The Australian national science agency, CSIRO, and the Australian energy market operator, AEMO, have announced a new report on costs of electricity generation in the country.

The inaugural GenCost report, prepared collaboratively with a range of industry stakeholders, updates estimates of the cost to generate electricity from new power plants in Australia; GenCost 2018 found solar and wind technologies to be lowest cost.

CSIRO Chief Energy Economist and report lead author Paul Graham says GenCost 2018 was an essential annual benchmark to guide strategic decision making, given technology costs change significantly each year.

“Our data confirm that while existing fossil fuel power plants are competitive due to their sunk capital costs, solar and wind generation technologies are currently the lowest-cost ways to generate electricity for Australia, compared to any other new-build technology,” Graham says.

The authors largely based their analysis on levelized cost of electricity, which includes operating as well as investment costs, and is the best way known to compare the costs of different technologies, like fossil fuel plants (which require relatively low capital costs, but higher operating expenses) and wind and solar (which require high capital outlays but low operating expenses).

“Data from GenCost 2018, combined with some of our previous research, indicate we may need additional flexible technologies—such as energy storage, demand management, and peaking gas plants—if the share of variable renewables increases beyond 50 percent,”Graham says.

Research in 2019 will identify in more detail the least cost set of balancing solutions required by variable renewables once they represent a significantly larger share of the generation portfolio.