Solar and on-shore wind provide cheapest electricity and nuclear most expensive, CSIRO analysis shows

   According to new analysis from the CSIRO, electricity generated by solar and on-shore wind remains the cheapest option in Australia, even when considering the significant expense of integrating these sources into the power grid.

The draft GenCost report indicates that estimates for building small modular nuclear reactors, a technology supported by the Coalition but not expected to be commercially available until at least 2030, have risen dramatically, making them the most expensive power option.

Australia's electricity networks were originally designed for large coal-fired power stations. However, as these aging coal plants are being phased out due to the cheaper cost of renewable power, the country is shifting towards cleaner energy sources to meet its climate targets.

The transition from coal to renewables in Australia involves spreading more sources of generation across the country, resulting in a distributed energy system. This shift requires substantial investments in expensive transmission lines and other technologies, including storage, to ensure grid reliability while managing costs.

In response to criticism of the previous GenCost report for not including these integration costs until 2030, the new draft GenCost report from CSIRO has incorporated such considerations. The report acknowledges the necessity of accounting for the expenses associated with storage and transmission projects to integrate renewables, addressing concerns raised by critics. While renewables are considered the most cost-effective technology to meet Australia's climate goals, the updated report aims to provide a more comprehensive assessment of the associated integration costs.

"We took on board that feedback and included those pre-2030 costs, but we found the story doesn't change that much. Variable renewables still have the lowest cost range."

The updated GenCost report, currently under industry consultation, indicates that by 2030, a theoretical small modular nuclear reactor would have the second-highest cost range among available technologies. The most expensive option would be power from a peaking plant fueled by hydrogen. This underscores the continued cost-effectiveness of variable renewables in the energy landscape.

The Albanese government in Australia has set a target to achieve 82% of electricity generation from renewables by 2030. In an effort to expedite progress, the government expanded a taxpayer scheme to underwrite projects last month.

The costs associated with building small modular nuclear reactors, a concept that is largely theoretical, have increased since the last GenCost report. This change in cost estimates is based on new figures obtained from the most advanced US project in this field.

The Utah-based project, operated by NuScale, which was initially set to commence electricity generation in 2029, was canceled earlier this year due to a lack of customers for the power it would produce.

Despite the project's cancellation, Paul Graham mentioned that it has still contributed valuable real-world data on the actual costs associated with a nuclear small modular reactor (SMR). This information can provide insights into the economic viability and challenges associated with implementing such technologies.

"That is better quality data because it's from a real project, but, for the time being, we can only conclude it is the highest cost option for reducing emissions."

The GenCost report also provides updated capital costs for various technologies, accounting for inflation. According to Paul Graham, the report indicates that inflationary pressures have somewhat eased compared to the previous year, but there are still ongoing cost pressures on gas, wind, and nuclear small modular reactor (SMR) technologies.