AbstractThe Australian energy sector is transforming towards a carbon-constrained economy and large emitters, such as power plants, need to consider the pathways for transitioning. This study highlights the technical and economic issues that need consideration by power generators in meeting the expected increase in energy demand while also meeting greenhouse gas targets. The strategy examined in this study is time phased post combustion capture retrofitted to existing power plants coupled with refurbishment of the power plant. The effect on the levelised cost of electricity (LCOE) and the avoidance cost is investigated for both coal and natural gas fired generators.This study assumes that 20% of the Australian electricity fleet is retrofitted with capture in 2020, increasing in 20% increments at 5-year intervals until 2040 when all the fossil fuel power plants have capture retrofitted. The LCOE increases from current values of A$50 - 57 per MWh to A$100 - 120 per MWh for complete implementation of capture in 2040. At the same time, the CO2 emission intensity of the fleet gradually reduces from 0.6 tonnes per MWh to less than 0.1 tonnes per MWh. With phased implementation, the number of power plants that have capture increases over time and hence the avoidance cost increases from A$100 – 160 per tonne of CO2 avoided if capture is implemented in 2020 to A$150 – 240 per tonne of CO2 avoided if capture is implemented in 2040.