Australia has already passed gas – the market is just updating its paperwork

The latest Gas Statement of Opportunities shows “shortfalls” pushed out again, now beyond 2030, as electrification and a pipeline of roughly 30 GW of batteries eat into demand.

Instead of a looming shortage, AEMO now sees total gas consumption falling faster than previously projected, with industrial users and households shifting to electric options, and gas generation in the National Electricity Market (NEM) declining as batteries and renewables take over. In other words, the “gas gap” keeps moving away from us because the system is moving past gas.

This is exactly the story we (Peter Newman and Ray Wills) have been documenting: Australia’s grids are undergoing a storage-led transition where batteries rapidly move from the margins to the centre of system security.

Their analyses of the NEM show gas generation on a long-term decline, battery dispatch out-discharging gas peakers, and renewables plus storage supplying more than half of NEM energy for the first time in 2025. 

Batteries and electrification don’t need gas

AEMO’s 2026 GSOO says falling gas demand is driven by two forces: booming batteries in the power system and accelerating electrification in buildings and industry. Around 30 GW of battery projects under development are expected to sharply reduce gas-powered generation compared with previous forecasts, especially as batteries take over peaking, firming and frequency services that gas once dominated.

At the same time, households and businesses are abandoning reticulated gas for efficient electric appliances, and AEMO now expects industrial electrification to gather pace as the preferred decarbonisation path.

We have described this as “Australia’s battery revolution pushing gas out of the grid support business”, arguing that storage is cheaper than gas – indeed, gas is an expensive, inflexible relic rather than a necessary back-up. Recent AEMO data back this up: Q4 2025 saw battery discharge nearly triple year-on-year, while gas-fired generation fell 27% to its lowest level since 2000.

That is “Blazing Saddles” in action – what “passing gas” looks like in practice.

The disappearing gas crisis

For a decade, industry has warned of imminent gas shortages to justify new fields and pipelines. Yet each time AEMO updates its outlook, the crunch moves further into the future as demand erodes faster than expected.

The 2024 outlook talked about peak-day shortfalls as early as 2025; by 2025, the gap slipped to 2029; now major annual supply gaps are only projected from 2030 – and only if gas use stays high and electrification under-delivers. The trend line is clear: every year, more batteries and more electrification mean less gas.

We (Peter Newman and Ray Wills) have framed this not as a temporary reprieve but as the start of the fastest energy transition in history, where electrification structurally reduces primary energy demand and strips gas of its role in both bulk energy and grid support.

If policy simply aligns with the direction markets and technology are already heading – prioritising renewables, storage, efficient electric appliances and demand flexibility – the supposed future gas shortfall will be solved not by new supply, but by making gas unnecessary.

Australia has passed gas – now policy must catch up

The recurring delay of gas shortfall dates is not a footnote; it is a warning that planning based on old gas-centric assumptions is out of date. Australia has effectively “passed gas” in its electricity system, with batteries and renewables taking over the growth frontier and gas shrinking into a residual, transitional role.

The logical next step is to recognise this in regulation and investment: stop using ever-receding shortage forecasts to justify new gas fields and infrastructure, and start planning explicitly for a grid – and an economy – where gas demand continues to fall.

Australia’s lived experience now matches what Newman and Wills have long argued in their research and commentary: in a storage-led, electrified energy system, gas is not the bridge to net zero. It was only ever a cul-de-sac, we are already exiting the dead end.

Prof Ray Wills (Adjunct Professor, The University of Western Australia; Managing Director, Future Smart Strategies)
Prof Peter Newman (John Curtin Distinguished Professor, Curtin University)