Wind and solar remain Australia's cheapest options for electricity generation, according to the national science agency.
The Commonwealth Scientific and Industrial Research Organisation (CSIRO) and Australian Energy Market Operator (AEMO) on Friday released the annual GenCost report, finding global supply constraints in the wake of the coronavirus pandemic drove a rise in technology costs over the last year.
On average technology costs increased 20 percent, ranging from as low as 9 percent for rooftop and large scale photovoltaic solar systems to 35 percent of onshore wind farms.
Despite the significant increase, onshore wind remained one of the two cheapest electricity generation technologies with solar.
"The difference in cost increases mostly reflects differences in material inputs and exposure to freight costs," the report said.
Among fossil fuels, the cost of generating electricity by burning black coal increased by 24 percent and that of using open cycle gas turbines by 31 percent.
According to the modeling in the report, the inflationary cycle is expected to peak in 2022 and 2023 before returning to pre-pandemic cost levels by 2027.
It forecasts the role of electricity will increase materially in the next 30 years due to generation technologies offering some of the cheapest emissions abatement opportunities.
"Innovation in electricity generation technology is a global effort that is strongly linked to climate change policy ambitions." Paul Graham, the CSIRO chief energy economist and co-author of the report, said in a media release.
"Technology costs are one piece of the puzzle, providing critical input to electricity sector analysis. To limit emissions, our energy system must evolve and become more diverse."
Editor: Galia
