Wind and solar remain the lowest-cost new-build electricity generation sources despite inflationary pressures, new figures show.
Renewables, led by wind and solar, have retained their position as Australia’s cheapest new-build electricity generation despite a 20% average rise in technology costs, according to the latest GenCost report.
Released this week by CSIRO, the 2022-23 report marks the first time that all technology costs have increased from the previous year since GenCost commenced in 2018. This is attributed to the immense scale of manufacturing, raw materials and labour required to develop and deploy clean energy technologies consistent with net zero goals.
GenCost modelling projects that technology cost pressures felt in Australia will revert to normal levels by 2027, but are likely to be delayed to 2030 in global scenarios where the speed of the energy transition is highest.
CSIRO’s Chief Energy Economist and GenCost lead author, Paul Graham, said that the war in Ukraine war has also exacerbated the global supply chain inflationary pressures by raising energy input costs for all industries.
“During the recovery from these global events, various input costs are showing signs of moderation, however there is an expected delay due to future price uncertainties and the robust demand associated with the global energy transition”, Graham said.
“GenCost analysis anticipates that technology costs have mostly peaked and the risk of cost pressures extending beyond 2030 will be mitigated, as the global manufacturing capability established by that time will adequately meet deployment needs”, he concluded.
The report also showed that:
– Technology cost rises were not uniform due to variations in material inputs and exposure to freight prices;
– Globally, renewables led by wind and solar are the fastest growing energy source; and
– Batteries are set to play a crucial role in supporting both variable renewable generation in the electricity sector and the rapid expansion of electric vehicle deployment in transport.
The full 2022-23 GenCost report is available for download on the CSIRO website.
