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AsiaElec POLICY AsiaElec

Coal and gas to lose out to

renewables by 2026 in Australia

AUSTRALIA DEMAND for coal and natural gas as generating transmission capacity is likely to be an obstacle.
fuels in Australia has peaked and is set to be over- Most areas rich in solar and wind resources in
taken by solar PV and onshore wind by 2026. Australia are located inland and far away from
Total solar and wind capacity is set to over- urban centres and cities. Currently, the transmis-
take coal and gas by 2023, Rystad Energy said in sion system is fixed from coal generators to the
a report this week, although transmission limi- cities and is weak to areas inland,” says Rystad
tations will prevent some output from reaching Energy’s senior analyst, David Dixon.
demand centres in towns and cities. Furthermore, the variability of solar and wind
Coal’s share of Australia’s domestic gener- will have to be complemented with energy stor-
ation mix has declined steadily from a high of age to provide some stability to the grid. Several
83% in 2000. projects to achieve this are in the pipeline.
In 2020, Rystad Energy expects Australia’s On the transmission front, Australia has
coal-to-power generation to decline by 2.6% vowed to improve transmission infrastructure,
from 2019 to 145.67 TWh. The slide is likely to with A$5.1bn ($3.74bn) of capex committed for
continue below 100 TWh in 2024 and will con- transmission-related projects towards 2025, 88%
tinue to fall in subsequent years. of which are in New South Wales.
Gas-fired generation, on the other hand, rose
over the last 10 years to 55.33 TWh in 2017, and Alternatives for gas and coal
54.36 TWh in 2019. Total Australian coal consumption for power in
Rystad Energy now forecasts gas-fired power 2020 is estimated to reach about 90.8mn tonnes;
generation to fall in 2020 to 45.64 TWh and to comprising 42.1mn tonnes of lignite (brown
continue dropping every year until 2040. coal) and 48.7mn tonnes of bituminous and
Australia’s overall power generation is fore- sub-bituminous coal.
cast to slip to 263.88 TWh in 2020 from 265.23 The total coal-for-power consumption is
TWh in 2019 as a result of lower electricity con- predicted to decline annually to 28mn tonnes by
sumption during the coronavirus (COVID-19) 2040, a 70% reduction.
related lockdowns. From 2021 onwards Rystad Although the fall in coal-for-power con-
expects an uninterrupted annual rise in Austral- sumption is substantial in a local context, the
ia’s electricity generation all the way to 2040. impact of future reduced domestic demand on
Solar and onshore wind-power generation Australia’s coal industry will be a lot less, as the
is forecast to see a spectacular growth in Aus- main market for Australian coal is overseas.
tralia in the next years as roughly 200 GW of PV, Australia’s total black coal production (met-
wind and storage projects are lined up to replace allurgical and thermal) was 462mn tonnes last
decommissioned coal-fired plants. year, of which approximately 400mn tonnes was
Although solar power will account for only exported.
22.81 TWh and onshore wind for 27.24 TWh Coal for use in domestic Australian power
in 2020, Rystad Energy expects their combined stations normally has significantly lower energy
power generation to grow by between 10 and 15 content than the standard export coal specifica-
TWh annually up to the end of 2026, when their tion of 5,500 to 6,000 kcal/kg. This means that
cumulative electricity output is set to reach just many mines supplying local power stations will
above 134 TWh – slightly more than the com- have limited ability to sell that coal in the export
bined coal and gas-fired power generation. market, even if there is transport infrastructure
in place to move the coal to port terminals.
Grid challenges The expected decline in gas-fired power
Despite solar and wind growth, transmission generation means the future for domestic gas
limitations will delay solar and wind overtaking consumption is not very bright either. Gas-for-
gas and coal by three years from 2023 to 2026. power demand has already peaked at 15bn cubic
The combined solar and wind capacity is metres in 2017 and will see a steady stepwise
estimated to grow to 41.4 GW in 2023 from decrease to 6 bcm in 2040.
26.4 GW this year. Coal and gas capacity, on the Contrary to coal, however, Australia may take
other hand, is likely to shrink to 35.3 GW in 2023 advantage of international gas demand growth to
from 39.1 GW this year, based on the Australian absorb some of the gas that is no longer needed
Energy Market Operator (AEMO) Step Change in the domestic market by increasing its LNG
Scenario, which Rystad Energy sees as the most exports to achieve a higher utilisation rate at
realistic. these facilities. Some countries also have the fuel
“The challenge will be to successfully as a plan B for security of supply for electricity
shift from a centralised grid to one that is from a lower-emitting energy source when the
inverter/weather-based. Also, the lack of new renewables-dominated power mix falls short.™

P10 www. NEWSBASE .com Week 37 16•September•2020