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More renewables, fewer coal outages could ease potential gas shortfall

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The Australian Energy Market Operator has released a more bleak outlook for potential gas shortfalls in Australia’s domestic market, but said they could be much worse if renewable energy projects are delayed or one of Australia’s ageing coal units fails.

AEMO, in its third report in six months, now projects shortfall risk of between 54 petajoules and 107 PJs for 2018, and of between 48 PJ and 102 PJ for 2019.

“Based on the most recent information from industry, together with AEMO’s forecast demand, gas supply remains tight in eastern and south-eastern Australia in 2018 and 2019, and there remains a risk of a supply shortfall,” AEMO CEO Audrey Zibelman says in a statement.

Prime minister Malcolm Turnbull seized on the report, saying it was “three times worse” than earlier feared. The chief reason appears to be reduced production numbers, which account for nearly the entire accounted shortfall.

The report, however, points to two other key factors that could play on the market, and which were cited in its forecast for electricity supply earlier this month: namely, the risk of a major coal unit failing, and the possibility that the expected number of renewable energy projects may also fall short.

AEMO sees the new build of renewable energy as critical to help meet supply shortfalls in the electricity market, and in its latest report says that more renewable energy will mean less need to burn gas for electricity.

If new renewables are delayed beyond current commitments, then this could account for nearly half of the potential shortfall.

But it also warns that more gas will be needed if one of the country’s ageing coal generators went out of service for an extended period, as had happened in three of the last five years (Yallourn (flood), Hazelwood (fire) and Eraring.

“With an aging coal fleet, there is potential for a more serious failure to occur than is typically addressed by normal preventative maintenance,” AEMO says, in what some might interpret as a backhanded criticism of the government’s push to keep the ageing and increasingly decrepit Liddell coal generator open another 5 years.

For 2018, the shortfall risk is put by AEMO at between 54 petajoules and 107 PJs. For 2019 it is between 48 PJ and 102 PJ.

The potential gas shortfall is being used by the federal Coalition government and lobby groups to argue for NSW, Victoria and the Northern Territory to remove their restrictions on coal seam gas. But AEMO’s report says this would do nothing to relieve potential shortfalls in the next 12 months.

Independent studies have also said Australia does not have a shortfall, because there are plenty of gas reserves (not including onshore CSG reserves), but much of it is undeveloped because of the cost. AEMO appeared to echo that view:

“Higher (gas) prices … may lead to the acceleration of projects not yet online or the expansion of gas projects already producing in the longer term, but is not expected to materially alter outcomes within the next 12 months,” it says.

AEMO’s demand forecasts for gas also showed an increased range, allowing for greater industrial use of gas at the top end, and factoring in much reduced use of gas by households and small businesses, and in new residential developments which are focusing on electricity-only supplies.

The Coalition has also been mulling the imposition of export controls on the LNG industry, but after a meeting in Canberra on Monday, has given the east coast gas giants “one last chance” to free up enough fuel for the domestic market, the AFR reports.

  

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  • Don McMillan

    Too late. Classic case of shutdown the power generators before the replacement is installed. In the future people will look back and ask how stupid could we be!!!

    • Peter F

      Only because the renewables installations were stopped by TA for 2-3 years

      • Joe

        Spot on Peter. And it still goes on with The COALition / The Abbott wanting a new Coaler to be built or a Nu Clear power station to be built, scrapping The RET and ignoring Finkel’s proposal of a CET. It all creates uncertainty. The certainty we do know is that business will not finance Coal or Nu Clear. RE is still going ahead despite all the roadblocks from The COALition / The Abbott. RE would be going even better if The COALition would just get out of the way.

    • Mike Shackleton

      There is about 22GW of renewables capacity in various stages of delivery at the moment. Even running at 30% capacity, that is 4 times the output of Liddell.

      • Don McMillan

        Only when the sun is shining & wind blowing there is no proposed backup supply [batteries or gas or anything]. We are doomed

        • Mike Shackleton

          Batteries can be installed on the network in less than 6 months. A “gigafactory” is being built in Townsville. I’ll give you one guess as to where the majority of their output will end up.

          The “sun is shining and the wind blowing” is an irrelevant argument. Even on cloudy days solar produces energy. In Melbourne my panels are always producing something during daylight hours. Same goes for wind. Spread out over the whole network, you’re never going to have all of them stationary. That’s why I stated a 30% capacity factor. 22 GW of nameplate capacity should produce ~7GW consistently. That’s enough to replace all of Victoria’s coal fired capacity and Liddell’s capacity.

          Add to that, Liddell fell over in the summer during the heatwave. When it was needed the most. Solar, however kept on cranking. More solar in Western NSW, that can capture the sun’s energy right until sunset, will push solar generation out later in the day.

          • Don McMillan

            But nobody is doing this. The numbers do not add up anywhere. If you believe what you are saying then YOU do something – build these batteries in 6 months. Words are just words – action is believable.

          • Chris Fraser

            It behoves all of us to do something. As individuals with informed choice we can either generate distributed solar or store it for later. It will remove pressure on the grid. You’re getting thoroughly panicked.

          • Don McMillan

            Industry is panicking
            I tried and completely unsuccessful
            I wish you guys try and save our industry
            Talk is easy doing is hard

        • Joe

          No proposed backup, where have been hiding lately? Solar Thermal, Batteries are going ahead already. New Pumped Hydro ( Not Big Mal’s wet dream of Snowy 2.0 ) is in the wings as well. Please, no more of this “only when the sun is shining & wind blowing” line. In a truly NATIONAL Energy Grid there are always locations where the sun shines and the wind blows. Australia is surrounded by oceans and Tidal and Wave energy is just begging to be harnessed. Bio-gas is the biggest wasted opportunity here in Australia. Every sewage treatment works is a power plant in the waiting and as long as people keep using their shitters we have endless ‘human energy’. Just need a truly national vision to get all those resources hooked up and we have 100% RE! You are only doomed if you keep sticking your head down a coal pit .

          • Don McMillan

            Way too little way too late
            Read the paper industry is in big trouble
            No silutions
            We are uncompetitive
            Time will see who’s right o hope you are

  • Peter F

    I suppose we should accelerate the wind and solar farms to reduce gas usage in power generation then. Each 500MW wind farm reduces annual demand by 12-15PJ Six of those please. A 200MW solar farm saves 2PJ of gas a dozen of those With the wind farms we are already at 90-100PJ+.

    What about 1,000,000 heat pump/ solar hot water services. Even if driven
    by CC gas fired electricity they use only 1/3rd of the gas a standard gas hot water system uses. That saves another 7-10 PJ.

    Then we save money every year.

    OR

    We could demand that the gas exporters stop selling gas from Moomba and
    Bass Straight and get their gas from Queensland coal seams as they promised

    This whole scene is in fact an unjustifiable panic

    We have plenty of dispatchable power 42GW by next summer for 35GW peak demand + whatever wind and solar is around at the peak and there is always wind and solar at peak summer demand. In NSW in the last heatwave there was still 500MW of wind and solar at 6PM Next summer it will be more.

    There will also be 250MW of batteries on the grid by January and at least 150MW of demand response.

    So unless AEMO are telling us that we can’t rely on more than 75% of our coal and gas plants when they have had 12 months to get their maintenance up to date we actually have enough capacity.
    The introduction of new renewables makes the system more reliable in two ways a) reducing peak thermal demand and b) reducing annual gas demand so the storages are full to meet summer peaks