The electricity generation system of Australia has been demonstrated to be economically viable through the draft report of the GenCost 2025-2026 from the Commonwealth Scientific and Industrial Research Organisation (CSIRO) and supported through its collaborative work with the Australian Energy Market Operator (AEMO). In this year’s draft of the annual GenCost report, CSIRO used modelling to assess the overall costs of achieving Australia’s targets for 82 per cent of all generating electricity will come from renewable sources in 2030 and to achieve net zero carbon emissions by 2050.

The core finding is unambiguous. In any of the scenario models examined, the optimal mix of new electricity generation technologies was determined to consist of solar PVs, onshore wind turbines, and energy storage systems (e.g., batteries), along with firming (or peaking) electric generation capacity from either natural gas or hydrogen at the lowest cost. The analysis also shows that including other forms of technology, such as CCS, offshore wind generation and nuclear plants increases the average cost of electricity to the consumer relative to a mixed technology solution using the four lowest-cost options mentioned above.

Cost Analysis: A Clear Roadmap to Cheaper, Cleaner Power

The report provides granular cost projections that underscore the economic advantage of renewables:

• 2030 Targets: The cost of electricity in Australia’s National Electricity Market (NEM) is expected to drop significantly by 2030; with the inclusion of new transmission infrastructure, NEM electricity costs will be approximately $91/MWh if the 82 percent renewable energy target is achieved. Current average costs are $129/MWh.

   

• 2050 Net Zero Pathway: The latest modelling suggests that to achieve a Net Zero grid in 2050, generation costs will be in the range of $135/MWh to $148/MWh, inclusive of transmission. Generation costs without the addition of new transmission infrastructure are projected to range from $114/MWh to $124/MWh, below the current cost of $125/MWh.
• Comparative Costs: The modelling clearly indicates that the comparative cost of generation from non-renewable sources is significantly higher than the cost of generation from renewables. For example, the modelling indicates that generating electricity from a new coal-fired power station would cost at least twice as much as generating electricity from new solar and wind projects.

Diverging Cost Trajectories Favor Clean Tech

The GenCost report highlights a clear divergence in cost trends between clean energy technologies and traditional fossil fuels, indicating easing inflationary pressures for the former.

• Batteries Lead Cost Reductions: Large-scale battery storage saw the most substantial capital cost reductions, falling by 11% to 16% in the latest period, building on a 20% drop the previous year.
• Solar and Wind Stabilize: While utility-scale solar PV costs saw an 8% increase in 2025-26—a reversal after years of decline attributed to short-term volatility—onshore wind costs dropped by 5%, showing “tentative signs of stabilising” after previous spikes.
• Fossil Fuel Costs Surge: In sharp contrast, the costs for coal and gas generation have risen significantly. CSIRO projects a 13% increase for coal and up to a 32% increase for gas-fired generation over the 2025-26 period.

Industry and Government Hail Report as a Clarion Call for Action

The report’s findings have been welcomed by industry leaders and government officials as a definitive guide for energy policy.
Federal Industry Minister Tim Ayres stated, “Renewables are not just the cleanest energy option, they’re the cheapest. The economics are clear. We need to crack on with the job at hand, building out more renewable energy more quickly to replace retiring coal-fired power generation.”
Jackie Trad, Chief Executive Officer of the Clean Energy Council, emphasized the systemic analysis. “The GenCost report’s assessment of electricity costs at a whole-of-system level… finds renewables-led systems consistently outperform alternatives on cost,” she said. “This is once again confirmation that the lowest-cost electricity system for Australia is built on renewable energy backed by storage and firming.”

The Bottom Line

The CSIRO GenCost draft report cuts through policy debates with hard, verifiable cost data. This plan shows an economically viable way to create a clean energy grid for Australia while simultaneously meeting an established goal of reducing greenhouse gas emissions (GHG). The plan provides evidence that the transition from fossil fuel-based energy sources to renewable (clean) energy sources is possible and will result in lower costs associated with providing reliable electricity to both residential and commercial users over time.