Gas generation slumps in first half of 2021, as wind and solar continue to shine

Renewables have outshone gas generators during the first half of 2021, with the fossil fuel continuing to play a diminishing role in Australia’s electricity markets as lower-cost wind and solar meet an increasing share of our energy needs.

In the first half of 2021, renewable energy sources – including wind, solar, hydroelectricity and biomass – supplied 28.8 per cent of electricity in Australia’s main grid, according to new data published by the Climate Council.

This compares to just 6.1 per cent of electricity generation in Australia’s main grid supplied by gas generators – with most of this gas generation occurring in just two states.

It suggests that gas generators are set to play a diminishing role in the electricity market following a “shocking” 2020, when their market share slumped to just 8 per cent.

The analysis, published by the Climate Council on Wednesday, showed that gas played the largest role in the coal-free South Australian grid – supplying 36.4 per cent of the state’s power – and in Western Australia, where gas generators supplied 31.6 per cent.

Gas supplied 9.5 per cent of Queensland’s electricity, but in Tasmania, Victoria and New South Wales the market share of gas electricity was just 2 per cent, or less.

The Climate Council said that the market share for gas in NSW had fallen to its lowest level for 20 years, supplying just 1.3 per cent of the state’s electricity in 2020-21 financial year.

This was down by around a quarter compared to the previous financial year and, with the continued growth of wind and solar generation, renewables now supplied 17 times more electricity than gas generators in Australia’s most populated state and its biggest state grid.

“Renewable energy had a record start to the year, increasing by 35 per cent, the biggest clean energy jump NSW has ever seen,” Climate Council spokesperson (and former ARENA chair) Greg Bourne said.

The group said the data showed during the first six months of 2021, New South Wales’ four largest gas generators operated at the equivalent of just 15 per cent of their full capacity.

The Climate Council said the new figures raised doubts about the viability and the need for a new $600 million gas-fired power station being built by the Morrison government in Kurri Kurri, in the Hunter region, using taxpayer funds.

“Why are we investing in gas-fired power stations when the need for gas in our electricity system is clearly disappearing?” Climate Council spokeswoman and energy expert, Dr Madeline Taylor, queried.

“Gas is expensive, polluting, and diminishing in importance and relevance to the National Electricity Market as states and territories rapidly roll-out large-scale renewable energy and storage.”

The Kurri Kurri project is being developed by government-owned Snowy Hydro, which was forced to concede earlier this year that it had deliberately withheld gas generators from the market – during a period of the potential shortfall – as it had been hoping to receive a higher price to generate.

Snowy Hydro executives were grilled during a senate estimates hearing after revealing it had bid the Colongra gas power station into the electricity market at the maximum possible price – $15,000 per MWh – which resulted in the power station remaining idle while an aluminium smelter shut down to cut demand. The incident is now being investigated by the ACCC as a potential instance of deliberate market manipulation.

The Climate Council also pointed to a recent analysis published by the International Energy Agency, which suggested that to achieve a global goal of zero net emissions by 2050, investments in new coal and gas projects would need to cease.

“Gas will play an ever-decreasing role in the new energy economy. Should the Federal Government force gas into the market by underwriting the risks, it is likely to drive up household power prices and prices for our manufacturing,” Bourne added.

“Gas simply cannot compete with renewable energy, which is bringing down power prices for consumers and creating a cleaner, healthier energy system.”