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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)

COMMENTARY A new report from the Australian Energy Mar- the daily peaking role that will be needed
ket Operator (AEMO) has shed some insight as renewables replace coal-fired generation.
into the somewhat limited role the body believes AEMO said around 15,000 MW – or 63%
WHAT: gas will play in the country’s long-term power – of Australia’s coal-fired power generation
AEMO’s 2020 Integrated generation mix. was likely to reach the end of its life and
System Plan suggests AEMO recently released its 2020 Integrated retire by 2040.
investment in new battery System Plan (ISP), billed as a roadmap for east- The operator argued that “relative whole of
storage may be more ern Australia’s power system. The main thrust life cost” between GPG and batteries was a key
attractive that TPPs. of the report was that investment in renewables variable for potential investors to consider when
energy project would be needed once legacy weighing up new dispatchable energy projects.
WHY: coal-fired thermal power plants (TPPs) began to It noted that while GPG enjoys advantages over
A recovery in gas prices reach their end of life and were decommissioned. batteries, thanks to current cheap feedstock
will remove the cost While this is a far from surprising prediction, prices, this advantage was likely to swing in
advantages that gas-fired what is of interest is the fact the operator does not favour of batteries.
TPPs enjoy today. believe further investment in gas-fired power is The ISP’s cost model anticipates not only that
commercially viable. AEMO said existing gas- the cost of battery technology will fall, but that
WHAT NEXT: fired power plants would help to shore up the gas prices will rise on the back of supply con-
Existing gas-fired TPPs “inherently variable” nature of renewable power straints and political intervention. It noted that
will still have a role to projects, but noted that new gas projects would future climate policies could impact the invest-
play, given sunk costs will likely lose any competitive advantage over bat- ment case for new GPG.
offset higher feedstock tery storage within a few short years. East Coast wholesale gas prices averaged
prices. AEMO’s findings are troublesome for natural around AUD4 per GJ ($110.56 per 1,000 cubic
gas’ political and commercial champions, who metres) for many years until three world-class
continue argue that the fuel has a “critical” role liquefied natural gas (LNG) export terminals
to play in helping Australia transition towards a came online in Queensland in 2014. Prices
renewable future. rocketed to a peak of AUD20 per GJ ($553.55
per 1,000 cubic metres) in 2017, before retreat-
Power phase ing to AUD4 this year as a result of both global
The ISP notes that both gas-fired power oversupply and the coronavirus (COVID-19)
generation (GPG) and batteries can serve pandemic’s demand destruction.

P12 www. NEWSBASE .com Week 31 06•August•2020