High prices, mild winters and electrification have helped improve Australia’s outlook for meeting its gas needs.
The Australian Energy Market Operator has long predicted gas shortfalls for southern states yet lower projected demand has helped it push out that timeline until 2028, three years later than forecast.
The Eraring coal station staying open longer than expected following its delayed retirement should further lower demand for gas power generation, the market operator said in its report on Thursday.
The latest assessment landed the same day as a newly-inked deal between the federal government and Australia Pacific LNG to secure more gas for the domestic market.
AEMO chief executive officer Daniel Westerman said investment in new supply was necessary as gas fields in the Bass Strait were depleting.
He flagged several options to address shortfall risks for southern states.
“Investment could include new production, storage, transportation, and liquefied natural gas (LNG) regasification terminals, or a combination of these solutions,” he said.
Gas-fired power stations can be turned on quickly to produce electricity and are viewed as the “ultimate backstop” as renewables replace coal in the grid to cut emissions from the energy system.
Institute for Energy Economics and Financial Analysis lead gas analyst Joshua Runciman said government measures to drive households and businesses towards electric appliances and equipment were paying off.
“Further government support for residential and commercial gas users would drive down demand even further, addressing supply concerns and freeing up gas for Australian industry, thereby ensuring we keep Australian manufacturing jobs in Australia,” Mr Runciman said.
The analyst said the majority of east coast gas was exported to international markets at the expense of domestic gas users, pushing up prices and slowing down consumption.
Under the Labor government’s deal with APLNG, commercial and industrial gas consumers would have first preference for the new supply of up to 40PJ of gas.
That gas would be covered by the government’s code of conduct that dictates new supply will be offered at $12 a GJ.
Energy and climate change minister Chris Bowen said the gas code had successfully secured affordable gas for local businesses and took aim at the opposition’s energy policy.
“Unlike coal or nuclear, gas power generators can be turned on and off in a couple of minutes,” he said.
“And when it’s off, it’s zero emissions.”
Opposition climate change and energy spokesman Ted O’Brien said Labor’s “reckless intervention and ideological hostility toward gas” was to blame for shortfall projections.
“The coalition has a clear plan to restore investment in gas, bring down prices, and secure our energy future,” he said.
Lock the Gate Alliance national co-ordinator Carmel Flint said everyday Australians were paying the price for “artificial” domestic shortages created by exporting two-thirds of the country’s gas.
“Australia should be supporting households and the manufacturing sector to rapidly switch away from gas – not putting up legislation that makes it easier for gas companies to wreck communities, water, and nature,” she said.
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