Guest essay by Eric Worrall
A combination of green inspired state moratoria on gas exploration, coupled with growing gas export capacity, and politically motivated closures of coal plants, has created a looming shortfall in Australian energy supply.
Energy shortages in 2018-19 without national reform, market operator warns
Australian Energy Market Operator predicts shortfalls in New South Wales, Victoria and South Australia ‘if we do nothing’
The Australian Energy Market Operator has warned that Australia is facing energy shortages if governments do not carry out national planning as exports continue to dominate the country’s gas supply.
The Aemo report predicts New South Wales, Victoria and South Australia will be impacted from the summer of 2018-19 and warns that the tightening of the domestic gas market will have flow-on effects to the electricity sector unless there is an increase in gas supplies and development.
It also warns that rising gas and electricity prices could threaten the financial viability of commercial and industrial businesses. The report found that even new supply – with rising gas production costs – was unlikely to provide much relief and could still lead to business closures.
“If we do nothing, we’re going to see shortfalls in gas, we’re going to see shortfalls in electricity,” Aemo’s chief operating officer, Mike Cleary, told the ABC.
…
The following is the statement by the Federal Government run Australian Energy Market Operator;
March 09, 2017 – 8:00 AM
A projected decline in gas production could result in a shortfall of gas-powered electricity generation (GPG) impacting New South Wales, Victoria and South Australia from the summer of 2018-19, according to information provided in the Australian Energy Market Operator’s (AEMO) 2017 Gas Statement of Opportunities (GSOO).
The GSOO report, intended to assess the adequacy of gas infrastructure, reserves and resources to meet demand in eastern and south-eastern Australia to 2036, outlines that gas producers have forecast annual production to decline by 122 PJ, from 600 PJ in 2017 to 478 PJ in 2021. Based on this information, AEMO advises additional production will be required to meet the needs for GPG and residential, commercial and industrial gas consumers.
“At a time when LNG export is dominating demand and supply of gas in eastern states, strategic national planning of gas development has never been more critical for maintaining domestic energy supply adequacy across both gas and electricity sectors,” said AEMO Chief Operating Officer Mike Cleary.
This tightening of the domestic gas market will have flow-on effects to the electricity sector unless there is an increase in gas supplies and development. Without this development to support GPG, modelling suggests average electricity supply shortfalls of between approximately 80 gigawatt hours (GWh) and 363 GWh may be experienced in 2018–19 and 2020–21. The scale of these shortfalls would breach the reliability standard which aims to supply at least 99.998% of electricity demand.
Alternatively, if GPG gas requirements are supplied, then gas shortfalls of between 10 petajoules per annum (PJ/a) and 54 PJ/a are projected in the residential, commercial, and/or industrial sectors from 2019 to 2024 in New South Wales, Victoria and South Australia.
“The 2017 GSOO highlights the increasing interdependencies between gas and electricity, and supply and demand, and the need for the Australian energy industry to have a holistic “single energy view” to ensure long-term planning is carried out in the interests of consumers.
“Gas and electricity markets can no longer be viewed in isolation, as the overall convergence of energy markets in eastern and south-eastern Australia demands a single energy view from a national perspective. It requires holistic planning across the entire supply chain to enable investment decisions to be made in the long-term interests of consumers,” said Mr Cleary.
In the short term, AEMO has identified a range of potential industry responses that could mitigate both electricity and gas supply shortfalls, however notes that these responses rely on appropriate market signals, and may be impacted by considerations such as the retirement of coal-fired generators, and the direction of energy policy such as the existing moratoria on various gas developments across eastern Australia.
“Energy supply shortfalls could be mitigated in the short term by an increase in coal-fired generation and renewable energy output, combined with an uptake in technologies such as battery storage, together with increased gas production and the possibility of LNG exporters redirecting a small portion of their gas production to the domestic market,” said Mr Cleary.
“Gas producers have told us that there is potential scope to increase production from existing fields if incentivised, although the size of the increase is unknown and new fields may also need to be developed to meet projected demand,” said Mr Cleary.
The long-term outlook identifies that early investment in exploration and development programs will be needed to bring uncertain and undiscovered resources to market in time to meet forecast increases in demand for gas. Up to 5500 PJ of additional production will need to be developed to meet projected demand post 2030, although AEMO acknowledges that climate change policy, and emerging new technologies will influence future demand for GPG and the energy supply mix.
The 2017 GSOO uses demand forecast scenarios from the 2016 National Gas Forecast Report and forecasts production based on producer guidance, wholesale gas contract information, historical actuals from AEMO’s Gas Bulletin Board and other publically available information. The report is based on information available to AEMO as at 31 December 2016.
“We engage thoroughly with a broad range of gas stakeholders to achieve the highest quality input and accuracy, and we welcome the opportunity to continue to work with industry and government policy makers to maintain electricity and gas system security in a period of transition,” said Mr Cleary.
The Victorian Gas Planning Report was also released today and provides annual supply (available and prospective gas) and consumption forecasts for Victoria for the next five years. The report projects potential gas supply shortfalls for Victoria over the next five years should market participants not carefully manage their gas portfolio, including storage balances. It has identified challenges in filling storage as a threat to system security.
This disaster is self inflicted. Australian has vast gas resources, but hostile green influenced politicians have put obstacles in the way of exploiting them. At the same time, Australia has developed export capacity, which allows gas producers to sell what gas they have at international prices, bypassing marginal prices on the domestic market.
Those same green influenced politicians are pouring money into useless renewables, and closing coal plants.
I guess its time to upgrade the emergency household generator.
I sincerely hope Australia suffers a serious blackout crisis. Not for vindictive reasons but because that’s one of the few ways green policies (and the idiot politicians who spawned them) will be thrown under the bus. They will need to suffer self-inflicted pain before they can get better.
We have already had rolling blackouts in South Australia and in New South Wales too, or to give it it’s PC name, load shedding! Once big power plants are shutdown, it only going to get worse. Aussies are in for a big shock! No-one I know here has experienced the UK 1970’s blackouts, caused by socialist “industrial action”.
Gang Green love to pretend that shutting down coal plants doesn’t put extra demand on gas, affecting the supply and price of it.
“Gang green” What a great name for the big green rent seekers and destroyers.
+100
The Aussies will learn, as did the Germans. Five years ago, Germany shuttered its last nuclear power plant without implementing any viable alternatives. The results were predictable. A harsh 2013 winter sent electricity prices through the roof, and nearly three quarters of a million homes had their electricity turned off at a time when temperatures dropped to -20C and lower. The sale of wood burning stoves spiked, and people resorted to cutting down trees (a felony in Germany) just to stay warm. Germany immediately began building more coal and NG power plants. Wind and solar just don’t cut it when the temps drop below freezing during the winter. Shutting down the nuclear power plants was terribly irresponsible.
The Aussies should know better.
“The Aussies should know better”
We do! But our politicians are another argument..
Germany cant have shut all its nuclear plants, its still producing at 12% of demand. Its share of capacity is much lower but it can run almost continuously
Its not until 2022 that the last neutron will fission.
Italy is the only western european that shut all its nuclear plants. The strange thing is that its largest utility is building more nuclear plants, but in neighboring countries , France and Slovakia
Let me guess, they plan to ship the electricity generated back to Italy.
Aussies need to call a general strike and march on the capital. Hold all lawmakers in their offices and do not let them out until they do the will of the people and stop this madness. Give them bread and water, cut off phones and power, block or shutdown all cell services until they understand and act for the good of the nation and not the good of the greens and other high level thieves.
At this rate Australia will come after U.S. clear cut forests for wood pellets like the UK. Maybe the ships carrying AU gas exports will pass by the ships of wood pellets at sea.
I hate to say this because I love Austraians. I went to Sydney on R & R and was treated so well. Very friendly folks down under. But I am afraid to say that the Aussies are leading the way in converting their energy industry to “carbon free”, and they are going to suffer great hardships as a result. Hopefully the US will keep dragging her feet and not get too committed before the damage becomes unbearable.
The Green Politicos don’t have a motto, so I would like to suggest one. “Ready. Fire. Aim.”
If you dig you will find layer on layer of bureaucratic bodies involved in Australian energy activity. Some seem to be able to ensure the success of others by mandating sweetheart deals that prevent monetary loss. Others, as Eric quotes above use strange words like incentivise. Typical brown cardigan speak that should not really be quoted as a credible source of information, for these are some of the people who made this mess.
These same people are stopping us getting out of the mess.
When one studies the oil and gas history of the last 20 years in the USA, one can imagine that many exploiters would have studied the world for other countries able to succeed like the USA. Australia would have been a hot contender. — if politics had been absent the picture.
As it is, there have been significant developments, mainly for gas export, that show the principle that technically, gas can be found, extracted and shipped. Politics and ideology have been the main factors preventing more success.
One has to ask why there are effectively moratoria on exploration in most States and a hostile ban on fracking in Victoria. By what logic have politicians decided that people will be better off if schemes that could make a great deal of money are banned?
It is hard to think of a more stupid outcome than the one we have for future Australian energy. The Feds with Frydenberg are rabbiting on about energy storage and more renewables forgetting that elsewhere these renewables cost 2-3 times older generation and that there is no large scale energy storage project that has succeeded anywhere in the world in the manner he thinks Australia could go. There is still a longing for another pie in the sky process where CO2 from fossil fuel is buried underground, permanently. Any competent geologist will laugh that idea to oblivion.
Feds, you have to remove impediments. Remove regs that discourage investment in nuclear. Remo ve policies like preferences and targets for renewable energy, then disband the myriad bodies of which one can only say sadly, forgive them father, they know not what they do.
Finally, have a series of fundamental seminars that examine what the proper and necessary functions of a Federal government are, constitutionally and by the will of the people. One of Australua’ biggest handicaps is self- imposed overreach of government functions. Here we see it in action for energy.
Geoff.
Geoff, how many times have the people in Australia told these politicians they do not want a bar of it’s CO/2 taxes in any shape or form?
While all your thoughts and opinions are agreed with by a clear majority of the population. Myself included.They who your suggestions/demands are directed at are simply not listening. The impediments you refer to are their to further entrench the vehicle of choice used by the socialist movement, global warming. They have been placed there to facilitate an end. “Father” forgive them not because the barstards know exactly what they are doing!
Heres our biggest problem in my opinion.
When we express our anger at the voting box and punish a government for not listening. As we did at the last election. We only removed a few pieces of the tail of the snake that supports global warming at any cost. The many heads of the snake driving the support of the scam remain to regroup and continue their financial assault upon us. The same happened in the election before Abbott. But the labor/greens remain committed to robbing us blind in their quest for utopia even in opposition.
Abbott, in his short tenure as pm was on track to “kill” the snake that works its way through both political partys now. Till his political assassination by both sides. He shut the “climate commission” down,removed the funding for investing in the scam related hot rocks and wave generation, to name a few and would not have placed his paw print on our behalf on the Paris agreement. In the eyes of that snake he had to go and bugger the rest of us and our protests. I’ll save the advice from the likes of our former asteemed Australian of the year, the honorable Professor Flannery and its consequences. As I’m certain you are familiar with it.
There is an answer but looking at todays offerings on the Australian political scene, its a long way off.
Hopefully Trump will have kicked started Americas economy with a glut of fossel fuel driven energy by the next election. Exposing Australia and the rest of the political worlds stupidity along the way. Geoff, is it coincidence that China, India and Japan, who burn our coal, have economy’s doing far better than the ones that are “saving the planet”? Or has that been engineered?
Gas for export: Expensive, and available
Gas for domestic use: Cheap and increasingly unavailable
Gas is gas, no matter where it’s burned. It doesn’t take a government study to figure out the problem here.
Confession: I worked in the US power industry for 33 years (nuclear, fossil, transmission) 1963-1996, so I’m a biased and an old fashioned engineer — and I don’t believe CO2 is going to kill us all.
To me, “renewables” that require an equal amount of dispatchable backup (fossil fueled) make little or no sense, for all the reasons others have brought up over and over.
An argument that I never see for using coal and nuclear which Australia, the USA and many countries have in abundance, is that electrical generation is best way to use these resources. The only major use of nuclear resources is power production. Nuclear should be our primary base-load fuel. Coal has more commercial uses than nuclear, but its best use is power production. It should be used as in the recent past, to provided the vast majority of our electrical power needs.
Producing base-load power from oil and gas is a waste of resources that power vehicles — planes, cars, trains, trucks — the chemical industry, plastics, etc., etc. They should not be wasted on providing the bulk of our power needs. It’s even a waste to use them to back up wind and solar.
We need to properly apply resources and use them where they are most effective and efficient. Keeping coal and nuclear materials in the ground and wasting “portable” gas and oil in conjunction with “renewables,” controlled by incompetent politicians will subject us all to the recent SA blackout experience.
Bob Cherba @ur momisugly 7:59
Yes, Bob, you’re absolutely right.
There’s not much you can do with uranium except generate heat and make depleted U munitions. Coal is such a good energy source and an abundant one. It’s also versatile… can be used as a chemical feedstock like oil and gas but they are easier to use for this and also ideal for transport.
Oh yes, U3O8 is really heavy and can be used for diving weights…especially good for green politicians.
Totally agree: use nuclear for core baseload, coal for the top slice and flexible response to changing demand, and keep oil and gas for mass mobile and distributed energy use, such as fuelling vehicles, powering key industries and heating/ventilating habitable spaces.
PS – My pet conspiracy theory is that what “Exxon knew” (and other O&G cos too) was that the demonisation of CO2 was pseudo-science, but went along with it to wreck coal as a competitor and take over the generating sector. There are crazier theories out there…
It seems that Australia and New Zealand have been targeted to be the poster children for renewable energy and Agenda21. New Zealand has a contained enough size and population to throw money at and capture from the locals but Australia won’t be so complacent. The question is how far back in the evolution chain will they need to be pushed until there’s a populist revolt?
Nothing will change while sport is on TV.
Pylons, we need pylons urgently! & blindfolds! A dozen or two will do…
Aussome!! Probably going to subsidize more windmills to meet the demand. The left has been tilting at those things for decades.
You know, there was a wee bit of logic in subsidizing renewable energy back in the 80’s-90’s. The argument being that it needed a kick-start. But there are MANY major players in the renewable energy field now, and if it can’t stand on its own, then it just isn’t working. The technology is mature. Is it getting better? Maybe – but at most at the same rate as existing fossil fuel and nuclear technologies. We need to draw down all renewable subsidies and tax breaks over a five year period – or less. Admit it is an evolutionary dead end. Move on to the next set of ideas. Subsidize HELE, thorium reactors, other nukes, whatever. Smooth and accelerate the regulatory maze. Provide the same protection to fossil fuel energy extraction that Renewable energy had for killing wildlife, of at least level that field, with the same fierce prosecution and demonization of renewable installations that kill birds and bats.
I know – it’s been said here a hundred times. Apparently bears repeating.
It will undoubtedly take some sort of prolonged energy crisis (one with damaging consequences) to shake some sense into the electorate. As in Califrnia and the UK, self inflicted wounds.
There is probably some validity at looking at gas supply and demand up to 5 years out – but the rest of that chart is as useless as the IPCC charts predicting global climate. Few people would have predicted today’s US gas production 10 years ago – identification of reserves, changing technology and changing prices all fluctuate too wildly for reliable prediction in the long run. Otherwise we would have run out of gas 20 years ago as predicted in the 1970’s.
As a connoisseur of pseudoscience and wingnuttery in general there is something quite special about Australia. Can’t quite put my finger on it but there is definitely a hysterical yet solidly wooden-headed timbre to it which I just don’t see elsewhere. I guess it’s a result of the stoic phlegmatic pragmatism of the frontiersman attitude being culturally translated into modern eco lunacy. It’s interesting from an anthropological point of view but must be utterly infuriating to actually pragmatic people like engineers and so forth who haven’t contracted the mental illness.
+10
I too was confused about them until I put it all in context that the global export commodity boom driven by China’s growth and now overcapacity investment bubble must underlie the peculiar Aussie behavior. Let’s stress test it with a recession and with China unable to stoke the stimulus engine for a 10th time.
Ha ha! What a great post!
Unfortunately, most Aussies are far too consumed with sport, sports betting and the property ladder to worry about how our elected leaders are screwing us.
How are those full scale solar CSP plants working out? These were funded long after they were already known to be uncompetitive in other countries, even against solar PV.
They seem to be doing fine…
They solved the bird frying thing…
Other countries, including Australia, Chile, Saudi, Dubai are constructing them.
https://globenewswire.com/news-release/2017/03/09/933801/0/en/Concentrated-Solar-Power-Market-to-surpass-24-GW-by-2025-Global-Market-Insights-Inc.html
Most folks like their foul fried.
But it is not solved. You should do better research.
[But fouled fried fowl are inedible, unusable, unsaleable, and (potentially) deadly; and should be fired. (Er, burned.) .mod]
Australians have a bad case of me-too-ism. They want to play with the big boys, so their way to do that is to out-big the big boys, but they’re clueless how to do it. Cook & Lewandowski are all too typical of the Aussie approach which is akin to cargo-cult science but applies to every sphere. Their media is unbelievably biased, out-shrilling the Washington Post by miles. It would be a good place to practice or pioneer national psychology. Maybe they can start that process during the blackouts to come.
Dean,
‘. . .principle stress direction generally is vertical.’
This is a simplistic generalization that can not be quantifiably demonstrated. To use such a phrase poisons the ignorant’s well of knowledge.
Forget Australia, now we have Rex Tillerson saying how high when Green Piece says jump. In bloody believable.
State Dept: Tillerson has recused himself from Keystone decision
http://thehill.com/policy/energy-environment/323302-state-dept-tillerson-will-recuse-himself-from-keystone-decision
Rob commented: “…Forget Australia, now we have Rex Tillerson saying how high when Green Piece says jump. In bloody believable….”
Stop believing the MSM that this is a win for the Greens. Smart move. Get rid of the peripheral flack and replace with someone who is acceptable but will push anti AGW policy. End of problem. Next.
Remember when keating said we’d be a banana republic? Different scenario same conclusion
And to make matters worse , South Australia has the most expenisve electricity on the planet. But not to worry! The government gives some ‘assistance’ to help cover the costs. Why this last Year I receive $1.75 per week from the government to help towards my annual bill of AU$5000
Last week I read about farmers demanding action on climate change here in Oz.
This week I read about farmers moaning about a 100% or even 200% rise in electricity for irrigation (yup, it’s trippled) in the past few years. They are turning to diesel pumps at half the cost.
This is what farmers asked for, and this is what farmers now moan about. I suppose it beats moaning about the weather, but this time they are directly responsible!
About to get a whole lot worse…Musk is offering 100MW in 100 days! Lunacy!
http://www.smh.com.au/technology/technology-news/atlassian-cofounder-mike-cannonbrookes-offers-to-find-funding-for-teslas-aussie-energy-plan-20170310-guv9pj.html
Looks like a bet according to the Grauniad
https://www.theguardian.com/technology/2017/mar/10/elon-musk-i-can-fix-south-australia-power-network-in-100-days-or-its-free?CMP=fb_gu
Yes a bet, paid for by the taxpayers and power users of South Australia. How any state would consider this as a fix for the power problems, introduced by the SA Govn’t, is completely insane! But Musk stands to make a pretty penny!
Or not, if he fails
Wrong again. He will not charge for the *installation* of the batteries if not done in 100 days. The batteries and other infrastructure will still cost. Good fail there Griff.