Key facts
- A CSIRO report finds that abandoning net zero targets will not lower Australian power prices.
- Electricity generation costs are projected to increase after 2030, irrespective of net zero policy.
- Nuclear power is identified as the most expensive option for electricity generation in Australia.
- The report suggests wholesale electricity prices will likely remain below $100 per MWh in the near future.
- By 2050, wholesale electricity costs are expected to exceed $120 per MWh in most scenarios.
A new report from Australia's Commonwealth Scientific and Industrial Research Organisation (CSIRO) challenges the notion that abandoning net zero climate targets would lead to lower electricity prices. The annual GenCost report indicates that electricity generation costs are likely to increase after 2030, regardless of Australia's climate policy choices.
The report highlights that nuclear power, a technology promoted by the Coalition and One Nation parties, would be the most expensive method of electricity generation among current options. The CSIRO's analysis suggests that even with efficient deployment models, nuclear power cannot compete on cost with other available technologies in Australia.
Paul Graham, CSIRO's chief energy economist and the report's lead author, stated that abandoning net zero does not present a low-cost pathway for electricity. He explained that as coal-fired power plants retire, they must be replaced, and building new coal plants would result in similar electricity costs to replacing them with renewables. Delaying coal plant closures or building new ones would increase greenhouse gas emissions, requiring abatement efforts elsewhere in the economy, which is more costly than abating emissions in the electricity sector.
The report also noted that a surge in power-intensive data centers in the United States is driving up the costs of gas turbines. In Australia, batteries are increasingly fulfilling the role of gas in supplying electricity during evening peak demand periods.
Wholesale electricity prices, which constitute about 33% of a retail electricity bill, peaked at $189 per megawatt hour in the National Electricity Market in 2022. Projections suggest prices will drop to $104 per MWh in 2025 and likely remain below $100 per MWh for the coming years. However, as coal plants retire and new generation is built, wholesale prices are expected to rise, potentially exceeding $120 per MWh by 2050 across various scenarios. The highest costs are associated with scenarios that include nuclear power.
Despite global instability, the CSIRO continues to observe cost reductions in solar and battery technologies, contributing to Australia's energy resilience.