17 May 2023

Media Release: New gas supply for electricity critical to keep lights on: Energy Edge

Electricity blackouts are more likely to be avoided if new gas supply is not constrained as coal exits power generation, according to one of Australia’s top energy analysts.

Energy Edge Managing Director Josh Stabler told the APPEA 2023 Conference & Exhibition in Adelaide today that capping of prices could in theory result in a dampening of new gas supply.

His comments came during a presentation about last winter’s east coast energy system pressures when unprecedented and rapid demand for natural gas was triggered in the National Electricity Market (NEM) as unplanned outages hit coal-fired generation.

New figures presented by Mr Stabler to the conference reveal gas generation was called upon to generate 6143% above forecasts in NSW and 4298% in Victoria.

He said: “It is highly likely that additional gas supplied to gas generation capacity helped avoid energy shortfalls and load shedding during the days with the highest coal offline rates.

“Further reduction in new or replacement gas supplies could result in further energy market events if coal reliability continues to decline.

“The avoidance of energy shortfalls under a repeat high coal unreliability scenario will be more difficult if there is limited gas available as a substitute fuel for electricity.”

Mr Stabler said intervention like the recent price caps may diminish new supply.

“Muting the commodity market signals through the capping of high prices could, theoretically, result in a dampening of new entrant supply,” he said.

Australian Petroleum Production & Exploration Association (APPEA) Chief Executive Samantha McCulloch said the presentation underscored the importance of providing stable regulatory environments to bring on new gas supply given its key role in electricity generation as shown during last winter.

“New gas supply is needed, especially in Victoria and New South Wales, to keep the lights on,  avoid shortfalls and put downward pressure on prices as it increasingly partners with renewables to ensure reliable electricity,” she said.

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