GenCost 2025-26 Finds Storage-Backed Renewables Cheapest on Grid as Australia's Battery Fleet Triples
CSIRO and AEMO's annual cost report puts renewable generation with storage below fossil alternatives, as Australia's utility-scale battery capacity surges 233% in one year.
CSIRO and the Australian Energy Market Operator published their GenCost 2025-26 Final Report on Monday (2026-07-14), finding that storage-backed renewable generation now delivers the lowest electricity generation costs available to the Australian grid and provides a hedge against global fuel price shocks. The report puts that conclusion on official record at a moment when Australia's battery fleet has undergone its largest single-year expansion.6
Electricity generation costs are projected to continue falling in the near term as battery storage costs decline and capacity expands. Fossil generation technology costs are moving in the opposite direction, rising due to global supply pressures, according to the GenCost analysis reported Tuesday (2026-07-15). The divergence, if sustained, steadily narrows the economic case for new gas-fired capacity in the National Electricity Market.7
Behind those projections sits a buildout that accelerated sharply in 2025. Australia added 2 gigawatts of new utility-scale battery storage during that year, a 233% increase on 2024, lifting the country to third-largest big battery market in the world behind China and the United States, according to the Clean Energy Council.2
Several large projects drove the 2025 total. AGL Energy's Liddell Battery (rated 500MW and 1,000MWh at full build) began commissioning its initial 250MW phase. The Melbourne Renewable Energy Hub — a 600MW and 1,600MWh first stage jointly developed by Equis and Victoria's state-owned SEC — came online. In Queensland, Akaysha Energy's Ulinda Park project reached 55MW and 298MWh of operational capacity by December 2025.2
The financial pipeline behind the operating fleet is larger still. The CEC recorded A$4.8 billion of new battery capacity financially committed in 2025, covering 4.3GW and 13.5GWh, representing a 67% increase on 2024 investment levels. One industry figure cited in the CEC report noted that batteries are starting to compete more often with each other than with gas peakers. The shift bears directly on the shape of AEMO NEM spot prices at peak demand intervals, where gas has historically set the marginal clearing price.2
On the generation side, utility-scale solar PV and wind assets produced a combined 4.6TWh in May 2026, up 10% from the 4.2TWh recorded in May 2025, according to Rystad Energy analyst David Dixon. March 2026 had set a single-month record for clean energy output at 4.7TWh across the NEM.4,3
Government procurement is adding further capacity at pace. The Capacity Investment Scheme Tender 7, results announced in May 2026, awarded 7.8GW across 19 projects, exceeding the original 5GW target by more than 50%. The tender attracted 53 bids totalling 18.6GW, making it the largest single CIS allocation to date and surpassing Tender 4's 6.6GW outcome. Wind dominated the awarded mix at 4.8GW, compared to 3GW for solar.1
The overallocation signals urgency on emissions targets, but it also deepens the grid integration challenge. Concentrating 4.8GW of new wind into one tender round, layered onto a fast-expanding solar base, widens the residual demand management problem at low-generation intervals — precisely the role the battery buildout is positioned to fill. Whether that pairing completes before or after a supply-adequacy crunch shapes the NEM spot price path over the next two winters.1
Fluence, the US-based storage specialist, described the Australian market in June 2026 as an emerging test bed for hybrid projects combining solar, wind and battery storage behind shared grid connections. The characterisation fits the CIS Tender 7 award mix and the CEC pairing trend.5
The GenCost cost trajectory has a concrete implication for gas. As batteries bid more frequently against each other rather than against peakers, the arbitrage window available to gas narrows. The bearish read on AEMO NEM spot power implied by current investment trends assumes continued commissioning without major delays — a reasonable base case given the pipeline, but one contingent on project execution in a market that has seen commissioning slippage before.
The signal to watch is delivery pace on the 4.3GW and 13.5GWh financially committed pipeline. Projects that reach commercial operation before the next southern hemisphere summer add supply at the peak margin; those that slip into 2027 leave a window that gas remains positioned to fill at high-demand intervals.2