The Australian Energy Market Operator has raised concerns over the looming prospect of diesel-powered electricity as a consequence of the dwindling gas supply on the east coast.
Without immediate action to bolster gas reserves, gas generators may resort to burning diesel, incurring additional costs and emissions to alleviate energy shortages.
The latest Gas Statement of Opportunities from AEMO has underscored the urgent need for new gas investment to meet the escalating demands of homes, businesses, and gas-powered electricity generation.
Australian Energy Producers have echoed these sentiments, emphasising the criticality of addressing the impending shortfall.
Chief Executive of Australian Energy Producers Samantha McCulloch stressed the gravity of the situation highlighted in the report.
“The policy failure is underscored when diesel, a higher emitting and more expensive fuel, may be needed for electricity because governments have stifled new gas projects with approval delays and compounding interventions,” she stated.
She underscored the risks of peak-day shortfalls, seasonal supply gaps, and structural deficits, with warnings intensifying over successive reports.
McCulloch lamented the policy inertia surrounding gas projects, attributing delays and interventions from governments as exacerbating factors.
She cautioned against the potential recourse to diesel, a costlier and more polluting alternative, due to the stifling of new gas initiatives.
AEMO reaffirmed the crucial role of gas-powered electricity in emission reduction and ensuring grid reliability, especially amidst the transition from coal to renewables. Projections indicate an urgent imperative for fresh investments to sustain supply adequacy, particularly beyond 2028.
The 2024 Victorian Gas Planning Report Update, released concurrently, painted a grim picture for gas supplies in Australia’s largest gas-consuming state.
With production declines in Gippsland Basin fields and project delays exacerbating uncertainties, Victoria faces a nearly 50 per cent reduction in gas supply by 2028.
McCulloch reiterated the urgency of the situation, citing the imminent challenges posed by declining gas reserves and the imperative for proactive intervention to avert energy crises.
“While the scale of gas consumption remains uncertain through the energy transition, particularly in relation to gas usage for electricity generation, all scenarios identify the urgent need for new investments to maintain supply adequacy,” AEMO said.