Solar photovoltaics (PV) and wind continue to be the cheapest sources of new electricity generation capacity in Australia.
In its latest GenCost report, the CSIRO and the Australian Energy Market Operator (AEMO) said solar and wind had come out cheapest even when the integration costs of renewables were included.
Each year the CSIRO, and the AEMO consult with industry stakeholders to estimate the cost to generate electricity for new power plants in Australia.
This year's report used a new approach for analysing the cost of renewables like solar and wind to include additional costs such as storage and new transmission infrastructure.
CSIRO chief energy economist Paul Graham said an early draft of the report, released to stakeholders at the end of last year, had been improved to reflect feedback about the impact of weather variability on driving up integration costs.
"Our analysis of renewable integration costs now includes greater recognition of this year to year weather variability and the impact it has on electricity demand and supply," Mr Graham said.
"We took the integration costs from the highest of nine historical weather years."
Stakeholders asked that the analysis recognise batteries were achieving longer lives before they need to be replaced and costing less, meaning the costs of storage from batteries is lower than previously thought.
This report concluded that solar and wind continued to be the cheapest sources of new-build electricity.
Battery costs fell the most in 2020-21 compared with any other generation or storage technology and were projected to keep falling.
Lower battery storage costs underpin the long-term competitiveness of renewables, the report said.
Pumped hydro was also important and was more competitive when longer durations of storage (above eight hours) were required.
The new approach was a model of the electricity system that optimises the amount of storage needed, and also includes additional transmission expenditure.
Previous reports added arbitrary amounts of storage costs but did not include transmission or other costs.
The latest report included hydrogen electrolysers for the first time and found that hydrogen was following a similar trajectory to more established renewables.
With increased interest in global deployment, and many demonstration projects worldwide, substantial cost reductions in hydrogen technologies were expected over the next decades, the report said.