Australia’s leading scientific research group and the country’s energy market operator have released a benchmark study that shows the cost of new wind and solar – even with hours of storage – is “unequivocally” lower than the cost of new coal generation.

The joint study – GenCost 2018 – by the CSIRO and AEMO shows that the levellised cost of energy (LCOE) of solar and wind is well below that of any other generation source.

Even adding two and six hours of storage with batteries or pumped hydro still leaves the cost of “firm” solar and wind power cheaper than any fossil fuel alternative.

The study follows similar conclusions from the likes of Bloomberg New Energy Finance, and the observations of big utilities such as AGL, Origin, and the government’s own Snowy Hydro. But it has added significance because of the importance and reputation of the two institutions involved.

“I fully expected the LCOE of renewables to be cheaper,” CSIRO economist and lead author Paul Graham told RenewEconomy in an interview. “I thought that once you added storage, maybe it would be line ball. But it is unequivocally cheaper. Wind and solar are still lower cost even if you take into account those balancing costs.”

And Graham says these are conservative estimates. He points out, as previous studies from the CSIRO and chief scientist Alan Finkel have shown, that the level of storage required for wind and solar is minimal up to a point of around 50 per cent.

That is because of the existing back-up required to support the fleet of coal and gas generators. But even when storage is required, Graham says there will be cheaper alternatives such as demand response, better use of existing back-up, more transmission, more “non coincident” wind and solar (in different regions) or even hydrogen and fuel cells.

“It is probably not even the lowest cost solution to add storage (to the cost of wind and solar). In a sense we have gone to the most expensive solution just to be conservative,” Graham says.

“We say that storage is not a big problem now …. but when we go beyond 50 per cent we will need it. So we have grabbed 2 and 6 hours of storage because that gives us a starting point, and is a bit closer to apples for apples.”

The significance of this report is immense, both for its contribution to the political debate – which is usually derailed by the false claims of the fossil fuel industry and the Far Right – and for the choices to be made for grids like NSW, where much of the existing ageing coal fleet will have to be replaced over the next 15 years.

AEMO will also use it as its guide for the Integrated System Plan – its 20 year blueprint for managing the energy transition – and Graham says it will be updated every year from now on.

The top table shows the estimated LCOE’s for the various technologies in 2020. The next one immediately above shows the anticipated costs in 2030, when much of the coal fleet is due to retire.

There are a couple of important points to be made from this graph.

The first is that on simple generation costs, wind and solar winds hands down. Coal only gets close to competing with wind and solar with storage when there is no risk premium to the financing.

But as Graham points out, that is not realistic. Adding a 5 per cent risk premium, which is what financiers do, blows coal out of the ball-park. Adding in the cost of abatement for the emissions of coal makes them even less competitive.

Nuclear, the favourite technology of many within the Coalition and the peak business lobbies such as the Business Council of Australia, and many conservative commentators, is ridiculously expensive – at least five times the cost of wind and solar, and three times the cost of wind and solar plus storage – and simply not a credible alternative.

Then comes the estimates for 2040 and 2050 (above and below) which show the costs when the final coal generators will exit the fleet. In reality, the costs are likely to be even lower, and the coal exits even earlier.

AEMO Group Manager, forecasting Nicola Falcon said AEMO looked forward to using the GenCost figures.

“The reports will act as the foundation for initial discussions with stakeholders when we commence our modelling inputs and scenario consultations for the next Integrated System Plan,” Falcon said in a statement.