A new report by Australia’s national science agency, CSIRO, has confirmed that renewable energy backed by storage remains the nation’s cheapest path to net-zero emissions while shielding the grid from global energy shocks.
The GenCost 2025–26 Final Report, released in partnership with the Australian Energy Market Operator (AEMO), reveals a widening cost divergence between emerging green technologies and traditional fossil fuels.
Near-term electricity generation costs are expected to slide as battery storage costs plunge and capacity expands. Conversely, the cost of gas-based generation is climbing, driven by surging global demand for gas turbines to power US data centres.
According to the review, solar PV and onshore wind are projected to supply 93 per cent of Australia’s electricity by 2050.
This green transition is already reshaping local markets, with growing battery capacity competing with gas peaking generation to drive down evening peak prices.
Wholesale electricity prices in the National Electricity Market (NEM) fell from a peak of AU$189 per megawatt-hour (MWh) in 2022 to approximately AU$104/MWh in 2025. Futures market data suggests they could drop to between AU$80 and AU$90/MWh by 2030.
However, CSIRO Chief Energy Economist Paul Graham warned that the era of ultra-cheap power will not last forever, with all new generation technologies projected to exceed $100/MWh by 2050 as the country replaces its ageing assets.
“As battery costs continue to fall and gas technology costs rise, batteries are increasingly becoming the preferred flexible generation technology in the near term,” Graham said.
He noted that while gas will play a diminished role, it remains crucial.
“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,” Graham said.
The report also cautioned that relying on non-renewable alternatives, such as new black coal, would force other sectors of the economy to absorb higher carbon abatement costs to meet national climate targets.
