News Just in | CSIRO: Scrapping Renewables Would Not Make Electricity Cheaper

One of the biggest claims by many media organisations, think tanks and politicians is that abandoning renewable energy would lead to lower electricity prices. However, the latest analysis from Australia’s national science agency specifically CSIRO, suggests it is not supported by the evidence.

The CSIRO’s GenCost 2025–26 Final Report, produced in partnership with the Australian Energy Market Operator, found that electricity-generation costs are likely to increase as Australia’s ageing power stations are replaced, regardless of whether the electricity sector continues towards net-zero emissions. In other words, scrapping renewable-energy targets would not allow Australia to avoid the cost of rebuilding its electricity system.

Australia’s coal stations must be replaced

Much of Australia’s existing coal-fired generation was built decades ago. As these power stations retire, new generation must be constructed to replace them. That replacement infrastructure will cost money whether it consists of renewable energy, storage, gas or new coal. CSIRO projects that generation costs will rise from approximately $80–$90 per megawatt-hour to more than $100 per megawatt-hour as older and comparatively inexpensive generators leave the system. It says all replacement options are expected to cost more than much of Australia’s existing generation fleet.

This is an important distinction. Higher future costs are not simply the result of building renewables. They also reflect the unavoidable expense of replacing ageing infrastructure. Coal-fired power stations cannot operate forever, and continuing to rely upon them does not remove the need to invest in new generation.

Renewables remain the lowest-cost foundation

CSIRO found that solar photovoltaic generation and onshore wind form the foundation of the least-cost future electricity mix. When storage, transmission and the need for reliable supply are considered, renewable generation supported by storage remains the lowest-cost investment pathway for achieving net zero. Under CSIRO’s modelling, solar and onshore wind would provide approximately 93 per cent of electricity generation by 2050, supported by hydro, batteries, transmission and a limited amount of flexible generation such as gas or hydrogen.

This does not mean CSIRO is recommending that Australia rely exclusively on wind and solar. The organisation explicitly says a reliable electricity system requires a mixture of technologies. Storage can move renewable electricity to the times when it is needed, while hydro and limited flexible gas generation can respond when renewable output is low or demand is unusually high. The evidence therefore does not support the false choice between an entirely renewable grid and an entirely fossil-fuelled one. The real question is which combination of generation, storage, transmission and firming can provide reliable electricity at the lowest overall cost.

Would building more coal reduce prices?

CSIRO’s findings contain an important nuance. Its modelling found that including a small amount of new coal could slightly reduce electricity-generation costs under certain assumptions. However, renewables would still supply the majority of electricity, and a system dominated by new black coal could not deliver lower costs than a low-emissions, renewable-based system.

There would also be a larger economic consequence. Using more coal would increase electricity-sector emissions, requiring Australia to achieve more expensive emissions reductions in transport, industry, agriculture or other parts of the economy to meet its overall net-zero commitment. Any small saving within the electricity system could therefore produce greater costs elsewhere. That is why claims that Australia can simply build new coal stations and enjoy cheaper power dramatically are misleading. They ignore construction costs, financing, emissions obligations and the reality that the existing coal fleet must eventually be replaced.

Batteries are beginning to challenge gas

CSIRO also found that falling battery costs are changing the economics of Australia’s electricity market. Large-scale batteries can store inexpensive electricity produced by solar farms during the day and release it during the evening peak, when electricity demand and wholesale prices are usually higher. This allows batteries to compete increasingly with gas-fired generators that have traditionally supplied electricity during periods of peak demand.

AEMO has reported that batteries are already shifting growing quantities of daytime renewable energy into the evening peak, helping moderate electricity prices during high-demand periods. At the same time, strong international demand for gas turbines—partly associated with expanding data-centre electricity requirements, has contributed to higher costs for new gas generation.

Home batteries can also support the grid

The benefits are not limited to large batteries connected directly to the electricity network. Household batteries can store excess rooftop-solar electricity during the day and use it in the evening, reducing the amount of electricity a household needs to draw from the grid during peak periods. This can lower the household’s electricity costs while also reducing pressure on the wider electricity system. The Australian Government’s energy information service states that batteries can lower costs across the grid by reducing pressure during peak times.

This becomes particularly valuable during very hot afternoons and evenings, when air conditioners and other appliances can cause electricity demand to surge. When thousands of households use stored energy instead of drawing electricity from the network at the same time, the combined reduction can help ease peak demand, reduce the need for expensive gas generation and potentially delay some costly network upgrades.

Home batteries can provide even greater system-wide benefits when connected through a virtual power plant. A virtual power plant coordinates many household batteries so they can respond collectively to electricity-system conditions. Participating batteries may discharge during periods of high demand or high prices, effectively operating like a larger power station distributed across thousands of homes. AEMO says households with batteries reduced their average electricity draw during the evening peak by nearly one kilowatt in the first quarter of 2026. It found that this reduced households’ bills while also benefiting the broader electricity system by lowering overall demand.

The potential is particularly relevant in Western Australia. AEMO has forecast that coordinated household batteries operating as virtual power plants could reduce peak demand in the South West Interconnected System by approximately 200 megawatts in 2028–29. CSIRO reported that the average National Electricity Market generation price was approximately $104 per megawatt-hour in 2025, down from the extraordinary peak of $189 per megawatt-hour in 2022, when international gas prices surged following Russia’s invasion of Ukraine. Electricity futures indicated that generation prices could fall to around $80–$90 per megawatt-hour by 2030, assisted by increased battery capacity and reduced reliance on expensive gas during the evening peak.

This is another reason why increasing dependence on fossil fuels does not automatically produce cheaper electricity. Coal and gas expose consumers to continuing fuel costs, outages and international commodity-market volatility. Batteries, by contrast, allow Australia to make better use of inexpensive solar and wind generation while helping balance supply and demand when the electricity is most needed.

Renewables are not the only factor affecting bills

It is also important not to confuse generation costs with household electricity bills. According to CSIRO, electricity generation accounts for approximately 33 per cent of the average retail bill. Transmission contributes around 7 per cent, distribution networks approximately 35 per cent, while the remaining share covers metering, retail services and government programs.

Retail prices are also affected by supply and demand, market competition, extreme weather, network investment, the speed at which new capacity is connected and the timing of power-station closures.

CSIRO says there is no simple direct correlation between a country’s proportion of renewable electricity and the prices paid by consumers. A poorly managed transition can contribute to higher prices if old generation closes before adequate replacement capacity is ready. That is an argument for better planning—not for abandoning the lowest-cost replacement technologies.

Evidence must come before slogans

Australians deserve an honest energy debate. Renewable energy is not free. New transmission lines, storage facilities and generation projects require substantial investment, and communities affected by new infrastructure deserve genuine consultation and appropriate benefits. However, fossil-fuel alternatives are not free either. New coal and gas stations require construction, fuel, maintenance and financing. They also expose consumers to commodity-price volatility and create additional emissions that must be addressed elsewhere if Australia is to meet its climate commitments.

CSIRO’s findings do not claim that electricity prices will never rise during the transition. Rather, they demonstrate that abandoning renewable energy would not make the underlying cost of replacing Australia’s ageing electricity system disappear. The evidence points towards a diversified grid built principally around low-cost solar and wind, supported by storage, transmission, hydro and limited flexible generation. Scrapping renewables might make for an effective political slogan. It is not a credible plan for delivering cheaper electricity.

References

Australian Energy Market Operator — AEMO supports release of CSIRO GenCost 2025–26 Final Report, 15 July 2026.

CSIRO — GenCost 2025–26 Final Report and key findings. The report compares new electricity-generation and storage costs and introduces system-level modelling that includes transmission, storage and renewable-integration costs.

CSIRO — “GenCost 2025–26: Renewables and storage a source of stability amid global uncertainty,” 15 July 2026.

CSIRO — GenCost Frequently Asked Questions. Includes explanations of future generation costs, coal modelling, renewable integration and the relationship between wholesale generation costs and retail prices.

Australian Government — Batteries. Explains how household batteries can reduce peak demand, household bills and pressure on the electricity grid.

Australian Energy Market Operator — Near-term electricity supply outlook improves in Western Australia’s main power system. Includes AEMO’s forecast that coordinated household batteries could reduce Western Australia’s evening peak by 200 MW in 2028–29.