According to the agency, the shift to high gas prices and electricity housing and businesses helped slow down the expected gas shortage in Australia’s southern states until 2028.
A report from Australian Energy Market Operator (AEMO) said it reduced gas use in combination with a mild winter when the cost of fossil fuels and the trend towards electrification was increased.
He said the delay in closure of NEWS’ erased coal power plants reduced forecasts for the amount of gas needed from August this year until 2027.
As a result, gas shortages on peak usage days were not expected until 2028, three years later than previously expected, AEMO said. Long-term supply gaps beyond seasonal and annual time frames were projected to occur later than in 2028 and 2029 respectively.
This finding could ease pressure to find short-term solutions to the expected shortages, particularly in Victoria. This is because existing fields in the Gippsland and Otway Basin have not exhausted the gas.
Daniel Westerman, CEO of AEMO, said the report has the title of the Gas of Chutones Statement, highlighting structural changes in the East Coast market. He said there are solutions being considered to address the shortage, including new production, new gas storage facilities and short-term liquefied natural gas (LNG) terminals.
The gas industry and other business leaders are calling for the government to allow new fossil fuel basins to open and develop.
Dylan McConnell, an energy system expert at the University of New South Wales, said increasing gas supply is not the only way to deal with the shortage. “Another obvious option is to reduce demand,” he said.
He said that for residential and commercial use this can be achieved by switching from gas to renewable power and battery storage to improve energy efficiency.
According to an AEMO report, the LNG export industry is the country’s largest gas user, and has increased consumption from all other sources, including households, local industries and gas-fired generators.
He said there was uncertainty about the scale of gas required for power generation, but it was expected that its role as a backup power source would increase when renewable power was low. Gas Power currently provides about 5% of its electricity in the National Electricity Market (NEM), which supplies five Eastern States and laws.
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Alison Reeve, deputy director of the Energy and Climate Program at the Grattan Institute, said that with the Coal Department shut down, most modelling suggested that while the rest of the market has moved to renewable energy, a small amount of gas would be needed as backup.
“Gas is not going to replace coal. Coal is being replaced by renewable energy,” she said.
Workers have a renewable energy target of 82% by 2030, and then a higher percentage is expected based on battery gas and energy storage, pumped with hydroelectric power that provides backup. The coalition says that if elected, it will slow down the deployment of renewable energy, rely on more fossil fuels, including increased gas volumes, and will eventually build nuclear power plants at seven locations, primarily from 2040 onwards.
Climate Change and Energy Minister Chris Bowen said AEMO’s report showed that the gas market outlook has improved and is “now safe in 2029.”
“Gas plays an important role in the energy system in moving to 82% of renewable energy,” he said. “Unlike coal and nuclear power, gas generators can be turned on/off in a few minutes, and when they are turned off, they have zero emissions.”
