The alarming language in the Australian Energy Market Operator’s press release for its annual Gas Statement of Opportunities on Thursday paints a catastrophic picture about the state of the gas market.
“Short-fall risks”, “supply gaps”, “extreme weather” and “production decline” are all pointedly used to call for urgent solutions to an impending crisis: namely, extract more gas.
But is there really cause for alarm? Buried in the GSOO report itself are projected residential energy savings in gas and electricity which are forecast to underpin a massive reduction in energy demand in the National Electricity Market over the next 30 years to 2053.
Even on AEMO’s conservative “central projection” trajectory, which assumes current policies continue, as much as 40,143GWh of national electricity savings are possible between now and FY2053.
In New South Wales and Victoria, “gas savings” aka reduced consumption, will make up the bulk of those savings. In NSW, reduced demand for gas heating will account for 81 per cent of total gas savings, while in Victoria, gas savings will rise from 73 per cent of energy savings in 2010 to about 85 per cent of projected energy savings in 2053, or 5,065 petajoules.
The Australia Institute went so far as to accuse AEMO of “gaslighting” Australians over the gas supply outlook because it forecasts decreasing demand for gas while at the same time calling for new investment
The Australia Institute went so far as to accuse AEMO of “gaslighting” Australians over the gas supply outlook because it forecasts decreasing demand for gas while at the same time calling for new investment.
The Climate Council pointed out that more than 80 per cent of gas produced in Australia is either exported or used by the gas industry itself. Increased supply in the coming years would inevitably be used to firm up LNG forward contracts rather than meet domestic residential supply, which AEMO itself acknowledges is falling.
Interestingly, this is not the result of national energy policies, but is being driven by grassroots action at least in part from local councils to move away from gas-powered homes in a bid to reduce carbon emissions and bolster safety and indoor air quality.
Take Waverley council, for example, which quietly banned gas cooking and heating installations in new homes in its latest Development Control Plan (DCP) published six months ago with little fanfare.
The council wanted to go one step further and ban new gas connections in homes altogether, but a council spokesperson said gas hot water connections can still legally be installed because the New South Wales BASIX State Environmental Planning Policy (SEPP) overrides the council’s DCP.
Since the DCP was activated, around 60 development applications have been submitted, and council have noted a significant shift to the use of electric cooktops and reverse cycle airconditioning, the spokesperson added.
The DCP will help the council achieve its net zero community greenhouse emissions target by 2035.
All electric homes and EV ready
Besides all-electric homes, council is supporting residents to transition to EVs by mandating that all apartments need to ensure that all car spaces are “EV Ready” and in medium and high-density apartments, all visitor parking at 20 per cent of residential car spaces must have a charger installed.
This requirement swells to 40 per cent of all car spaces in retail and office developments.
Neighbouring Randwick City Council is following suit with its updated DCP, which was open for community consultation until the middle of last month and is anticipated to be updated around the middle of the year.
The DCP outlines requirements for “all electric” homes with rooftop solar and battery storage, 100 per cent renewable power contracts and the installation of ceiling fans to reduce the need for air-conditioning in three “Housing Investigation Areas” scattered around the municipality.
City of Melbourne going gas free
South of the border in Victoria, the City of Melbourne is effectively banning new gas connections for new large apartment buildings of more than 5000 sq m in size under a proposed sustainable building design amendment, which will require a change to state planning legislation.
A consultation is taking place between now and mid-April, as we pointed out in last week’s editorial.
Like Waverley Council, the Victorian government wanted to push the envelope further in outlawing new gas connections. The government’s Gas Substitution Roadmap, which was based on advice from Infrastructure Victoria, initially proposed a gas ban but later had to wind back its position.
Among a list of 10 recommendations in IV’s “Towards 2050 Gas infrastructure in a net zero emissions economy” report is this: “Remove barriers to all-electric developments so gas connections are not the default and prepare for increased electrification of transport and buildings in the future.”
IV notes the predominant private ownership of the state’s gas infrastructure but urges the government to contribute to reduced gas demand by investing more in energy efficiency across the residential, commercial and industrial sectors in the state’s economy.
“The government should consider a policy of ending all new gas network connections before 2030 to avoid risks from a potentially stranded asset,” the report recommends.
Hot water is in…hot water
Returning to NSW, the future of gas demand also weighs heavily on state government policy.
Waverley Council notes that once gas hot water connections are installed, it is difficult to go electric due to the prohibitive costs of removing gas infrastructure and installing electric heat pumps.
“There is a significant opportunity for the NSW government to review the inclusion of natural gas appliances in BASIX, to enable all development to be built as all-electric powered by renewable energy,” according to the Waverley Council spokesperson.
In a way, the gas industry is right to be sounding alarm bells about the industry’s future – but it should be more concerned about what is happening on the demand side rather than where future supply is going to come from.