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

Week 31 06•August•2020 www. NEWSBASE .com P13