The Coalition and One Nation’s assertion that scrapping Australia’s net zero emissions target by 2050 would reduce power prices has been directly contradicted by the latest CSIRO GenCost report. The annual analysis of electricity generation costs reveals that abandoning the target does not open up a cheaper pathway for electricity generation, and that nuclear power—championed by both parties—remains the most expensive option available.
Generation Costs to Rise After 2030 Regardless of Net Zero Policy
According to the CSIRO’s chief energy economist and lead author Paul Graham, generation costs are projected to increase after 2030 irrespective of Australia’s stance on net zero. However, prices are expected to stabilise below the recent peak levels seen in 2022. The wholesale price of electricity across the National Electricity Market (covering all regions except Western Australia and the Northern Territory) peaked at $189 per megawatt hour in 2022 before dropping to $104 per MWh in 2025. Analysis of electricity contracts suggests prices will likely remain below $100 per MWh in the near term, but as coal plants retire and new generation is built, wholesale prices will rise.
Nuclear Power Found to Be Most Expensive Generation Option
The report consistently identifies nuclear power as the most costly method of generating electricity in Australia. Even when basing costs on South Korea’s efficient nuclear deployment, the CSIRO found that nuclear cannot compete with other options. Paul Graham stated: “We consistently find that nuclear is the most expensive option for electricity generation in Australia. Even when we base our costs on South Korea’s very efficient deployment of nuclear, we still can’t see that it can be competitive relative to the other options that we have.”
Impact of Data Centres and Battery Storage
The GenCost report highlights that a surge in power-hungry data centres in the United States is driving up the costs of gas turbines. Meanwhile, batteries are increasingly replacing the role of gas in providing electricity during evening peaks in Australia. Graham noted: “We have been tracking electricity costs for eight years and the market still surprises us. We are still delivering cost reductions in solar and batteries when the world is really unstable. It has made Australia far more resilient than a lot of people appreciate.”
Coal Plant Closures and Emissions Abatement
Graham explained that if coal plant closures are delayed or new coal plants are built, greenhouse gas emissions in the electricity sector would increase. He emphasised that the cost of abatement is lower in the electricity sector than in the rest of the economy, making it more efficient to pursue net zero in electricity generation. “If you do want to reach net zero then you have to do that abatement somewhere else,” he said. “The analysis shows the cost of abatement is lower in the electricity sector than the rest of the economy.”
Components of Retail Electricity Bills
The wholesale price of electricity accounts for only about 33% of a typical retail electricity bill. Transmission via high-voltage power lines and towers makes up 7%, while local distribution through poles and wires contributes 34%. The remaining costs include metering, retail charges, and government programs. By 2050, wholesale electricity costs are likely to exceed $120 per MWh in all scenarios, with the highest costs associated with nuclear power.
