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.
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So – Elon Musk just said he can fix SA energy problems within 100 days, or your money back..
https://www.theguardian.com/technology/2017/mar/10/elon-musk-i-can-fix-south-australia-power-network-in-100-days-or-its-free
(I note Tesla has just completed its first major solar storage project since its $2bn acquisition of SolarCity, The company has brought online the Kapaia solar and storage project in Hawaii, combining a 13MW solar array with a 52MWh storage system featuring over 270 of Tesla’s Powerpack systems.
The project has secured a 20 year contract with the local Kauai Island Utility Cooperative and promises to deliver power at a cost of 13.9 cents/kWh, significantly cutting the amount the utility pays for diesel power, according to Tesla.
The ability of the new project to deliver solar power generated during the day onto the island’s grid at night is expected to cut diesel use by 1.6 million gallons a year.
The installation further underlines how renewables can undercut traditional fossil fuel power generation, especially in regions such as Hawaii which boasts significant renewable energy resources and high power costs.)
More idiocy from the uninformed. Where are populations located on Hawaii? How large is Hawaii? Now, compare that to South Australia, which is more than 3 times the size of the UK, with a dispersed population. Griff, you have no idea how big Australia is, New South Wales, for instance, is bigger than Texas, USA.
and I imagine quite a lot of it is empty. Easy enough to put the power near the people not in the outback (starting with their own roof)
“Griff March 10, 2017 at 5:12 am”
Nice of you to impose your solution on others Griff, well done.
Patrick, Oz is actually as large as the contiguous USA states all together. There used to be a single cattle ranch bigger than Texas, but it’s been split up now.
@Jer0me
What is funny is the King Ranch (in Texas) used to be touted as larger than several states. Texas does not take kindly to being outsized, even by Oz. 😉
Diesel isn’t traditional fossil fuel for power generation. The use of wind power in small remote and windy islands sounds like a good idea. However, those islands don’t have the area needed for the wind turbines unless they are built close to villages and tourist hotels. This exposes them to adverse health effects and reduced income from tourism.
I usually recommend Jamaica as a case study for those who are interested in advocating wind power for small to medium sized islands. Jamaica requires about 700 to 800 GW, it’s fairly crowded, and tourism is a large part of national GDP.
Jamaica also suffers from two other factors you must consider: hurricane and storm force winds, and isolation from nearby Cuba by the Cayman Trench, which makes installation of subsea high voltage electric cables a very expensive project.
Diesel isn’t traditional fossil fuel for power generation.
Isn’t it? Tesla’s new grid battery solution in Hawaii is going to save 1.6 million gallons of it a year.
It is pretty widespread in the Caribbean too.
Jamaica does have a heck of a lot of rooftops.
On the face of it, that looks like a demonstration project where Tesla pays for the solar cells and batteries, the cost of which is not disclosed in the report you link. If it truly makes economic sense then we would expect them to be moving into wholesale electricity supply without need for subsidies. Don’t hold your breath.
There are around 500 TCF of gas in one of the shale layers stacked in the NW territory Beetaloo basin alone. Fracking could recover perhaps 15% of that (Origin energy estimate). The first test frac was successful last year, so successful that the greens promptly banned fracking in the territory. An extensive seismic survey suggests that the gas field has the same land area as Wales in the UK. There are other similar shale layers (untested) in the basin. Appears similar to the US Marcellus etc that have crashed the US gas price (at least for producers). Origin and Sasol are partners in the project. There’s an ongoing government public enquiry into the ban on exploitation, naturally the greens are going full flaming faucets with earthquakes on. Think of the children.
Elon Musk has stated that he can solve the crisis with his energy storage system in 100 days or it is free.
Tesla’s Musk discusses energy proposal with South Australian government
Elon Musk has stated that he can solve the crisis with his energy storage system in 100 days or it is free.
Forgot the link-
http://www.reuters.com/article/us-australia-power-tesla-idUSKBN16I06J
Keith commented: “…Elon Musk has stated that he can solve the crisis with his energy storage system in 100 days or it is free…..”
His “solve” is a relative term and much hyped with grid storage. Currently there is a site not far from me with such a “solution”. It sits on 1.5 acres, 80MWh, and is supposed to supply 2,500 homes for 1 day or 15,000 homes for 4 hours. It consists of 400 of his PowerWalls that retail at $5.5K US each. Do the math for a city of say 100K dwellings = 60 acres and almost $90M and the power/home is 3.2KWh which would let you only light the house at night and fry and egg in the morning (if my math is correct, and I’m poor at it). Now apply that to a state/country. Also, if you deplete the batteries due to low wind or solar how would you recharge them unless there was no usage during wind or solar availability?
This is an example of stunning stupidity. I read several years ago that Australia has enough coal to supply the power needs of the planet for 500 years. People of Australia…WAKE UP!!!
It’s always nice to bring actual actual Data to the table.
Take a gander at this real-time dashboard of where the power comes from and where it goeth.
http://www.aemo.com.au/Electricity/National-Electricity-Market-NEM/Data-dashboard#nem-dispatch-overview
Then stack that up against some of the wilder comments….
Another battery poster child goes bust……http://powersource.post-gazette.com/powersource/companies/2017/03/08/Energy-storage-company-Aquion-Energy-files-for-Chapter-11-bankruptcy-Pittsburgh-sodium-ion/stories/201703080186.
I wonder if Griff put his money into it…being such a fan an all.