Page 5 - AsiaElec Week 32

AsiaElec COMMENTARY AsiaElec

came online in Queensland in 2014. Prices
rocketed to a peak of AUD20 per GJ ($553.55 particularly in scenarios that have carbon budg-
per 1,000 cubic metres) in 2017, before retreat- ets to meet.”
ing to AUD4 this year as a result of both global While the good news for the gas sector was
oversupply and the coronavirus (COVID-19) limited, the Australian Pipelines and Gas Asso-
pandemic’s demand destruction. ciation (APGA) and Australian Petroleum Pro-
AEMO questioned the future competitive- duction and Exploration Association (APPEA)
ness of gas-fired power, suggesting that for new took the opportunity to highlight the “critical
flexible generators to play a greater role then gas role” that GPG had to play in the country’s
prices would need to remain as low as AUD4-6 power mix going forward.
per GJ ($110.56-165.83 per 1,000 cubic metres) APGA CEO Steve Davies said on that during
over the outlook period. the hottest days of the last Australian summer,
“[F]or GPG to remain a competitive invest- gas-fired power generation had frequently pro-
ment as battery costs reduce (to AUD922 per vided more than 70% of South Australia’s elec-
kW by 2030), gas prices need to be as low as tricity supply and up to 25% of total supply in
AUD4 per GJ in the long run, while charging the NEM. Davies singled out South Australia,
costs need to remain relatively high at AUD30 as it boasts the largest share of renewables in its
per MWh. Even in 2019-2020, 4-hour batteries power mix than any other state or territory.
would have been able to charge at an average “The ISP makes clear that greater renewable
price below AUD30 per MWh in all regions penetration will increase the need for availa-
except New South Wales.” bility of a portfolio of flexible generating tech-
The Australian upstream, however, has made nologies,” Davies said. “As we see already in
no bones over the fact that such prices are unre- South Australia, with Australia’s highest level
alistic, noting that AUD4 gas does not even cover of renewables, gas is an outstanding partner
the cost of development. Some analysts have to manage sudden changes in the supply and
projected prices of up to AUD8 per GJ ($221.5 demand balance or weather variability.”
per 1,000 cubic metres) at the low end and an APPEA CEO Andrew McConville, mean-
upper limit of AUD12 ($332.05 per 1,000 cubic while, said: “AEMO also highlighted the impor-
metres). tance of ongoing investment in new natural gas
With AEMO predicting that gas prices will supplies, finding a need for continued invest-
prove to be a stu mbling block to new GPG, ment of between 120 PJ and 285 PJ every year
the operator said most of the 6,000-19,000 between 2024-25 and 2036-37. This confirms
MW of new “flexible, utility-scale dispatchable gas-fired power generation will have an even
resources” that would be needed would come more substantial role once coal generators are
in the form of pumped hydro or battery storage retired post 2030.”
projects. Based on AEMO’s projections, Davies and
McConville may have been a touch too opti-
Existing role mistic when talking up the GPG’s importance
AEMO did note that existing GPG had a role to going forward.
play in supporting the expansion of renewable The government’s Australian Energy Statis-
energy capacity, noting that the spread between tics, which was published in May, showed an
the cost and availability of different storage tech- ongoing expansion of renewable energy within
nologies and future gas prices gave existing TPPs the power sector and the ISP does little to sug-
an edge. gest that trend will continue. More troubling for
It said: “This [spread] favours existing GPG the gas sector, however, is the likelihood that
plants, but further investment in GPG is less higher feedstock prices will sideline new GPG
likely based on the assumptions used in this ISP, in favour of battery technology.™

Week 32 12•August•2020 www. NEWSBASE .com P5