Australia’s gas industry has been warned the nation’s east coast could lack sufficient supplies for the rest of this freezing winter amid production disruptions, poor renewables output and soaring gas demand.
The Australian Energy Market Operator (AEMO) on Wednesday alerted major players of tight supplies, meaning electricity bills could soar for households.
“The supply of gas in all or part of the east coast gas system may be inadequate to meet demand,” AEMO wrote in its ‘Threat Notice’ to the gas industry.
This warning comes as gas is used in Australia to supplement traditional energy during periods of peak demand.
The market operator said gas supply shortfalls in NSW, Victoria, ACT, South Australia and Tasmania were due to the high rate of depletion of storage inventories.
This was in part due to production disruptions at Longford, Victoria, as offshore maintenance at the plant will continue to constrain production capacity until July 1.
The Newcastle gas Storage Facility in NSW and Iona gas storage facility and Dandenong Liquefied Natural Gas Storage Facility in Victoria have been impacted by this.
Alongside this, high gas demand amid a particularly cold winter and poor renewables output has spelt trouble for the state of Australian energy.
“The high gas fired electricity generation demand is in part due to low wind and solar generation,” AEMO wrote.
The operator said it would “continue to work with governments and industry to manage gas supply”.
AEMO warned the situation could worsen if an unplanned event occurs which impacts either gas supply or demand.
This risk of supply issues could last through the winter peak demand period, which ends about the start of October.
The dire outlook on gas supply constraints spurred AEMO to recommend those in the gas industry take measures which facilitate the production and supply from Queensland to the south-east states and reduce the rate of storage inventory depletion.
An emergency meeting amongst major gas players has been called to address the dire situation, sources told The Australian.
The ‘Threat Notice’ comes after AEMO warned NSW and Victoria could face heightened risk of blackouts this summer.
In an update to the 10-year outlook it released last year, the operator revealed the increased risk was due in part to a year-long delay to the delivery of a Project EnergyConnect power cable between NSW and South Australia, and the upcoming retirement of coal-powered generators.
The operator warned last year it was continuing to forecast “reliability gaps” in the network, largely due to the move to close to 62 per cent of Australia’s coal fleet by 2033.
To minimise the risk of outages, AEMO will tender for emergency reserves to mitigate the impact these possible outages will have on Aussies.