CSIRO, in partnership with the Australian Energy Market Operator, has released the GenCost 2025–26 Final Report, which assesses the costs of new-build electricity generation, storage and hydrogen technologies in Australia. The report says renewable generation backed by storage remains the lowest-cost investment pathway for an electricity system moving toward net zero emissions, and argues it can help reduce exposure to global energy shocks.
According to the report, electricity generation costs are expected to keep falling in the near term as battery storage costs decline and installed capacity expands. It also finds costs for fossil generation technologies are increasing, with demand for gas turbines—linked in the report to US data centre growth—contributing to higher prices for gas-based generation equipment.
GenCost’s analysis points to battery storage playing a larger role in the National Electricity Market, with new capacity and lower costs beginning to compete with traditional gas peaking generation. The report says this competition is contributing to lower evening peak prices.
The report cites an average NEM generation price of about $104 per megawatt-hour in 2025, down from a peak of $189/MWh in 2022, which it attributes to high global gas prices at the time. It says market expectations drawn from electricity futures indicate generation costs could fall further to between $80 and $90/MWh by 2030.
CSIRO Chief Energy Economist and GenCost project leader Paul Graham said GenCost tracks how global events and technology markets influence capital costs for generation. “As battery costs continue to fall and gas technology costs rise, batteries are increasingly becoming the preferred flexible generation technology in the near term,” Mr Graham said.
He added that GenCost modelling still forecasts a role for gas in system firming. “However, GenCost modelling finds gas technologies will still play a limited but important role in helping firm the electricity system, contributing around three to seven per cent of generation by 2050.”
The report also notes that some non-renewable technologies, including new black coal, may be cost-competitive with renewables on some measures, but says using them would require higher-cost carbon abatement elsewhere in the economy to meet Australia’s net-zero goals.
Under a net zero scenario presented in the report, solar PV and onshore wind are projected to supply 93 per cent of Australia’s electricity by 2050, supported by hydro, storage, transmission and flexible generation such as gas and hydrogen. It also projects that by 2050, all new electricity generation technologies will cost more than $100/MWh as ageing assets are replaced across the system.
“Each year GenCost, with the help of stakeholders, seeks to understand how electricity technology markets are changing. The impacts of the Iran war and data centre demand for gas turbines are currently the strongest drivers of uncertainty,” Mr Graham said.
AEMO Executive General Manager System Design Nicola Falcon said: “GenCost continues to be a respected example of collaboration between CSIRO and AEMO, providing trusted, independent insights that support planning for Australia’s future electricity system.”
CSIRO Director of Energy Dr Dietmar Tourbier said: “Consultation remains central to GenCost, ensuring the report reflects diverse perspectives and the best available evidence to support transparent decision-making across the energy sector.”
