Why is CSIRO hiding the inconvenient truth about renewables cost blowout?

If coal is cheaper, why does the CSIRO proclaim “renewables remain the lowest-cost new-build electricity generation technology”?

The CSIRO just admitted that coal is cheaper than renewables. But you wouldn’t know it from the headlines.

CSIRO’s 2024-25 GenCost report released this week provides the latest annual cost data for new-build electricity generation technologies.

Assuming all the GenCost assumptions are correct, the report revealed that ‘integrated renewables’ — which includes storage and transmission — cost on average 4 per cent more than black coal projects.

So if coal is cheaper, why does the CSIRO proclaim “renewables remain the lowest-cost new-build electricity generation technology”?

It’s because the CSIRO has cherrypicked the results most favourable to renewables.

The federal government has always avoided admitting renewables will not lower electricity prices for consumers — especially given Energy Minister Chris Bowen’s recent announcement of a 25 per cent expansion to the Capacity Investment Scheme.

Minister for Climate Change and Energy, Chris Bowen. Picture: NewsWire / Martin Ollman

The scheme will provide an unknown — and likely enormous — amount of taxpayer underwriting to wind, solar and battery investors to prop up the currently slow renewables rollout.

Renewables’ ongoing need for taxpayer support makes it increasingly difficult for the government to argue they are cheap. GenCost’s annual crowning of renewables as the cheapest is crucial for protecting the government’s narrative.

Electricity lines passing near the emission funnels of the Bayswater coal-powered thermal power station near the central New South Wales town of Muswellbrook. (Photo by DAVID GRAY / AFP)

While coal is cheaper than renewables for GenCost’s 2024 analysis, the report also compares cost estimates for projects built in 2030, and this is where the CSIRO’s claim that renewables are cheaper comes from. But integrated renewables only look cheaper in 2030 because the CSIRO assumes pre-2030 storage and transmission projects will be built for free.

Worst of all, the CSIRO have chosen unrealistic assumptions that make new coal plants look more expensive than they would be in reality. When these assumptions are fixed, coal is hands down the clear cost winner.

For example, only brand new coal plant sites are considered. New coal units or refurbishments of existing plants are ignored, despite multiple plants having space for new units. This greatly increases the coal project cost estimate because new roads, transmission and other infrastructure would have to be built from scratch.

And not only are the sites brand new – the CSIRO ignores coal plant designs already in use in Australia in favour of a more expensive design yet to be built anywhere in the world; using unprecedented steam temperatures and pressures. If Australia wants to build new coal plants at the lowest cost, going for an established design is a no-brainer.

James Petersen and his neighbours are butting heads with Transgrid over the construction of transmission lines on their rural properties. Picture: Ash Smith

CSIRO’s assumptions around integrated renewables are also deeply flawed. For a publicly funded scientific institution, the CSIRO has displayed a concerning lack of transparency in refusing to release the details of how it calculates the component costs that comprise its integrated renewables cost estimates.

Its Chief Economist, Paul Graham, stated in a 2024 GenCost consultation webinar that the CSIRO is “reluctant to dump a whole lot of that modelling detail out there, because we’re trying to support AEMO and the ISP process”.

What he was referring to is the Integrated System Plan: the government’s roadmap that includes the practically unattainable goal of reaching 82% renewables by 2030.

In other words, CSIRO’s experts have not released their modelling because they are afraid of contradicting the government’s existing plan. Instead of providing frank and fearless technical advice to government to ensure consumers are not paying more than they have to, the CSIRO has become the government’s cheer squad.

This lack of transparency means there is no way of knowing whether the CSIRO has included enough system stability infrastructure in its model to ensure ‘least-cost’ renewables can keep the lights on.

The Hampton Wind Park near Hampton, close to the Blue Mountains (Photo by SAEED KHAN / AFP)

Likewise for transmission, the CSIRO has not provided a list of included projects and does not appear to have factored in the recent 25 to 55 per cent cost increases observed for major transmission projects this year.

Then there is the issue of storage costs, which have likely been greatly underestimated. Battery expert Alex Wonhas has indicated Australia may need more than double the amount of battery storage previously thought; something the CSIRO seems to have ignored.

While some may say coal is more expensive than renewables due to ‘climate costs’, the social licence for the energy transition thus far has been based on the belief renewables are cheaper purely on an economic basis.

The CSIRO claims to have produced “accurate, policy and technology-neutral cost estimates”, so GenCost’s results should reflect realistic project costs regardless of emissions reduction targets.

If the CSIRO wants to regain the trust of consumers, it needs to be willing to provide realistic and transparent cost estimates — even if this means ruffling the feathers of our energy ministers.

Zoe Hilton is a Senior Policy Analyst at the Centre for Independent Studies.