Gas to Play a Vital Role in Oz Power Generation: Report

Gas-fired power will play an important role in Australian electricity sector as coal-based generation declines over the coming decades, according to the Australian Energy Market Operator’s (AEMO) Integrated System Plan released on July 30.

“Existing combined-cycle gas turbines and open-cycle gas turbines are forecast to play critical complementary roles when significant coal generation retires in the 2030s,” AEMO said. The AEMO said 63% of Australia’s coal-fired generation would reach the end of its technical life and so likely be retired by 2040.

Upstream industry group Australian Petroleum Production & Exploration Association (Appea) CEO Andrew McConville said AEMO’s energy roadmap confirmed the only way to make gas cheaper was with more supply, especially in southern states.

“AEMO also highlighted the importance of ongoing investment in new natural gas supplies, finding a need for continued investment of between 120 petajoules and 285 petajoules every year between 2024-25 and 2036-37,” McConville said. “This confirms gas-fired power generation will have an even more substantial role once coal generators are retired post 2030.  Gas will continue to play a critical role in ensuring a secure electricity supply when variable renewable generation is unavailable.”

Hydrogen

AEMO also said that role of hydrogen would be more closely examined in the 2022 plan. “Hydrogen has the potential to meet some of Australia’s energy needs, once it is economically competitive and the possible challenges to efficient sector integration are resolved,” it said.

Despite hydrogen’s potential, strong policy support is needed to reduce its current high cost, build infrastructure, and otherwise create certainty and appropriate incentives in the market, AEMO added.

“There is potential for hydrogen to be competitive with diesel for use in long-distance haulage by the early 2030s, and for a green steel industry to develop if global policy shifts to support decarbonisation of the industrial sector,” AEMO said. “However, hydrogen prices need to be much lower than currently projected to compete with gas in many other domestic applications. Shipping costs and current low efficiencies are further challenges for development of an Australian export industry.”