Electricity generation costs would be a third lower with 82% renewable grid, CSIRO says | Energy

The cost of generating electricity in an Australian grid powered by 82% renewable energy would be a third cheaper than current wholesale electricity costs, according to a new CSIRO analysis.

The organization has for the first time modeled the likely cost of generating electricity from different combinations of technologies that could make up Australia’s grid in 2030 and 2050. Previous work has only looked at the comparative costs of individual technologies.

Modeling suggests that by 2050, the country’s main electricity market – covering all states and territories except the Northern Territory and Western Australia – could run almost entirely on renewable energy without any increase in the cost of electricity generation.

_{Subscribe: Email AU Breaking News}

The findings contradict the Coalition’s claims that adding solar, wind and storage such as batteries to Australia’s grid would lead to higher electricity costs.

The Albanian government has set a target for 82% of electricity generation to come from renewable energy by 2030, but many experts warn that this target is at risk of being missed.

The CSIRO GenCost report found that a grid with this level of renewable energy would result in wholesale electricity costs of $91 per megawatt hour, including the additional cost of connecting renewables in 2030. This compares to the current average cost of $129 per MWh, the report said.

The actual cost of renewable generation is likely to be lower because the CSIRO has taken the most expensive year for solar and wind power between 2011 and 2023 as a benchmark.

The cost of wholesale electricity accounts for about a third of national bills.

Another third comes from the cost of distributing electricity via local poles and wires, with the rest made up of transmission costs, retail costs and government programs.

The price of electricity has been a dominant political issue this year, with the Coalition blaming the influx of renewable energy for a 40% increase in electricity bills.

In the 12 months to October, electricity bills jumped 37.5%, mainly due to the exhaustion of federal and state government rebates, the Australian Bureau of Statistics said. Excluding these rebate changes, electricity prices have increased by 5% over the past year, the ABS said.

The CSIRO modeled a series of scenarios to estimate electricity costs in 2050, from a future in which there are no system-wide emissions reductions after 2030 to a completely emissions-free grid.

The GenCost report found that it was “not economically efficient” to have a completely emissions-free network.

The report instead suggests using fossil gas rather than green hydrogen to keep the network running.

If Australia aimed to achieve net zero emissions across its economy, it would be more efficient, the report said, to allow a small amount of gas emissions into the electricity system and then capture the CO2 elsewhere in the economy.

The report finds that the cheapest option for generating electricity would be to use only mature technologies – coal, gas, solar and onshore wind – and not make further efforts to reduce emissions from the electricity market beyond 2030.

In all scenarios, the addition of offshore wind, fossil fuel generation with carbon capture and storage, and nuclear increased the wholesale cost of electricity.

Elsewhere, the report examined the changing costs of different technologies and found that the biggest change was in the price of batteries, which fell 15% year-on-year, following a 20% drop the year before.

The largest cost increases were in open-cycle coal and gas production due to rising turbine manufacturing costs. The costs of large-scale solar power have increased slightly and those of onshore wind have shown “tentative signs of stabilization.”