Lower battery costs advancing Australia's net-zero goals: CSIRO

Renewable energy backed storage remains the lowest-cost pathway to achieving Australia's net zero electricity system, according to the latest GenCost report from CSIRO and the Australian Energy Market Operator (AEMO).

The report said falling battery costs are helping insulate the market from global energy shocks.

The 2025-26 GenCost Final Report found battery storage continues to deliver significant cost reductions, while demand for gas turbines driven by the rapid expansion of artificial intelligence data centres in the United States is pushing up the cost of gas-fired generation.

Australia's national electricity market generation prices have already eased to around $104 per megawatt-hour in 2025 from a peak of $189/MWh in 2022, with electricity futures indicating prices could decline further to between $80/MWh and $90/MWh by 2030.

CSIRO chief energy economist and GenCost project leader Paul Graham said battery storage was increasingly becoming the preferred source of flexible 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," Graham said.

"However, GenCost modelling finds gas technologies will still play a limited but important role in helping firm the electricity system, contributing around 3-7% of generation by 2050."

The report projects solar photovoltaic and onshore wind will account for 93% of Australia's electricity generation by 2050 under a least cost net-zero pathway, supported by hydro, storage, transmission and flexile generation including gas and hydrogen.

It also found while some fossil fuel technologies, including new black coal generation could appear cost competitive in isolation, they would require more expensive emissions reductions elsewhere in the economy to meet Australia's climate targets.

Gramham said geopolitical tensions as well as the increased need for energy to support AI infrastructure were creating uncertainty for energy markets.

"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," he said.

AEMO executive general manager of system design Nicola Falcon said the report continued to provide "trusted, independent insights that support planning for Australia's future electricity system."

This follows the release of the draft report in December last year, when CSIRO and AMEO similarly concluded renewables backed by storage remained Australia's cheapest source of new electricity generation. The final report retains that conclusion while incorporating stakeholder feedback, updated market data and new modelling tools to improve transparency.