Australia’s national science agency, CSIRO, and the Australian Energy Market Operator (AEMO), have released the final version of their GenCost report for 2021.
CSIRO and AEMO consult yearly with industry stakeholders to estimate the cost of generating electricity for new power plants in Australia before releasing the report.
The 2021 report used a new, more accurate approach for analysing the cost of renewables, to include additional ‘integration’ costs, finding that solar and wind are still the cheapest sources of new-build electricity – confirming the draft findings CSIRO initially released regarding the cost of renewable energy in December 2020.
CSIRO Chief Energy Economist, Paul Graham, said the early draft of the report, released to stakeholders in December 2020, had been improved to reflect feedback about the impact of weather variability on driving up these integration costs.
“The final report addresses this feedback: our analysis of renewable integration costs now includes greater recognition of this year to year weather variability and the impact it has on electricity demand and supply,” Mr Graham said.
“We took the integration costs from the highest of nine historical weather years.”
Stakeholders asked that the analysis recognise that batteries are achieving longer lives before they need to be replaced, whilst also costing less – meaning the costs of storage from batteries is lower than previously thought.
Battery costs fell the most in 2020-21 compared to any other generation or storage technology and are projected to continue to fall, lower battery storage costs underpin the long-term competitiveness of renewables.
Pumped hydro is also important to mention and is more competitive when longer durations of storage (above eight hours) are required.
The new approach is a model of the electricity system that optimises the amount of storage needed and also includes additional transmission expenditure.
With previous reports adding arbitrary amounts of storage costs and not including transmission or other costs.
For the first time the report includes hydrogen electrolysers and finds that hydrogen is following a similar trajectory to more established renewables.
Due to increased interest in global deployment and many demonstration projects worldwide, substantial cost reductions in hydrogen technologies are expected over the next decades.
CSIRO Chief Executive, Larry Marshall, wrote an exclusive op ed piece for Energy on the release of the GenCost report, which you can read here.