Media Release: Cost of coal power dramatically cheaper than current energy operator estimates
Independent analysis conducted by Arche Energy demonstrates that the CSIRO’s GenCost’s capital cost assumptions for black coal ultra-supercritical (USC) plants are between 1.2 and 2.4 times higher than recent real-world benchmarks adjusted for Australian conditions.
The resulting levelised electricity cost estimate for new coal plants is $50-$70/MWh which is significantly cheaper than the GenCost estimate of $102–164/MWh for black coal. It is also considerably lower than the current wholesale electricity price in the National Electricity Market which averaged over $120/MWh in 2024.
Coal Australia, the peak industry body representing coal producers, workers and their communities, calls on the CSIRO to address inconsistencies in the assessment of coal-fired generation costs to ensure Australia’s future energy system is optimised.
Coal Australia Chief Executive Officer, Stuart Bocking, said that flawed assumptions about the cost of coal power were costing hard working Australians dearly in energy bills and holding Australia back from reaching its true energy potential.
“Australia is blessed with an abundance of natural resources, including some of the world’s highest quality coal. This should make our energy among the cheapest and most reliable in the world. Yet, we are falling short of that potential.
The very energy that could be powering our economy, driving investment and securing prosperity for future generations is being held back by selective policy, outdated assumptions and unnecessary restrictions.
In its submission, Coal Australia demonstrates that the GenCost analysis overstates the levelised cost of electricity (LCOE) for coal by relying on problematic assumptions, such as excluding realistic coal plant designs, and overstating capital and operational cost inputs.
Coal Australia found this results in a distortion of comparative costs between coal and other technologies. If these critical errors are not addressed, it could undermine the credibility of GenCost as a policy-neutral tool for Australia’s energy planning.
The Arche Energy report also found that undertaking coal plant life extensions to the existing fleet was a very cost-effective way of providing electricity to the grid, based on current Queensland coal station data. A ten-year extension for a coal plant was found to require capital in the order of only $500,000 per MW of capacity.
Coal Australia Chairman, Nick Jorss, said the results raised serious questions about GenCost’s methodology and conclusions, particularly as it related to the cost of coal-fired plants.
“Unfortunately, due to the limitations of GenCost’s methodology and assumptions, the headline finding, that renewables have the lowest cost range of any new-build electricity generation technology, is not correct.
“If the aim of GenCost is to provide objective estimates for the cost of building new electricity generation that is both technology-agnostic and policy neutral, then the assumptions chosen in the LCOE calculations are inappropriate for that task.” Mr Jorss said.
“Correcting this will ensure that the report is truly policy-neutral, technology-agnostic and can be viewed credibly by the wider energy market. It is our view that, based on real-world assumptions, GenCost would find that coal has by far the lowest cost range of all new-build generation technologies.
“Furthermore, a low-cost life extension of the current coal fleet, rather than prematurely shutting it under the Government’s 82% by 2030 renewables target, clearly has the ability to provide much lower electricity cost outcomes for all consumers, retail and business alike.”
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