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Coal and gas to lose out to

renewables by 2026 in Australia

PERFORMANCE DEMAND for coal and natural gas as gener- weather-based. Also, the lack of new transmis-
ating fuels in Australia has peaked and is set to sion capacity is likely to be an obstacle. Most
be overtaken by solar PV and onshore wind by areas rich in solar and wind resources in Aus-
2026, according to a new report. tralia are located inland and far away from urban
Total solar and wind capacity is set to over- centres and cities. Currently, the transmission
take coal and gas by 2023, Rystad Energy said in system is fixed from coal generators to the cities
a report this week, although transmission limi- and is weak to areas inland,” said Rystad Energy
tations will prevent some output from reaching 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. Although the fall in coal-for-power consump-
From 2021 onwards the consultancy expects tion is substantial in a local context, the impact of
an uninterrupted annual rise in Australia’s elec- future reduced domestic demand on Australia’s
tricity generation all the way to 2040. coal industry will be a lot less, as the main market
Solar and onshore wind-power generation for Australian coal is overseas.Australia’s total black
is forecast to see a spectacular growth in Aus- coal production (metallurgical and thermal) was
tralia in the next years as roughly 200 GW of PV, 462mn tonnes last year, of which approximately
wind and storage projects are lined up to replace 400mn tonnes was exported.
decommissioned coal-fired plants. Coal for use in domestic Australian power
Although solar power will account for only stations normally has significantly lower energy
22.81 TWh and onshore wind for 27.24 TWh content than the standard export coal specifica-
in 2020, Rystad Energy expects their combined tion of 5,500 to 6,000 kcal/kg. This means that
power generation to grow by between 10 and 15 many mines supplying local power stations will
TWh annually up to the end of 2026, when their have limited ability to sell that coal in the export
cumulative electricity output is set to reach just market, even if there is transport infrastructure
above 134 TWh – slightly more than the com- in place to move the coal to port terminals.
bined coal and gas-fired power generation. The expected decline in gas-fired power
generation means the future for domestic gas
Grid challenges consumption is not very bright either. Gas-for-
Despite solar and wind growth, transmission power demand has already peaked at 15bn cubic
limitations will delay solar and wind overtaking metres in 2017 and will see a steady stepwise
gas and coal by three years from 2023 to 2026. decrease to 6 bcm in 2040.
The combined solar and wind capacity is Contrary to coal, however, Australia may take
estimated to grow to 41.4 GW in 2023 from 26.4 advantage of international gas demand growth to
GW this year. Coal and gas capacity, on the other absorb some of the gas that is no longer needed
hand, is likely to shrink to 35.3 GW in 2023 from in the domestic market by increasing its LNG
39.1 GW this year, based on the Australian Energy exports to achieve a higher utilisation rate at
Market Operator (AEMO) Step Change Scenario, these facilities. Some countries also have the fuel
which Rystad Energy sees as the most realistic. as a plan B for security of supply for electricity
“The challenge will be to successfully shift from a lower-emitting energy source when the
from a centralised grid to one that is inverter/ renewables-dominated power mix falls short.™

P12 www. NEWSBASE .com Week 37 17•September•2020