Household gas demand to fall 50% within 10 years | RenewEconomy

Household gas demand to fall 50% within 10 years

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Report predicts domestic demand for gas power could be halved within a decade, as households switch from expensive gas heaters to cost-efficient air-con.

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The case against unconventional gas mining in Australia has been given a boost this week, with the release of a new report that predicts household demand for in gas in the nation’s eastern states could be cut in half in a matter of years, as households switch their gas heaters off, and their reverse-cycle air conditioners on.


The report, published on Wednesday by the University of Melbourne Energy Institute, forecasts declining gas demand in both electricity generation and industry, but says the most dramatic decline will be seen in the domestic market, where demand may fall by 50 per cent within a decade.

The new modelling, commissioned by the Australia Institute and a group of Victorian farmers, even outstrips AMEO forecasts of declining gas demand, despite their 2030 forecast having been cut by a staggering two-thirds.

According to AEMO data, the amount of gas consumed in eastern Australia peaked in 2012, since which time it has declined each year – and will continue to do so. AEMO’s high, medium, and low demand scenarios indicate that by 2025, gas demand in eastern Australia will have fallen from the 2012 peak by 15 per cent, 26 per cent, or 38 per cent respectively. AEMO forecasts that gas demand will decline in the industrial and electricity generation sectors.

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Mark Ogge, from The Australia Institute says the MEI scenario of a 40 per cent reduction in household gas demand reflects the likely switch, by households, from increasingly pricey gas-powered heating to increasingly efficient electric alternatives.

Space-heating cost savings of $1,733 per year (a savings of 77%) were modelled for a large home in Canberra and $658 per year (63%) for a large home in Melbourne.

Around 4.4 million Australian homes already have reverse cycle air conditioners, that can both heat and cool.

According to University of Melbourne’s Tim Forcey, an energy advisor and author of the report, Victorian households alone could collectively save around $250 million in 2016, just by switching their gas heaters off, and their air-con to heating mode.

And he should know: “In my home we did that for the first time this winter,” Forcey wrote in an article published here in July.

“Our savings are remarkable, though not surprising nor different to what others in the community are reporting. As an example, during two particularly blustery days I found I could comfortably heat my house one day with gas at an energy-only cost of A$4.80 and then do it the next day with my air conditioner at a cost of just A$1.50. Our savings across the full heating season will add up to hundreds of dollars.”

Obviously, switching from gas to efficient electric heating makes even more sense for those households with rooftop solar – or planning to get it.

And there are other benefits, says Forcey, with energy savings in the residential sector opening up large quantities of gas for higher-value industrial use.

Not everyone is convinced, though, like the Energy Networks Association, which called the MEI’s claims “wildly premature” in a response to the report on Wednesday.

“Gas has always competed as a fuel of choice and Australia should not lose sight of the benefits of dual fuel energy networks to our households and economy,“ ENA CEO John Bradley said.

“Consumers will consider a range of factors including what kind of home they have, their appliance mix, cost effectiveness, environmental performance, amenity and cooking preferences.

“Gas is very price competitive – in the case of Victorian customers, the Australian Technology Association notes it remains about a quarter of the price of electricity on an equivalent energy basis.

“For households that have adopted solar to reduce emissions, gas plays an important role when the sun is not shining, by avoiding 85% of the greenhouse gas emissions from electricity use,” Bradley said.

The MEI report comes as a Victorian government inquiry into unconventional gas prepares to hand down its interim report. It has been largely crowd-funded by Victorian farmers and rural communities concerned about onshore gas drilling.

At a federal level, meanwhile, the Abbott government’s support for gas has been on par with its championing of coal.

Just over a year ago, its energy green paper focused largely on the nation’s gas industry and how to get more investment into extractive energy resources, so that Australia could become an energy “superpower.”

The green paper’s four-page executive summary mentioned gas 18 times, coal four and solar, just two. And the the 78-page body of the report, gas is mentioned 434 times; coal 100 times …. solar 26 and wind energy just 13 mentions.

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  1. Steve Gates 5 years ago

    CEO Bradley says “Gas is very price competitive – in the case of Victorian customers, the
    Australian Technology Association notes it remains about a quarter of
    the price of electricity on an equivalent energy basis.”

    However, it would be good for him to clarify in heating terms, whether he is referring to the amount of heating supplied into a house by say a reverse-cycle (heat pump) system or is he referring just to electrical resistance heating. if the former, then it needs to be remembered that electrical heat pumps with a Coefficient of Performance (CoP) of 4 or so (as mine is), the amount of electricity required is only 1/4 of the amount of heat delivered into my house. Because gas creates heat rather than pumping in ambient heat, it only has a CoP of 1, and therefore one needs 4 times as much gas energy than electrical energy into a heat pump. This would appear to cancel out the lower gas cost he refers to?

    • Ian 5 years ago

      It is the cost and GHG of delivered energy which is the key point.
      While gas per raw unit of energy is around half that of electricity, after going through an efficient heat pump, the cost of electrical heat is less than half that of gas.
      This applies to space heating and hot water heating.
      Given the efficiency of induction cooking, electricity is the same cost as gas for delivered- use able heat.

      When talking about GHG, (in NSW) content is about the same for delivered heat….that is if using standard grid electricity. If using solar or Greenpower the GHG can be as low as zero.
      Gas appears to have a short future in many places

      • Steve Gates 5 years ago

        Thanks Ian and yes good point about minimising GHGs – I use solar PV on my roof and buy 100% green power through Synergy here in W.Australia.

    • Craig Memery 5 years ago

      Absolutely correct Steve, and that is indeed the main point of ATA’s analysis in the report Are We Still Cooking With Gas.
      Further, to understand the real economic value, the improved capital costs (they are becoming cheaper to buy), performance benefits (eg, elec space heaters also do cooling and can be zoned), and other factors need to be taken into account to determine the actual long term cost.
      In fairness to John at ENA, he is quite correct that gas is still relatively cheap in Melbourne on a price-at-the-meter basis, such that, for example, it is still a cheaper option for water heating for consumers in some locations. However, this in the exception, not the rule, and even in Vic gas cannot compete with electric space heating, for example. And elec may become more favourable over time, especially when more sophisticated tariffs and solar control option become available and the impact of rising fixed prices are accounted for.

    • Tim Forcey 5 years ago

      Interestingly, the new solar feed-in tariff of 5 cents per kilowatt-hour converts to 14$/GJ, which is about the same as the retail price of gas (comparing energy-only component only, excluding any fixed supply charges). So in some situations, electrical energy is now no more expensive than gas energy. Whereas electricity always used to be a few times more expensive than gas. **GAME CHANGER ALERT! ** Times have changed (in some cases). So instead of selling your excess electricity back to the grid at a very low price, using it to, for example, heat water via a simple resistive-type water heater (not a heat pump) makes economic sense. Of course if you can access the additional funds to invest in a hot water heat pump, you will need less solar PV capacity to give you all the hot water you need. See

      • Alastair Leith 5 years ago

        I wonder how soon other reasonably pricy energy efficiency technologies like say double/triple glazing will be undercut by the price performance improvements of rooftop solarPV. Soon it might be cheaper to be wasteful with energy, in a sense back to the old coal fired 50s but with near zero emissions.

        • nakedChimp 5 years ago

          Try to get double (not even talking triple) glazed windows in Far North Queensland, I dare you. I’ll have to order them in from Brisbane.

          • Alastair Leith 5 years ago

            Yeah, not one size fits all even in Melbourne. Try getting double glazing replacement glass panels for custom machined steel floor to ceiling glazed wall made in the late 50s.

            One option that’s been described to me is DIY acrylic panels that are cut to size in factory and then fixed to the inside of old windows using magnets. No argon gas filled thermal barrier of course.

          • nakedChimp 5 years ago

            I would be wary of the optical quality/clarity with that solution.

            I really wonder what the big deal is about having 2 sheets of glass sandwiching some aluminium profile with some glue (for my own solution). I bet for the price a ‘pro’ does this for you one could even get a vac pump and the argon gas from BOC to get them up to spec.
            So far every tradie I had screwed up stuff that I could have screwed up myself for way less money, just some time – since then I usually get to keep the pro-tools that I buy to do the job and come out cheaper 😉

  2. lin 5 years ago

    Most interesting. Running one of these during the day from solar panel output in a house with some thermal mass sounds like a fine plan. This technology is also looking like making gas water heaters redundant.

  3. Alastair Leith 5 years ago

    Here’s a big part of the reason why household gas demand will fall:

    Reverse cycle AC up to 7x more efficient at heating than existing ducted heating systems found in many homes. Multiple by rising fuel cost => replacement capital can be found. Source BZE Buildings Plan Hot water heat pumps, similar story. Wonder when a manufacturer will produce an all purpose heat pump?

    • A Wall 5 years ago

      That is an excellent figure, but it ignores the inefficiencies of getting electricity to the user relative to those for gas (elec has, I believe, about a 3-fold inefficiency, unless it is locally produced solarPV).

      What we need is a good and affordable domestic heat storage system so that excess solar production can be directed to heated water (I am imagining 1000L storage) using a heat pump, which can drive radiators in winter. In summer, the excess can be used to chill the water. Who can sell me this? 😉

      • Alastair Leith 5 years ago

        Dunno who can sell you that, talk to the Earthwork Collective about it, they make heat pumps that retrofit onto existing HW tanks. Although I’ve heard some people find them a bit noisy. I’ve thought about same, also some people don’t seem to cope with the ?dry air heat pumps put out and water radiators could be a good alternative. Don’t know what the efficiency of radiators are, hydronic floor heating seems to be good if that’s an option for you.

      • Miles Harding 5 years ago

        Hmmm… time for an efficient eco-house that does this for you using the thermal mass of the building, good insulation and solar aspect, all without radiators.

        Maybe a large aquarium?

        • A Wall 5 years ago

          Totally agree, Miles! If I could snap my fingers and change these things in my 60 year old house, I’d do it! 😉

          (I’m doing what retrofitting I can though, including loft insulation, secondary glazing, and a solar space heater on the roof)

      • nakedChimp 5 years ago

        Hm.. sounds like European Zero-Energy homes with internal water tank.. some are really BIG. Search Google for 37.000L passive house in Switzerland.

    • Miles Harding 5 years ago

      The burner efficiency part of the above graphic is definitely misleading. Depicted is a truly awful gas heater, like the one I used to have. The really good gas heaters are more like 90 or 95% efficient; the flue is cool enough to put your hand on.

      Even with an efficient gas heater, the cost of using an air conditoner is still less and it also cools — try that with your gas heater.

  4. Miles Harding 5 years ago

    The AEMO forecasts show the influence of politics on policy.

    The confluence of efficient home design, cheap solar PV, effective batteries, induction cooking and heat pump technology all indicate the irrelevance of gas. I don’t intend to ever have a gas service connected again.

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