Renewables shine over Australian summer, as gas share slumps to new lows

Output from Australian gas generators fell to new record low levels over the latest summer, as output from wind and solar surged to new highs, raising new questions around a Morrison government push to invest in a new gas-fired power station.

New analysis published by the Climate Council highlighted the diminished role that gas generators are playing within the National Electricity Market (NEM), slumping to less than 5 per cent market share of the electricity generated during the last Australian summer.

The market share of gas generators peaked at around 13 per cent total supply in the NEM in Autumn 2014, but since that time, the gas of electricity produced by gas plants has collapsed, falling by almost two-thirds in just seven years, while renewables have more than doubled their market share over the same period.

The Climate Council says the trends show that Australia does not need to invest in new gas fired generators.

“Our existing gas power stations are struggling to compete with clean, reliable and affordable renewable energy and storage. Australia does not need any new gas,” Climate Council senior researcher Tim Baxter said.

“Gas is a polluting and expensive fossil fuel that’s on the way out and has no role to play in our economic recovery. It’s driving up household power prices, and prices for our manufacturing industries, putting the sector at risk.”

The analysis showed that renewables, particularly wind and solar, were contributing more to Australia’s electricity supply than gas over the last Australian summer.

Across December 2020 to February 2021, gas fired power stations supplied just 4.9 per cent of the electricity generated in the National Electricity Market, while renewable energy sources supplied 30 per cent of electricity used in Australia’s main grid.

These differences were even starker in Australia’s most populated states; Gas supplied just 0.5 per cent of Victoria’s electricity over the last summer, while renewables supplied 29.5 per cent.

In New South Wales, the market share of renewables reached 26.1 per cent, while gas supplied just 0.9 per cent of the state’s power.

Gas generation in South Australia fell to its lowest level in 16 years over the summer, with falling gas generation helping to produce much lower wholesale electricity prices.

Western Australia’s South West Interconnected System was the only Australian grid where gas had a larger market share (36.5 per cent) than renewables (26.9 per cent).

The Climate Council found that gas generators were getting squeezed by both growth in supplies of renewable electricity generation and falling overall electricity use.

The analysis found that electricity demand fell by 4 per cent in the 2020/21 summer, compared to the same period a year prior, while the amount of electricity supplied by has generators fell by more than one-third.

The Climate Council cited the analysis to query why the gas industry was getting so much attention from the Morrison government, when it was playing a diminishing role in the electricity sector.

“Gas industry advocates regularly point to the experiences of countries overseas to justify new gas, while completely failing to acknowledge the reality of what is actually happening here in Australia,” Baxter said.

“As the sunniest and one of the windiest places on the planet, Australia should be cashing-in on its renewable advantage, and in doing so, rapidly reducing greenhouse gas emissions. It’s a win-win.”

The Morrison government is closing in on a self-imposed deadline to finalise a decision to invest in a new gas-fired generator at Kurri Kurri, in the New South Wales Hunter region, that the government insists would be required to fill a supply gap left by the closure of the Liddell power station, if insufficient new investment commitments are made by the private sector.

However, it is unclear the degree to which such a decision is linked to supply needs, with government-owned Snowy Hydro progressing plans to develop a 750MW gas generator at Kurri Kurri, while market regulators suggest the supply gap could be as little as 154MW in 2023 when Liddell is scheduled to close.

The Integrated System Plan prepared by the Australian Energy Market Operator suggests that now new gas fired generation capacity could be needed in a future electricity grid, thanks to the strong uptake of renewable energy sources, with existing gas fired generation capacity likely to be sufficient to meet future grid needs, even with the predicted exit of most of Australia’s coal fired generators over the next couple of decades.