The road map said gas would continue to play a small but crucial role. It will back up the vast bulk of renewable electricity under the Albanese government’s ambitious target to more than double the proportion of renewable electricity in the grid to 82 per cent by 2030.
Gas peaking plants can respond almost instantly when needed during periods of extreme demand or periods of low renewable generation, especially in winter when low wind and sunshine coincide with cold weather, and households switch their heaters on all at once.
However, AEMO is warning supplies of the fuel are running out – driven by dwindling reserves from Bass Strait fields, which have been the mainstay of the east coast gas market for decades.
AEMO said in March that the entire east coast gas market would be in annual deficit by 2028 unless new supplies are tapped, forecasting the supply gap to increase over time.
That is why AEMO said new gas plants should be built with onsite storage for extra diesel or hydrogen fuel to keep the turbines running if gas runs out – although it noted that hydrogen was likely to be too expensive in the coming decades.
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“A typical gas generator may generate just 5 per cent of its annual potential, but will be critical when it runs. Most of that will be needed to support some winter days of low renewable energy output,” AEMO said.
A spokesperson for the Climate Change and Energy Minister Chris Bowen said the government was aiming to boost gas supply under its future gas strategy and that gas power would play a small but significant role in an energy grid dominated by renewables.
“AEMO estimates just 1.4 per cent of our 2050 demand will be met through flexible gas or hydrogen generation to support the transformation to reliable renewables that’s underway,” they said.
Former prime minister Scott Morrison’s “gas-fired recovery” policy vowed to open up new gas fields, including the Beetaloo Basin in the Northern Territory, but no new gas field was developed during that term of government.
Dutton must convince industry and voters he can reverse the record of the Morrison government, when four gigawatts of generation capacity left the grid and only one gigawatt was added.
Shadow minister for climate change and energy Ted O’Brien.Credit: Alex Ellinghausen
Opposition energy spokesman Ted O’Brien has promised to release a gas policy before the election. He was contacted for comment.
Not everyone agrees that more gas is needed. Renewable and climate advocates argue that pumped hydro dams coupled with batteries can provide the storage needed to back up renewables, coupled with policies to reduce energy demand with increased energy efficiency.
“A national support program for home batteries will ease the power bill shocks in people’s homes, further stabilise the grid, and cut pollution,” the Smart Energy Council said last week.
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Grattan Institute energy and climate policy expert Tony Wood said the government’s policy to encourage more renewables, known as the Capacity Investment Scheme, risked leaving the grid in a mess because gas was excluded.
Wood warned the opposition’s nuclear policy, a plan announced earlier this month to use public funds to build reactors on seven sites across the country, could leave the taxpayer on the hook for inefficient technology that private investors wouldn’t back.
“What we should be saying is we want to design a market with a reliable, low emissions mix and leave it to the market to solve the problem,” he said.
“But we seem to have got ourselves in a situation where the Labor government is arguing more for the private sector and the Coalition is arguing for the public sector investment. How weird is that?
“If the government’s going to decide what the mixture of technology is then we’re in a really bad place.”
The Albanese government approved last week Senex Energy’s long-delayed $1 billion Atlas project in Queensland’s Surat Basin gained federal environmental approval and is set to supply 60 petajoules a year from the end of 2025.
Renewables are driving coal plants out of business at a rapid rate with 90 per cent of the grid’s coal plants expected to be gone by 2035 and all of them shut by 2040. These plants currently supply 60 per cent of electricity.