• Wind and solar are the most popular renewables in Australia
    Wind and solar are the most popular renewables in Australia
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Renewables remain the cheapest new-build electricity generation option in Australia, although inflation and supply chain disruptions will likely put cost reductions on hold for the next year, CSIRO’s annual GenCost report has found.

Each year, Australia’s national science agency CSIRO, and the Australian Energy Market Operator (AEMO), work with industry to give an updated cost estimate for large-scale electricity generation in Australia.

The report considers a range of future scenarios to understand the mix of technologies that may be adopted and costs for each of these possible pathways.

The 2021-22 report confirms past years’ findings that wind and solar are the cheapest source of electricity generation and storage in Australia, even when considering additional integration costs arising due to the variable output of renewables, such as energy storage and transmission.

According to CSIRO CEO Dr Larry Marshall said the latest report shows renewables are holding steady as the lowest cost source of new-build electricity.

“With the world’s largest penetration of rooftop solar, unique critical energy metals, a world class research sector and a highly skilled workforce, Australia can turn our challenges into the immense opportunity of being a global leader in renewable energy,” he said.

Projections in the report assume that cost reductions for all technologies will stall for the next 12 months because tight global supply chains will require more time to recover from the pandemic.

However, after the current inflationary cycle ends, solar, wind, and batteries are all projected to keep getting cheaper.

CSIRO chief energy economist Paul Graham said researchers had observed year-on-year cost reductions for most technologies and this year’s report is no exception.

“What will be different in the next year is that we will have a confluence of factors impacting project costs. The war in Ukraine has resulted in fossil energy price inflation which flows through to all parts of the economy through transport and energy costs. We also have tight supply chains that are still recovering,” he said.

The final 2022 report also includes an update on costs of hydrogen electrolysers which are experiencing rapid cost reductions and could support a faster transition to green hydrogen, particularly in the current context of high natural gas prices.

The updated analyses also found that both onshore and offshore wind costs have fallen faster than expected.

Cost reductions for technologies not currently being widely deployed such as carbon capture and storage (CCS), nuclear Small Modular Reactors (SMRs), solar thermal, and ocean energy are lagging and would require stronger investment to realise their full potential.

The report also found the status of nuclear SMR has not changed. Following extensive consultation with the Australian electricity industry, report findings do not see any prospect of domestic projects this decade, given the technology’s commercial immaturity and high cost.

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