Verdict
No. Renewable energy, paired with energy storage and transmission is lower cost than coal, gas, and nuclear energy.
Analysis
Renewables remain the lowest-cost generation technology when compared to coal, gas and nuclear generation. This includes all associated costs, such as firming and transmission.
CSIRO’s GenCost study, which reviews and updates energy technology costs on an annual basis, shows that renewable energy firmed by energy storage, and including transmission costs, provides a lower ‘levelised cost of energy’ (LCOE)1 than black coal, gas or nuclear power2.
Estimates from Bloomberg NEF, one of the foremost firms in energy financial analysis , has also found that renewables – even when accounting for firming, back-up generation and transmission – deliver the lowest levelised cost of electricity3.
The Australian Energy Market Operator’s 2024 Integrated System Plan takes these generation LCOEs and develops a holistic analysis of how to build the lowest cost power system. The Integrated System Plan finds that renewable energy plants, paired with energy storage, back-up gas fired power generation and new transmission, delivers the lowest cost pathway to meeting our future energy needs, as Australia’s fleet of coal fired power stations exit, with renewables accounting for 94% of the power system (by capacity) in 20504.
Keeping coal generators online for longer will not be a cheaper solution for Australians as it will expose electricity consumers to more volatile market prices as the reliability of coal fired power stations approach or continue beyond their intended operational life.
It will also likely necessitate taxpayer funded subsidies to the plant owners to keep them going. This has already been seen in relation to the Yallourn Power Station in Victoria and most recently the Eraring Power Station in New South Wales. In the case of Eraring, the New South Wales Government struck a deal with the plant owners in 2024 to provide subsidies of up to $225 million per year for two years, to extend its operation to August 20275.
References
1 – LCOE is the standard metric used when determining the lowest cost and most efficient form of generation. It converts the full costs of any generation type into the price that generator needs to charge, to recover these costs. This makes LCOE a straightforward measure to compare costs, in current year dollars, that a power plant must charge for electricity to recover all costs and make a profit over the plant’s operational lifetime. The method includes all costs over the full lifetime of the plant’s operations, including siting and permitting, construction, grid connection, transmission, storage/firming for renewables, fuel costs for thermal and nuclear, and decommissioning.
2 – Commonwealth Scientific and Industrial Research. (2024). GenCost 2024-25 Report. URL: 24-00479_EN_INFOGRAPHIC_GenCost24-25Consultation_FINAL1_241.png (3508×2480). For the full report and other supporting information – click here. Note that CSIRO utilises financial firm Lazard’s annually updated LCOE: Lazard. (2024). 2024 LCOE+ Report, page 9. URL:https://www.lazard.com/research-insights/levelized-cost-of-energyplus/
3 – Bloomberg New Energy Finance. (2025). Levelized Cost of Electricity Update 2025: Record Lows. URL: https://www.bnef.com/insights/35825 (this is behind a paywall)
4- AEMO, 2024 Integrated System Plan, June 2024. https://aemo.com.au/-/media/files/major-publications/isp/2024/2024-integrated-system-plan-isp.pdf?la=en
5 – NSW Government. (2024). NSW Government secures 2-year extension to Eraring Power Station to manage reliability and price risks. URL: https://www2.environment.nsw.gov.au/news/nsw-government-secures-2-year-extension-to-eraring-power-station
