“That’s a balance which other countries are pursuing,” Mr Taylor told the ABC’s Radio National. “We’ve got ourselves into an immature debate where you say, ‘it’s all got to be renewables, we can’t have any gas’. Here in Victoria for instance there’s an anti-gas mindset. Finally, we’ve seen the Labor Party getting religion on that.”
Australian Pipelines and Gas Association chief executive Steve Davies said industry had been warning about looming gas supply shortfalls for half a decade, but that little had been done and now businesses were “being asked to pay the price”.
“The extreme lows in renewable generation, particularly wind yields, have meant gas-powered generation has picked up a significantly larger load to keep the lights on and ensure electric homes can remain heated,” Mr Davies said.
Gas production at Longford, the east coast’s biggest domestic supplier, has been constrained by maintenance work. James Davies
In the first 19 days of June, gas-powered generation in Victoria had already been used as much as over the entire last winter, demonstrating its importance, Mr Davies said. “But you can’t have gas generation without supply,” he added.
In Victoria, Liberal energy spokesman David Davis blamed the shortfall on Labor’s “war on gas”, which he said had left the state’s industry and households vulnerable.
“Labor over 10 years in power has botched energy policy,” he said. “Not one new exploration permit has been issued for onshore conventional gas across their decade in power. Gas will have a critical role in managing the intermittent nature of renewable energy supply as shown by the low percentage of renewables in the system over the last few days where coal and gas have carried the load.”
But Victorian Energy Minister Lily D’Ambrosio said there was no cause for concern.
“We’ve had a very, very cold few days and that’s meant that Victorians are using more gas to keep themselves warm, and we want to make sure that they stay warm,” Ms D’Ambrosio said, adding AEMO’s alert notice was a signal to the market for more supply.
“The alerts they’ve issued are about ensuring they can source alternative or additional sources of gas to ensure there is sufficient supply for this period of time.”
Wind power at a low
The squeeze on south-east gas supplies has been driven by the need for gas power plants to compensate for low renewable power generation, as is typical during winter periods when wind levels can subside for days at a time.
In the three days to June 20, average renewable power generation in the electricity market generated just 21.1 per cent of the energy used in Victoria, a state with higher-than-average wind capacity. It sank to a low of just 2.5 per cent during that period.
Meanwhile, all coal plants have been operating non-stop. EnergyAustralia’s Yallourn generator in Victoria’s Latrobe Valley is understood to have one unit out of action.
At the same time, the east coast’s biggest supplier of domestic gas, the Longford gas plant owned by ExxonMobil and Woodside Energy, is running below capacity due to an outage. AEMO said maintenance work at offshore fields would continue to limit production at Longford until at least July 1.
The reduction of supplies from Longford has caused a run-down in gas storage levels at the main gas storage plant in the south-east, the Iona facility in Victoria. AEMO said gas storage at the Newcastle and Dandenong storage plants would also experience high withdrawal rates while the squeeze continued.
“Reduced storage facility delivery capacity may pose a risk to gas supply adequacy in southern jurisdictions on peak demand days during the winter peak demand period [through to 30 September 2024],” the regulator said.
Josh Stabler, an adviser at Brisbane-based Energy Edge, said the threat of shortages in the south-east would only become “more real” as winter takes hold.
He pointed to the two concurrent issues of high consumption of gas due to cold weather, and the limit to gas supplies from the Iona storage plant, requiring “optimisation” of storage over the entire winter. “It is a medium-term issue as storage at the current levels but will become more real at winter continues,” Mr Stabler said.
Under the regulations, any shortages that do result would hit industry rather than households, which would be prioritised in terms of the supply of available fuel.