Winter gas shortages looming with no new supply

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Australia’s southern states will experience gas shortages during the upcoming winter peak, with continued shortages likely within the next few years.

Australia’s Energy Market Operator (AEMO) took a tougher look after Thursday’s update calling for urgent investment to secure gas supplies in the medium term.

The company’s 2023 gas report expects gas production to meet customer demand in central and eastern Australia.

But he said supply risks remain in the south as gas production is declining, especially in Victoria, where production is expected to nearly halve by 2027.

Operators said the risk of a supply gap would increase if surplus gas production from northern states were exported rather than used for domestic demand.

From 2026, barring additional commitments to expand domestic supply, or hydrogen and biomethane coming online as alternatives, Queensland producers will be able to use gas contracted for export to meet domestic requirements. may need to be used for

Australia’s energy minister has already expanded the powers of market operators to address supply shortages on the east coast.

These new authorizations, which will come into effect in winter 2023, are intended to secure the gas and electricity market and protect domestic gas consumers.

Domestic gas security mechanisms and agreements between governments and gas producers are considered important to strengthen domestic supply.

AEMO CEO Daniel Westermann said the existing agreement will help manage supply, but more production is needed to prevent winter peaks and long-term shortages. rice field.

“What we really need is to invest in more gas supply, either from conventional natural gas fields or into the southern states, either by importing[gas]or when it becomes available. We may use renewable gases such as biomethane or hydrogen,” he told ABC Radio.

Westermann added that with coal-fired power plants retired, gas will continue to be essential for power generation and will provide intermittent renewable energy source backup.

But the Climate Council has criticized the focus on more gas supply as a solution to Australia’s energy problems.

The group’s energy expert Andrew Stock said starting new gas projects was not the solution, and instead Australia should accelerate investment in renewable resources and energy storage.

“There is no shortage of hydropower. Most gas storage is nearly full, so it would take a major failure of a coal-fired power plant to cause a gas shortage,” he said.

Gas-fired power plants are projected to support renewable generation as at least five coal-fired power plants are projected to retire over the next decade, accounting for 13% of the electricity market’s capacity.

In the 12 months to February 2023, an additional 2000 megawatts of wind and grid-scale solar power and storage were added.

Westerman said this would help offset known winter generation gaps such as Queensland’s troubled Callide C coal-fired power plant and the retirement of NSW Liddell power station next month. said.

However, there is uncertainty about how quickly consumers will shift their energy preferences away from gas.

Electrification forecasts have been lowered to reflect slower-than-expected rates of fuel switching in homes and businesses.

The report recommends strong policy incentives and investment in the industry to achieve the level of electrification demanded by the government.

– AAP