Western Australia may only have a small population, but it is the country’s number one state when it comes to gas consumption. It’s got some of the biggest gas fields in the nation and it also has one of the country’s dirtiest and crappiest coal generators – Muja – that is due to shut half its capacity in four years time.
So you’d have to figure that WA would at least be one example where the federal government’s insistence on “gas a transition fuel” for the grid might actually come to pass. Alas, but no. The Australian Energy Market Operator, in its latest 10 year forecast for the gas market in WA, has rejected that idea.
In fact, AEMO’s detailed forecasts released in its highly technical Gas Statement of Opportunities (GSOO) report reflects a dramatic change from last year. Then, it expected the burning of gas for grid generation (GPG) would increase by 15 per cent over the next 10 years. Now it’s reversed course, and is expecting a significant fall.
Indeed, its forecast for 2029 in the latest GSOO (see table below) is now 20 per cent lower than where it was this time a year ago (see table above), with the consumption of gas for power generation (GPG) barely moving over the coming decade, despite the exit of key coal generators, and the increase in renewables.
What’s changed? A reality check for one. AEMO notes that some gas will be displaced by the commencement of two waste-to-energy generators by the end of 2022, some sidelined by its own high prices, and the rest by declining electricity consumption (mostly due to rooftop solar), and by the addition of more large scale renewables.
“The lower forecasts in 2021 and 2022 result from a reduction in gas demand …. associated with the entry of new renewable generation capacity by 2022,” AEMO notes.
It predicts a small bump in gas generation when the Muja C power station closes in October 2024, and increasing ramping requirements due to uptake of large-scale and behind-the-meter solar generation, but that doesn’t make a whole lot of difference. “(It leads) to a relatively flat forecast of GPG demand over the outlook period,” AEMO notes.
WA is not the only state where those promoting gas as the “transition” fuel will be disappointed. The addition of synchronous condensers – spinning machines that do not burn fuel – over the next year, and then big batteries with “grid-forming inverters” – means that the demand for gas generation in South Australia, where the share of wind and solar is already nearly 60 per cent, will fall away significantly.
A similar story will be played out in less developed renewable energy grids in the other maintain states, largely because gas is too expensive, and can’t compete with the combination of wind and solar and battery or pumped hydro storage. It will likely be used sparingly, mostly in fast-start reciprocating engines that can respond quickly when needed.
AMO’s latest GSOO does predict an increase in gas demand in other sectors of the WA economy – mostly in mining (although down from last year), and in mineral processing.
In a media statement, the head of AEMO in WA, Cameron Parrotte, said the latest GSOO highlights the interdependencies between the domestic electricity and gas markets, with additional renewable energy generation expected to influence gas demand for gas powered generation (GPG).
“As the energy industry transforms, the growing linkages between Australia’s gas and electricity sectors mean that events occurring in one sector could have strong impacts on the other,” said Parrotte.
“With the continued uptake of renewables and behind-the-meter solar generation, including the entry of large-scale renewable energy generation capacity in 2020, GPG in the South West Interconnected System (SWIS) is expected to decline at an average annual rate of 0.4%.”