| Coal rescues gas The Australian Energy Market Operator (AEMO) has just released the Gas Statement of Opportunities (GSOO) 2025, its annual review of the gas supply/demand balance on the east coast of Australia. In the latest GSOO, AEMO pushes back its estimate of when gas shortfalls for the southern states will occur from 2026 to 2028. A cursory read of the headlines might suggest that this is an improvement on last year’s forecast. However, the reason that the shortfalls have been pushed back compared to last year’s GSOO is the fall in forecast domestic gas demand. In a domestic market of approximately 502 PJ/a, AEMO’s forecast has decreased domestic demand in 2026 by 70 PJ (-13%) and 55 PJ (-11%) in 2027, compared to its previous forecast. Mr Wilkinson, the CEO of EnergyQuest, said that: “A decrease in gas demand may not be unexpected as the transition to renewables and electrification gathers pace” Of this decrease, industrial demand decreased by 12 PJ/a with plant closures. By far the largest contributor is decreased gas demand for power generation which is forecast to be lower than the GSOO 2024 forecasts by 56 PJ in 2026 and 43 PJ in 2027. An important point is how this reduced gas demand is to be achieved. Rather than by increasing renewable energy generation, gas has been replaced in the forecasts by coal. Specifically, the retirement of the Eraring coal-fired power station in NSW has been deferred to August 2027. Coal rescues the gas market – at least for the next year or so, while the east coast still works on how to power the economy and its residents, while reducing emissions. Mr Wilkinson noted that “In the AEMO forecast to 2028, industrial closures and more coal-fired power generation are used to curtail gas demand” “Closing factories and burning more coal is the worst possible way to balance the gas market – the economy and the environment are both losers” Gas use for power generation is forecast by AEMO to drop to 58 PJ in 2027, a record low, and only 62% of comparable demand in 2024. Fair enough in a rapidly transitioning energy market, but then it increases in the forecast to 94 PJ in 2028, up 61%, unless coal is asked to rescue the energy market again. Mr Wilkinson said that “decreasing gas demand for power generation by 38% then swinging it back up again by 61% in two years is a serious challenge to the gas industry which is already under pressure to meet demand”. “The fundamentals of increasing gas supply with the necessary associated infrastructure to meet demand have still not been addressed”. “The target of generating 82% of electricity from renewables by 2030 looks even less likely”. |
Media Release 23 March 2025 – Coal rescues gas
Media Release 23 March 2025 – Coal rescues gas