Report indicates that Australia might experience a rise of as much as 50% in electricity generation expenses were it not for the incorporation of renewable energy sources.

The cost of generating electricity would be up to 50% higher today if Australia had relied solely on coal and gas instead of pursuing renewables, according to new analysis. Right-leaning politicians and climate deniers have seized on the 30% increase in electricity bills since 2021 to call for new coal-fired power plants to replace renewable projects, claiming it would bring down energy bills. To investigate these claims, Paul Simshauser and Joel Gilmore from Griffith University’s Centre for Applied Energy Economics and Policy Research modeled a counterfactual scenario where resource-rich Queensland had ignored the global push towards net zero and climate science, and instead pursued an electricity grid based on fossil fuels from 2005 – when coal and gas were “unambiguously the lowest cost technologies”. But Simshauser and Gilmore concluded that soaring commodity prices, escalating costs associated with building new power plants, and major advances in clean energy technology means that coal can no longer claim to be the cheap energy source it once was. Their modeling suggested that the cost of generating electricity would be as much as 50% higher today if Australia had relied solely on coal and gas instead of pursuing renewables – highlighting that abandoning green energy would likely lead to higher, rather than lower, power bills. In results they said were applicable to the rest of the east coast states, the renewables scenario produced an average wholesale price of $99.70 per megawatt hour – in line with the $93 to $103 range predicted for Queensland over the coming three years, based on futures pricing. The average cost for an all-coal or all-gas power grid, in contrast, reached just over $150/MWh, according to the modeling. The authors note, however, that claims energy used to be cheaper to produce are right: coal-fired power in 2005 cost $88.6/MWh in today’s dollars (after accounting for inflation). The report assumed new coal-fired power stations would need to be built to replace the aging fleet over the two decades, and noted that the cost of constructing and financing these stations had increased by multiple times the rate of inflation. The analysis also included the construction and transmission costs of the modeled renewable energy build-out. Simshauser is an economics professor and a member of the University Cambridge’s energy policy research group, and recently resigned as CEO of Powerlink Queensland, a state-owned power transmission company. Joel Gilmore is an associate professor at Griffith University, as well as a general manager of regulation and policy at renewable power firm Iberdola and a councillor at the Climate Council. The report’s conclusions, while hypothetical, were emblematic of why private investors have poured tens of billions of private investment into renewable projects over the past five to six years, the authors said. Forecasts that power prices would fall thanks to the take-up of renewables – most notably Anthony Albanese’s ill-fated prediction before the 2022 election that electricity bills would be $275 lower – have proved wrong and helped fuel claims that a simple fix to higher prices was a return to fossil fuel energy. It is worth noting that when the various governments (NSW, Victoria, Queensland, Commonwealth) from both sides of the political divide made policy announcements suggesting renewables would be cheaper, those predictions were reasonable at the time, but “the world has changed significantly since then”. Russia’s invasion of Ukraine plunged global energy markets into turmoil, sparking a spike in power prices here and around the world. Covid disrupted global supply chains and the cost of building also soared. This should come as no surprise. If there was a lower cost way, markets and investors would find it.

Source: https://www.theguardian.com/australia-news/2025/sep/25/electricity-generation-costs-would-be-up-to-50-higher-in-australia-without-renewables-analysis-shows