Solar and wind energy are still the cheapest source of new energy in Australia, new analysis suggests, as the Morrison government eyes carbon capture and storage to help meet future emissions targets.
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The latest CSIRO and the Australian Energy Market Operator shows renewable sources of energy are significantly cheaper per kilowatt hour than coal or gas with carbon capture.
Even with the extra costs of integrating them into the grid, this is expected to be the case until 2050.
The cost of solar panels and batteries is also falling faster than through other technologies.
"Costs reductions for technologies not currently being widely deployed, such as carbon capture and storage, nuclear small modular reactors, solar thermal and ocean energy are lagging and would require stronger global investment to realise their full potential," the report says.
Under the Morrison government's new technology roadmap, Australia's green banks are set to prioritise investments in hydrogen and carbon capture technologies in a bid to reduce carbon emissions while accelerating the country's economic recovery from the coronavirus pandemic.
An extra $18 billion will be invested in new energy technologies over the next 10 years.
The government will only invest in coal, gas, solar and wind if there is a clear market failure, like a shortage of dispatchable generation, or to shore up jobs in key industries.
Australia is currently on track to meet its 2030 climate change targets of 26 to 28 per cent below 2005 levels.
The country's position against the target has improved by more than 300 million tonnes since last year, meaning Australia won't have to rely on controversial Kyoto carryover credits.