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Industry Calls on Australian Government to Back Gas Power

Australia’s energy producers and utilities are calling on the government to support the existing natural gas-powered generation as a smooth market mechanism to move to growing shares of renewables in the electricity system.  

Australia has been closing coal-fired power generation and raising solar and wind power, but without enough baseload generation, it risks power shortfalls and blackouts, industry officials have warned.

“If you're only supporting new renewables and you don't take care of existing gas assets, you run into trouble,” Rik De Buyserie, chief executive at utility Engie Australia and New Zealand, said at Australian Energy Week 2024 event, as carried by Argus.

The current Capacity Investment Scheme (CIS) of the government excludes gas-fired power, which could undermine the business case of keeping existing plants operational. Switching gas plants on and off to compensate for shortfalls in renewables generation is only adding to costs, industry executives added.

Australia is backing its natural gas industry and it will continue to back exploration and increased production of natural gas as the fuel will play a key role in the country’s transition to a net-zero economy by 2050 and help provide a reliable source of energy to Australia’s allies, the Australian government said in its Future Gas Strategy unveiled last month.

The industry now seeks clear signals from the federal and state governments that it is worth running their gas-fired power plants.

Australia could face a natural gas shortage later this decade without action to boost domestic supply, according to industry group Australian Energy Producers, which endorsed the federal government’s recently released gas strategy. 

Australian Energy Producers chief executive Samantha McCulloch said last month “The transition to higher shares of renewable electricity is only possible with gas backing up.”

“And new industries, such as critical mineral processing, low-carbon hydrogen and ammonia, and carbon capture and storage solutions for hard-to-abate industries, will only be possible with a strong gas industry,” McCulloch added.

By Charles Kennedy for Oilprice.com

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