Post: Gas’ role in the transition diminishing

Gas’ role in the transition diminishing

A recent report by the Institute of Economics and Energy Financial Analysis (IEEFA) has revealed that Australia is reducing its reliance on gas for power generation.

The Australian government has set a target to increase renewables to 82% by 2030, further decreasing the need for gas. According to the report, published on 11 May, gas usage for power generation has fallen by 47% from 2014 to 2022, while renewables have increased from 14% in 2014 to 35% in 2022. By 2030, the Australian Energy Market Operator (AEMO) forecasts gas usage for electricity generation will fall a further 34%.

The report notes two causes: gas baseload plants are being shut down due to the high cost of gas in Australia and gas-peaking plants only operate for a small percentage of the year, typically between 4%-14%. As a result, high gas-consuming gas baseload plants are closing, and heavily government-subsidised gas-peaking plants that won’t consume much gas are opening.

It also noted that grid-scale batteries pose a significant threat to gas-peaking plants. Batteries have high up-front capital costs but very low operating costs, allowing them to operate every day, filling at cheap prices and selling during peak periods. In contrast, gas peaking plants can only operate at very high electricity prices, making them less competitive in Australia, where gas prices are high. The current investment in increasing the scale and number of grid-scale batteries will crimp demand for gas.

GridBeyond Sales Director Australia Lisa Balk said: