CSIRO’s annual GenCost report, released recently as a draft for public consultation, has found technology cost increases averaging 20 per cent for new-build electricity generation in Australia. Despite these cost increases, the report remained consistent with previous years, showing that renewables (onshore wind and solar PV) remain the lowest-cost technologies.
GenCost is an annual collaboration between the national science agency CSIRO and the manager of the electricity and gas systems and markets across Australia, taking input from industry stakeholders to update electricity generation, storage and hydrogen production costs.
The 2022-23 consultation draft examines a range of future scenarios to analyse global technology deployment and associated costs for each pathway. Recently released modelling found that global supply chain constraints and inflation have placed upward pressure on technology costs following the COVID-19 pandemic.
Rises, as low as 9 per cent for solar PV and up to 35 per cent for wind, were not uniform due to variations in material inputs and exposure to freight prices. Modelling suggests that the inflationary cycle is likely to peak in 2022 and 2023, returning to normal cost levels by 2027.
The CSIRO Chief Energy Economist stated that innovation in electricity generation technology is a global effort that’s strongly linked to climate change policy ambitions. He added that technology costs are one piece of the puzzle, providing critical input to electricity sector analysis. To limit emissions, our energy system must evolve and become more diverse.
The 2022-23 consultation draft found that renewables are the fastest-growing energy source globally, led by wind and solar. The updated analyses also found that:
- The role of electricity is expected to increase materially over the next 30 years. Electricity technologies present some of the lowest-cost abatement opportunities.
- Batteries have a large future role in supporting variable renewables alongside other storage and flexible generation options and in growing electric vehicle deployment.
- Cost projections for nuclear small modular reactors (SMR) begin in 2030 since there is no prospect of a plant being deployed in Australia before this time. As the global distribution of nuclear SMR increases, significant cost reductions are expected. However, based on current projections, renewables (onshore wind and solar PV) remain the lowest-cost technologies.
The Executive General Manager System Design of the partnering power systems manager stated that the annual process to update electricity generation, storage and hydrogen technology cost trajectories is incredibly valuable as we plan for an accelerated transformation of the National Electricity Market.
He noted that the collaboration between the two parties has been critically supported by strong stakeholder engagement over the years. The GenCost project helps the parties as well as industry stakeholders, to together identify the assets needed to efficiently achieve a secure, reliable and, importantly, affordable electricity supply for consumers into the future. The final GenCost report will be delivered in mid-2023.
In 2022, the global renewable energy market was valued at US$1030.95 billion and is expected to hit over US$1,998.03 billion by 2030 with a registered CAGR of 8.6% from 2022 to 2030.
The hydroelectric power segment is projected to grow at a CAGR of 6.6% from 2022 to 2030. The solar energy segment is registering growth at a CAGR of 13.5% between 2021 to 2030. Moreover, the Asia-Pacific region is expected to grow at a CAGR of 9.7% from 2022 to 2030 and has gained a 35% market share in 2021.
