that considers stakeholder input and improves GenCost’s data and methodologies each year.
Stakeholders are invited to review the consultation draft and provide feedback. For details on how to participate, visit the AEMO consultation website.
Paul Graham, CSIRO Chief Energy Economist and GenCost Project leader said, ‘GenCost has evolved from delivering verifiable cost data on individual technologies to now also providing system modelling of the future generation mix and average cost of wholesale electricity.
‘Electricity systems will always require a diversity of resources to deliver all their functions and so no single technology will meet all the system’s needs regardless of its relative cost position.’
Nicola Falcon, AEMO Executive General Manager System Design said, ‘CSIRO’s process to regularly monitor, consult on and update generation technology cost trajectories is incredibly valuable in planning for a reliable and least-cost electricity market.’
Dr Dietmar Tourbier, CSIRO Director of Energy, said ‘Under any scenario, there is a cost associated with the build of Australia’s future electricity system and GenCost plays a vital role in producing and sharing trusted, evidence-based information with stakeholders to help understand that cost.
‘Through updating and publishing its data, its modelling and its cost projections every year, GenCost reflects the best available data in the most transparent way to help guide the electricity component of Australia’s energy transition journey.’
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