What cost for more renewables? The incremental cost of renewable generation – An Australian National Electricity Market case study

•This study evaluates incremental costs of higher levels of renewable electricity (RElec).•The Australian National Electricity Market in 2030 is used as a case study.•Incremental costs increase approximately linearly as the RElec share grows to 80%.•Costs demonstrate a small degree of non-linear escalation up to 100% RElec.•Results appear to support policies promoting very high shares of RElec.

This study evaluates the incremental costs of higher levels of renewable energy (RE) supply using an optimisation tool to find least cost electricity generation portfolios. The Australian National Electricity Market (NEM) in 2030 is used as a case study for exploring various generation portfolios from low to high shares of RE, low to high greenhouse gas emissions caps, and low to high carbon prices. Incremental costs are found to increase approximately linearly as the RE share grows from zero to 80%, and then demonstrate a small degree of non-linear escalation, related to the inclusion of more costly renewable technologies such as solar thermal electricity. Similarly, costs increase approximately linearly as a greenhouse gas emissions cap is lowered from 150 megatonnes (Mt) to 30 Mt, and then demonstrate a small degree of non-linear escalation for caps below 30 Mt. However, in both cases this escalation is moderate, and does not appear to provide a strong argument for long-term policies that aim for RE shares lower than 100%, or electricity sector emissions caps higher than zero as one option for rapid decarbonisation.