Everywhere we look in eastern Australia, gas demand is falling away: in homes, in commercial buildings, in power stations, and in industry, from South Australia and Tasmania to Queensland.
Many former gas consumers have found cheaper renewable energy alternatives in heat pumps, solar PV and wind. Energy efficiency measures have also found new life as gas prices have increased to punishing international levels and beyond. As well, high gas costs have caused “gas demand destruction” in cases where some businesses have not modernised and have closed.
And as always should be mentioned, because gas (methane) is a powerful greenhouse actor, as is its combustion product carbon dioxide, the end of widespread gas use can’t come quickly enough.
This article provides some charts to document the decline of the gas era – a decline that began more than a decade ago.
(Note: This article includes no substantive discussion of future gas demand forecasts. Please look elsewhere for that.)
See you next year…. and I’ll include the 2023 annual result in our look into the past as we track gas demand falling away.
Why should we and how can we watch gas demand fall away?
It is easy to follow developments in electricity consumption and generation. Handy tools such as OpenNEM allow us to examine electricity supply and demand down to five minutes intervals, and back to the very beginnings of the National Electricity Market (NEM) in 1999, across hundreds of generating facilities.
On the other hand, the public currently has no way to so easily track gas use. No one has yet built a user-friendly OpenNEM-like tool that, if it existed, we’d happily name “OpenGAS”.
Nevertheless, the Australian Energy Market Operator (AEMO) from year to year does publish gas production and consumption data that can be accessed via various portals, though it can be tedious for an individual to manually compile, and to recognise changes in AEMO accounting methodologies. The charts that follow use that AEMO data.
Eastern Australian gas demand peaked in 2012
First up, below is a chart that combines all gas used domestically in eastern Australia in the three AEMO-defined sectors:
- gas used for generating electricity,
- in industry,
- in commercial and residential buildings.
(Note: Focusing solely on domestic eastern Australian gas use excludes all gas associated with exporting the far greater quantities of liquefied natural gas (LNG) from Gladstone, Queensland that commenced in 2015. Gas-consuming activities in WA and in the NT are also excluded.)
The combined amount of gas used in these sectors peaked in 2012 at 713.3 petajoules (PJ). It has since declined to a level in 2022 only about 80% of the 2012 peak (566.3 PJ).
With 80% still remaining, this means we still have a long way to go to eliminate the use of fossil gas in eastern Australia.
For context in what follows, in 2012 the amount of used in each of the three sectors can be thought to be roughly 1/3rd 1/3rd 1/3rd each, or more exactly 30%, 43%, and 27% respectively.
1) Gas use for electricity generation peaked in 2014
The widespread deployment of solar PV, wind turbines, and energy storage has driven down the use of expensive gas for electricity generation to half of the peak annual level.
However, gas demand can still jump up at intervals with the abrupt closure or breakdown of coal-fired generators. For example, the 2017 rise shown above resulted partly because of the abrupt closure of Victoria’s Hazelwood power station.
2) Gas used by industry peaked in 2014
The chart below (created directly on the AEMO portal), shows that the amount of gas used for industrial purposes seems (*) to have peaked in 2014 at 318.5 PJ and by 2022 had declined to a level only about 80% of the 2014 peak (256.4 PJ).
(* – The chart illustrates accounting differences in the AEMO datasets available via the portal.)
The chart shows that over the last few years, gas demand in industry has not fallen.
Some AEMO scenario forecasts indicate we might not see further decline in industrial gas use until 2030.
However, as we have seen in the past, “gas demand destruction” may occur if a gas-consuming business is forced to close because it did not respond to high gas prices in any other way.
3) At last in 2021, gas used in the residential and commercial sectors may have peaked
The following chart shows eastern Australian gas demand in the combined residential and commercial sector. (AEMO doesn’t provide data to show residential and commercial demand broken apart.)
As shown in the chart, gas demand in this sector has historically been fairly flat, which in itself means that gas demand has not kept pace with Australian population or GDP growth.
In 2021, demand reached an all-time high of 195.9 PJ and then in 2022 fell by 0.8% to 194.4 PJ.
In Victoria, the state that consumes the most gas in these sectors, gas demand peaked a year earlier. In 2020 demand was at 129.3 PJ. In 2022, gas demand was down 2.3% from that peak, at 126.3 PJ despite continued population and GDP growth.
So was 2021 the peak? The residential and commercial sector has been the most difficult in which to “move the dial” to electrification. Furthermore, the impact on gas heating demand over colder versus warmer winters can cloud the data as may have the COVID epidemic. But it may be that the dial finally has moved.
Indeed, AEMO has called 2021 as the peak in this sector in four of five scenario forecasts presented in the 2023 Gas Statement of Opportunities.
Conclusions
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The charts presented show that gas demand in all eastern Australian domestic sectors has fallen.
Based on data available from the Australian Energy Market Operator (AEMO), domestic gas demand across eastern Australia (all sectors combined) peaked in 2012. In 2022, ~ 80% as much gas was used versus the 2012 peak year. With 80% still remaining, this means we still have a long way to go to eliminate the use of fossil gas in eastern Australia.
1) Gas demand for power generation peaked in 2014. In 2022, only about 50% as much gas was used versus the 2014 peak year.
2) Gas demand for industry peaked in 2014. In 2022, ~ 80% as much gas was used versus the 2014 peak year.
3) Significantly and at long last, demand in the combined residential and commercial sectors seems to have peaked in 2021, this being the sector where it has been most difficult to see progress in bringing down gas demand.
Over the next and following years, we expect to see gas demand continue to slide away across all sectors with greater deployment of energy efficiency measures, fuel switching to renewable energy options including heat pumps, solar PV, and wind, and in some cases by demand destruction caused by the chronically high cost of fossil gas.
