Batteries are increasingly becoming Australia’s preferred technology for flexible electricity generation as data centers drive up the costs of gas-fired generation, a report from the national science agency said.

The latest annual GenCost report released on Wednesday by the Commonwealth Scientific and Industrial Research Organization (CSIRO) and Australian Energy Market Operator (AEMO) concluded that renewable energy backed by storage remains Australia’s lowest-cost pathway to reaching net zero emissions.

It found that the average generation cost in the National Electricity Market (NEM) was 104 Australian dollars (72.6 U.S. dollars) per megawatt hour (MWh) in 2025, down 45 percent from a peak of 189 AUD (131.9 USD) per MWh in 2022, and that it could fall to 80 AUD (55.8 USD) per MWh by 2030 driven by declining costs and rising capacity of batteries.

The report said that the growing capacity of lower-cost batteries is beginning to “reshape” electricity markets by competing with traditional gas-fired generation, the costs of which are being driven up by rising demand for gas turbines in the United States to power data centers.

“As battery costs continue to fall and gas technology costs rise, batteries are increasingly becoming the preferred flexible generation technology in the near term,” Paul Graham, chief energy economist at the CSIRO and project leader of the GenCost report, said in a media release.

According to the report, photovoltaic solar and onshore wind farms are projected to supply 93 percent of Australia’s electricity by 2050 when they will be supported by gas, hydrogen and hydroelectricity.

It said that some non-renewable technologies, such as new coal-fired power plants, could be cost-competitive with renewables, but would require higher-cost carbon abatement elsewhere to achieve net zero goals.