Page 4 - AsiaElec Week 32

AsiaElec COMMENTARY AsiaElec

Costly feedstock could scupper

new Australian gas-fired TPPs

A new Australian Energy Market Operator (AEMO) report suggests that investing in battery
storage may be a better bet than flexible gas-fired thermal power plants (TPPs)

AUSTRALIA A new report from the Australian Energy Mar- Power phase
ket Operator (AEMO) has shed some insight The ISP notes that both gas-fired power gener-
WHAT: into the somewhat limited role the body believes ation (GPG) and batteries can serve the daily
AEMO’s 2020 Integrated gas will play in the country’s long-term power peaking role that will be needed as renewa-
System Plan suggests generation mix. bles replace coal-fired generation. AEMO said
investment in new battery AEMO recently released its 2020 Integrated around 15,000 MW – or 63% – of Australia’s
storage may be more System Plan (ISP), billed as a roadmap for east- coal-fired power generation was likely to reach
attractive that TPPs ern Australia’s power system. The main thrust the end of its life and retire by 2040.
of the report was that investment in renewables The operator argued that “relative whole of
WHY: energy project would be needed once legacy life cost” between GPG and batteries was a key
A recovery in gas prices coal-fired thermal power plants (TPPs) began to variable for potential investors to consider when
will remove the cost reach their end of life and were decommissioned. weighing up new dispatchable energy projects.
advantages that gas-fired While this is a far from surprising prediction, It noted that while GPG enjoys advantages over
TPPs enjoy today what is of interest is the fact the operator does not batteries, thanks to current cheap feedstock
believe further investment in gas-fired power is prices, this advantage was likely to swing in
WHAT NEXT: commercially viable. AEMO said existing gas- favour of batteries.
Existing gas-fired TPPs fired power plants would help to shore up the The ISP’s cost model anticipates not only that
will still have a role to “inherently variable” nature of renewable power the cost of battery technology will fall, but that
play, given sunk costs will projects, but noted that new gas projects would gas prices will rise on the back of supply con-
offset higher feedstock likely lose any competitive advantage over bat- straints and political intervention. It noted that
prices tery storage within a few short years. future climate policies could impact the invest-
AEMO’s findings are troublesome for natural ment case for new GPG.
gas’ political and commercial champions, who East Coast wholesale gas prices averaged
continue argue that the fuel has a “critical” role around AUD4 per GJ ($110.56 per 1,000 cubic
to play in helping Australia transition towards a metres) for many years until three world-class
renewable future. liquefied natural gas (LNG) export terminals

P4 www. NEWSBASE .com Week 32 12•August•2020