Gas shortages could come as early as winter 2023

Gas flame from industrial chimney against cloudy sky (gas deals)
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In its annual review of the Australian gas market, the Australian Energy Market Operator (AEMO) warned the East Coast gas market could face gas shortages as early as winter 2023 due to delays for a planned NSW import terminal and falling Bass Strait output.

AEMO’s 2022 Gas Statement of Opportunities, which maps the supply and demand for gas, said shortages could be avoided by using less gas in power generation on cold days while accelerating the transition to electricity.

Regions likely to be hardest hit by the shortages include Victoria, the ACT and parts of southern NSW.

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“A shortfall risk in the south-eastern states in winter 2023 is forecast under extreme conditions, given ongoing production decline from Bass Strait and pipeline capacity limits from northern Australia,” AEMO executive general manager system design Merryn York said.

AEMO said existing and committed available production in the south would drop from 487PJ in 2022 to 360PJ by 2026.

Under the so-called “step change” track, a gas shortfall would be “narrowly avoided” in 2023, AEMO reported. This scenario outcome assumes gas demand will drop as consumers shift quickly to electricity, particularly for heating, and improve energy efficiency.

“While these [changes] are likely over time, the pace so far has been relatively slow, and urgent action would be needed to put south-eastern regions on the Step Change path by next winter,” AEMO said. If not, by the winter of 2023, “there are risks of small, infrequent gas shortfalls under extreme one-in-20 year demand conditions”.

In response to AEMO’s 2022 Gas Statement of Opportunities, The Climate Council has called on all governments to speed up plans to phase out gas completely. 

Climate Councillor and Senior Lecturer at Macquarie University’s School of Law Dr Madeline Taylor said, “Australia does not have a gas supply problem. Australia produces five times more gas each year than is used for domestic purposes, and 80 per cent of Australia’s gas is exported or used by the gas industry itself.

“Expanding gas use will only make Australia more susceptible to global energy shocks like we are seeing in Russia right now.” 

“Australian gas production has tripled in the past decade, yet gas prices have gone up and up, not down—and it’s the most expensive form of power in Australia, driving up power bills.”

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“The quickest and cheapest way to increase Australia’s supply of clean, secure, affordable energy into our electricity systems is to replace gas with renewables.” 

Victoria is already developing plans to reduce gas use with its Gas Substitution Roadmap expected later this year, which will outline the state’s plan to decarbonise the gas sector. Places like the ACT and New York in the US, have implemented similar policies, and a recent Climate Council report outlined the first-ever plan to get Australia’s most populous state, NSW, off gas. 

“Renewables are already replacing gas in the electricity sector, with gas use in 2021 falling to its lowest level in more than 15 years in the National Electricity Market,” Dr Taylor added.

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