Renewable energy generation supported by storage and additional transmission remains Australia’s cheapest form of energy, the latest report suggests.

And nuclear power remains the most expensive technology.

Australia’s national science agency the CSIRO has released the 2024-25 edition of its GenCost report.

Prepared in conjunction with the Australian Energy Market Operator AMEO), the report provides an annual assessment of the overall costs which are associated with different forms of energy generation across Australia.

This includes costs associated with design, construction, operation and maintenance over the lifecycle of assets. It includes a developer profit margin.

Overall, the report found that renewable technologies such as solar and wind remain the cheapest form of energy generation.

This remains the case even after allowing for a range of additional costs which are associated with renewable assets in order to maintain a secure and reliable energy supply in light of the intermittent nature of renewable generation.

Such costs include the need to support renewables with storage (batteries/pumped hydro etc.), additional transmission to connect new renewable assets to the grid and costs associated with system security and spilled energy (excess energy from wind and solar assets which is not used or delivered to the grid for reasons such as grid constraints or market conditions).

These factors have been included in the report’s costs for renewable assets.

Close on the heels of renewables in terms of competitiveness are black coal and gas.

However, these technologies become considerably more costly if carbon capture and storage are included – something which may well be needed if these technologies are to play a role in Australia’s energy transition.

Large scale nuclear facilities are more expensive whilst small modular reactors are many times more expensive compared with other technologies.

Meanwhile, the report found that costs associated with both solar generation and batteries are falling again after COVID saw a spike in the cost of building every generation assets.

Across the past financial year, battery costs fell by 20 percent whilst those associated with solar contracted by 8 percent.

However, costs associated with gas, wind and coal continued to grow (see chart).

(image source: CSIRO GenCost report 2024/25)

Ongoing debate

The latest report comes as energy policy remains a significant feature of Australia’s pollical debate.

With a resounding victory in the May election, the Albanese Labor Government is attempting to transition the nation’s energy system toward a lower carbon future with renewable energy supported by storage (batteries, pumped hydro), additional transmission and gas to support intermittent renewable generation.

By 2030, Labor aims to achieve 82 percent renewable penetration of the nation’s energy market and carbon reductions of 43 percent compared with 2005 levels.

The Coalition, by contrast, ran on a platform of supporting intermittent renewable energy generation with seven nuclear power plants.

Whilst the Coalition took a policy of net zero emissions by 2050 to the last election, it is now facing pressure to dump this policy in the wake of its election defeat.

Responding to criticism

In its latest report, the CSIRO has responded to criticisms which have been levied against previous versions of the report by advocates of nuclear energy.

Broadly speaking, the criticisms assert that:

• The report does not account for potential cost advantages which may be associated with the longer lifespan of nuclear assets compared with that of renewable assets.
• The ‘capacity factor’ which the report assigns to nuclear generation is too low. (Capacity factor indicates how efficiently a power plant utilises its potential to generate electricity.)
• The lead time which the report has assumed is required to develop a nuclear power plant (at least 15 years) is too long.

On the first point, nuclear energy advocates suggest that the longer lifespan of a nuclear power plant (commonly 40 to 60 years) as opposed to that of renewable energy assets such as wind farms and solar farms (20 to 30 years) should imply a cost advantage for nuclear when compared with renewables.

In the 2024/25 edition of its report, the CSIRO has calculated these impacts for the first time.

However, it fond that there are no unique cost advantages which arise from the longer lifespan of the life of a nuclear power plant. This is the case even as solar and wind assets would need to be built twice in order to achieve the same lifespan.

Primarily speaking, the report attributes this to the need for substantial refurbishment costs which are needed with a nuclear power plant to maintain safe operation over that longer timespan along with the falling cost of renewables (which means they will likely cost less to rebuild in 20 to 30 years’ time).

In addition, when you add the 15-year development timeframe which is associated with nuclear development to the 20-to-30-year life of a solar or wind farm, any comparative cost advantages from the longer life of nuclear are not available until at least 45 years from now. This significantly reduces the value of those assets, the CSIRO says.

Turning to capacity factors, critics charge that the range of 53 percent to 89 percent on which the report bases its calculations for nuclear energy are too low.

They argue instead that a single capacity factor of 93 percent should be used – equivalent to the average which is achieved in the United States.

In its report, the CSIRO acknowledges that capacity factors of 90 percent or more are genuinely achievable.

However, it points out that the international average capacity factor for nuclear generation is 80 percent – with as many as 10 percent of plants achieving a capacity factor of less than 60 percent.

Accordingly, the CSIRO argues that the range used in its report is reasonable in light of international experience.

At any rate, the report points out that more than 100 years of baseload generation data in Australia (admittedly based on coal rather than nuclear) suggests an average capacity factor over the past decade of only 59 percent – albeit with some plants achieving a 90 percent capacity factor.

In relation to the final point, the latest GenCost report has assessed that the lead time to develop a nuclear power plant is at least 15 years.

To be sure, the report acknowledges that in 2015, the International Atomic Energy Agency (IAEA) estimated that nuclear power plants would take on average around 10 to 15 years to develop – a shorter timeframe compared with what has been assumed in the GenCost report.

The report also acknowledges that the Unite Arab Emirates completed a recent nuclear project in twelve years.

However, the CSIRO argues that the median timeframes for the construction phase of nuclear power plant development has increased from 6.0 years when the IAEA made its estimate in 2015 to 8.2 years today – a phenomenon it stresses was not simply a result of the pandemic.

For this reason, applying the IAEA’s estimate of 10 to 15 years back in 2015 would lead to an expected timeframe that would likely be at least 15 years now.

Moreover, countries with faster nuclear development timeframes tend to have lower levels of democracy.

Australia with its relatively high level of democracy (and as a learner in the nuclear field) would likely have a longer development timeframe for nuclear power plants when compared with countries such as the UAE referred to above.

(source: as above)

A comprehensive report

CSIRO’s Director of Energy, Dr Dietmar Tourbier, said that the report is Australia’s most comprehensive source of electricity generation cost projections and supports evidence-based decisions across the sector.

“GenCost delivers transparent, independent cost estimates that feed directly into electricity system modelling and investment planning,” Tourbier said.

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