Over the next two decades, Australia will need to reduce its electricity sector emissions to near zero.

It will need to do this while meeting rapidly increasing electricity demand to support other sectors of the economy in decarbonising. 

Climateworks Centre modelling shows that deploying renewables with battery storage is the most cost-effective way to achieve this. 

Renewables could also provide Australia with some of the world’s most competitive electricity prices, positioning the country to prosper in a global green economy.  

Climateworks’ least-cost model chooses renewables every time  

For more than a decade, Climateworks has used the AusTIMES model to explore possible futures for Australia’s major sectors – including the electricity sector. 

The AusTIMES model is least-cost and technology-agnostic. 

That means all forms of energy generation are available in the model – such as coal, gas, wind, solar and small nuclear reactors – but it deploys only the technology that will reduce emissions at the lowest overall cost. 

Our modelling results consistently show that deploying renewables is the cheapest way to decarbonise the grid.  

Sun, cloud, rain or hail, renewables are the most effective electricity source

In addition to finding the lowest-cost option, the model must ensure enough electricity supply to meet demand at any given time.

Even considering renewable energy’s intermittency, the modelling finds it to be the most effective source of electricity due to its lower costs, emissions and build time.  

To ensure a reliable electricity supply, battery storage is added to the system, and some gas-powered generation remains – but this makes up less than 1 per cent of total generation and is only used on rare occasions when demand exceeds supply.  

Renewable energy is cheaper for consumers in the long run 

Renewable energy is the cheapest source of new energy generation, according to CSIRO and the International Energy Agency. 

In Australia’s energy market operator’s 25-year roadmap to decarbonise the country’s main energy grid, renewables are the lowest-cost electricity supply. 

Transmission projects are expected to recoup investment costs, save consumers almost $19 billion in avoided energy costs and support emissions reductions valued at more than $3 billion.      

Australia has everything to gain from a rapid renewables uptake

Australia has abundant renewable energy resources, such as wind and solar, as well as extensive land area. 

Our modelling shows that if Australia uses this natural advantage and deploys renewable energy at scale, the country’s electricity costs could be among the best in the world. 

Business as usual in the energy sector results in a different future for energy prices. 

Australia could fall behind China, India, Western Europe, Africa, North America and the Middle East in terms of electricity costs. 

Action is needed now to safeguard Australia’s future energy system 

Our modelling shows that in 2030, Australia could need around 350 TWh (or 130 GW) of renewable energy. In 2050, this number increases to almost 600 TWh or 260 GW. 

Luckily, renewable energy is a proven technology and Australia has a track record of delivering renewable energy projects.  

In 2023, Australia generated just over 93 TWh of renewable energy – 35 per cent of the country’s total electricity.  

Current renewable energy capacity is around 55 GW and another 180 GW is waiting for approvals, contracts, or connection to the grid.

If the country continues to build on this momentum, it could cement itself as a leading country in the global net zero emissions economy.