Gas-fired power generation is a bridge (short one), not a destination between our fossil fuel era and Australia’s uniquely bright clean energy future.
However, new modelling highlights how important it is that the bridge is short. The reality is, building more gas plants isn’t guaranteed in the global energy race, and delays only add unnecessary costs for households, businesses, and the nation.
New analysis by Nexa Advisory shows that delays to the build out of renewable energy generation, transmission, and storage to back up wind and solar, risks an over reliance on expensive gas-fired generation. This would mean wholesale costs totalling $115.7 billion more than getting this right, and achieving an ‘orderly transition’.
There is no getting away from the fact that, even in Australia, the sun doesn’t shine and the wind doesn’t blow 24/7. So, in a National Electricity Market increasingly dominated by clean and renewable energy sources, we will need significant storage capacity and a ‘back up’ power source.
Gas-fired generation is part of that solution- but a small part. Gas plants are highly flexible, including quick to start and stop. However, it is not the ‘get out of clean energy jail card’ for Australia or Australian families and businesses that some would have you think it is.
Gas is an expensive fuel, with prices and supply determined on a global stage. Even if we wanted to rely on it more heavily, it’s already too late to build the new plants required. Australia isn’t alone in this transition—demand for gas turbines is soaring worldwide, with supply chains now stretching beyond five years, and we’re not even in the queue. There is also, of course, an emissions implication to continued significant use of gas.
What does, or at least should, all this mean? Gas has a small back-up role in our energy transition. But it needs to be just that – a back -up role. And, we need to get the hell on with the transition in a real way or it will cost Australia and Australians – needlessly.
In Nexa’s modelling, delays to the transition that lead to over reliance on gas as a primary energy fuel will cost them $115 billion between now and 2050 – that means a needless average 22 per cent increase to consumers bills. An expensive trajectory we are on unless we change the assumptions.
Simply put, every delay in building the infrastructure for our energy transition means consumers pay more. When transmission isn’t delivered on time, the default winner is expensive gas.
To avoid this, state and federal governments must get serious about accelerating renewables—the cheapest form of new generation—backed by storage and a clear strategy for reliable backup power rather than extending unreliable coal generators which have reached their end-of-life.
So what can we do about it? The good news is this isn’t about more taxpayer handouts. While there’s no single silver bullet, governments can focus on sending the right signals to attract developers, investors, and operators to deliver what’s needed.
That means providing certainty on coal closure timelines, enabling market-led solutions like virtual transmission, and ensuring accountability for delivering transmission on time and on budget. Governments also have a crucial role in streamlining planning and approvals and helping build the social licence needed to get renewables and transmission projects built—where and when they’re needed.
That is the only route to building what we need and avoiding an expensive energy transition trajectory we find ourselves on due to decades of delays and politicking. Which is:
– adding 4.3-8 GW of new renewable generation capacity per year through to 2030 to avoid the need for additional gas-fired generation
– fast-tracking intra-regional transmission capacity to avoid the additional 1.8-2.8GW of gas-fired generation that would be needed if transmission and renewable generation projects continue to be delayed
– an expanded focus to include private, market-led transmission – such as virtual transmission – this could deliver projects faster, reduce costs and the ‘footprint’, and better support social licence
– certainty of coal-fired power station closures dates to send the right investment signals to the market
– most importantly, support medium and large businesses to access consumer energy such as a business battery scheme and rooftop solar
None of this is new—or complicated. What matters is that our runway is getting shorter. We need clear, coherent direction from government and real action, not more announcements. The hard, unglamorous work must start now.
Nexa Advisory’s research shows that failing to act—by delaying transmission, renewables, and storage—will unnecessarily cost Australian families, businesses, and the economy $115.7 billion.
Gas-fired generation has an important, but temporary, role as backup to ensure reliable and affordable power during the transition. It’s a short bridge to Australia’s clean energy future—and if we linger on it too long, we’ll pay the price in both dollars and emissions.
Stephanie Bashir is principal of Nexa Advisory.
