Here’s what you need to know about Australia’s energy future
Australia’s energy transition is well underway, but most of the people involved (and many consumers who are genuinely curious about what the future holds) are still wondering not only what our electricity system will end up looking like, but also how long it will take to get there and, of course, when and how we will see cheaper energy deals.
For the past eight years, GenCost has tried to analyse all the relevant data in order to answer those questions. This annual joint CSIRO and Australian Energy Market Operator (AEMO) report was specifically conceived to track the cost of building new electricity generation, storage and hydrogen technologies.
The 2025–26 Final Report was published last month, and it’s arguably one of the more important editions yet, given that it’s been released into a global energy market that’s being reshaped by conflict, AI infrastructure demand, and a fast-maturing battery industry.
Here’s what GenCost is, why it matters, and what this year’s findings mean for Australia’s path to net zero.
What is GenCost (and why does it exist)?
GenCost is a collaboration between CSIRO, Australia’s national science agency, and AEMO, the body responsible for operating the country’s electricity and gas markets.
Together they produce what’s become Australia’s most comprehensive annual assessment of the costs of new-build electricity generation, storage and hydrogen technologies.
The report exists because good energy policy – which is more likely to encourage good investment decisions – depends on reliable cost data. Governments, energy companies, investors and researchers all need a consistent, independent benchmark for comparing technologies like solar, wind, gas, coal, batteries and hydrogen on a level playing field.
Without that shared reference point, any debates about Australia’s energy future risk being based on assumption and ideology rather than evidence.
GenCost’s independence and rigour come from an extensive stakeholder consultation process. This year’s report incorporates industry feedback along with newer methods, including the use of market pricing data for near-term forecasts and open-source modelling tools designed to make the underlying analysis more transparent and easier to scrutinise.
The headline finding: stability amid global uncertainty
Global energy markets have been volatile, largely due to conflict in the Middle East and surging demand for gas infrastructure. However, the report’s core finding is that renewables backed by storage are acting as a stabilising force for Australia’s electricity system, continuing to represent the lowest-cost route to net zero emissions.
That suggests that the technologies Australia has been building out for over a decade aren’t just environmentally preferable, they’re also proving to be the more resilient economic choice when global supply chains and fuel markets are under stress.
Key findings from GenCost 2025–26
1. Technology costs are diverging
Batteries and gas are heading in opposite directions on price. Battery technology costs have been falling, while gas turbine costs are rising, largely due to a surge in global demand for gas turbines to power data centres in the United States. According to the International Energy Agency (IEA), US data centres have become one of the largest sources of gas turbine demand worldwide, and that pressure is pushing gas technology costs up, a trend that’s expected to continue.
It’s a useful reminder that Australia’s energy costs don’t exist in a vacuum. Decisions being made about AI infrastructure on the other side of the world are now just one more input into local electricity planning.
2. Batteries are reshaping the short-term market
As battery costs fall and capacity expands, storage is starting to directly compete with traditional gas peaking generation. GenCost’s modelling shows this shift is already putting downward pressure on wholesale peak prices, which should help deliver cheaper energy.
CSIRO Chief Energy Economist and GenCost Project Leader Paul Graham noted that, as battery costs continue to fall while gas technology costs rise, batteries are becoming the preferred flexible generation technology in the near term.
3. Renewables plus storage remain the lowest-cost pathway to net zero
This is the report’s central, ongoing conclusion: solar PV and onshore wind remain the cheapest way to build a net-zero electricity system.
GenCost projects they’ll supply 93 per cent of Australia’s electricity by 2050, supported by hydro, storage, transmission and flexible generation such as gas and hydrogen.
The report finds gas technologies will still play a limited but important firming role in the system, contributing somewhere between three and seven per cent of generation by 2050.
Interestingly, the report also acknowledges that some non-renewable options, like new black coal, could be cost-competitive with renewables on paper. The catch is that relying on them would require more expensive carbon abatement elsewhere in the economy to still hit Australia’s net-zero targets.
4. Long-term costs will rise across the board
Here’s a finding that might surprise people expecting electricity to just keep getting cheaper: GenCost projects that by 2050, all new electricity generation technologies (renewable and otherwise) will cost more than $100 per megawatt-hour.
That’s not a renewables-specific problem; it reflects the broader reality that today’s power stations are ageing, and replacing them at scale is inherently expensive, regardless of which technology fills the gap.
What’s happening to prices right now?
The report puts some real numbers around where the National Electricity Market (NEM) actually sits today. It found that average generation prices reached around $104 per megawatt-hour in 2025, a significant drop from the $189/MWh peak seen in 2022, when high global gas prices spiked costs across the system.
Meanwhile, electricity futures pricing suggests cheaper electricity deals may be just around the corner.
Why this report matters
GenCost isn’t just an academic exercise; it directly informs AEMO’s Integrated System Plan and shapes how governments, investors and industry think about Australia’s energy future.
As AEMO’s Executive General Manager System Design, Nicola Falcon, put it, the report’s value lies in the trusted, independent insight it provides to support planning for the country’s future electricity system, built on an ongoing collaboration between AEMO and CSIRO.
CSIRO’s Director of Energy, Dr Dietmar Tourbier, emphasised that the consultation process is what keeps GenCost grounded in diverse perspectives and the best available evidence, which is what makes it useful for genuinely transparent decision-making across the sector.
The takeaway
GenCost 2025–26 reinforces the analysis that renewables and storage remain the cheapest way forward, and short-term price trends are genuinely encouraging.
However, the report is also refreshingly honest about the pressures ahead: rising gas costs driven by global data centre demand, the eventual retirement of ageing infrastructure, and the reality that no technology will deliver electricity below $100/MWh in the long run.
The report paints the picture of a transition being shaped by global markets as much as local policy, and one where storage, rather than any single generation technology, is emerging as the quiet hero of the next few decades.
GloBird Energy recognised that was likely to be the case when we created the ZEROHERO plan specifically to give households with solar batteries the best return on that investment. It will be interesting to see how much further storage technology develops in the coming years, and we’ll be ready to adapt our electricity plans accordingly.
Read the full GenCost 2025–26 report on the CSIRO website.