Gas Shortages on the Horizon for Southern Australian States
In a recent report by the Australian Energy Market Operator (AEMO), it has been predicted that there will be a risk of gas supply shortages in the southern states of Australia. The report specifically warns of these shortages on extreme peak demand days starting from 2025, with small supply gaps expected from 2026 and greater supply gaps from 2028. The authors of the report note that while there is a shift towards a “net zero emissions future,” gas will still be utilized by Australians, particularly in the electricity sector.
The 2024 Gas Statement of Opportunities (GSOO) provides forecasts on gas supplies in Australia from now until 2043. According to the report, there are potential risks of shortfalls in gas supply on extreme peak demand days from 2025, as well as seasonal supply gaps from 2026, primarily in southern Australia. The report also highlights that gas consumption by residential, commercial, and industrial consumers is expected to decline, but production in the south is forecasted to decline at a faster rate.
One of the main factors contributing to the decline in gas production in the south is the decreasing production from the Bass Strait, historically responsible for supplying two-thirds of southern Australia’s gas. AEMO CEO Daniel Westerman explains that various storage and pipeline projects have been completed since the 2023 GSOO, which have improved gas supplies to southern states. However, he emphasizes the need for new infrastructure by 2026 to address the declining production from the Bass Strait. Mr. Westerman suggests that running gas-powered generators on liquid fuels could provide temporary relief during periods of extremely high gas demand.
Looking ahead, AEMO emphasizes the important role that gas-powered electricity generation will play as Australia transitions from coal to renewable power. Gas-powered electricity generation is seen as crucial for reducing emissions and maintaining electricity reliability and security during the transition. Mr. Westerman affirms that gas, along with batteries and pumped hydro, will support higher rates of renewables and ensure electricity reliability as coal-fired power stations retire.
In line with the shift towards renewable energy sources, the Australian Capital Territory (ACT) and Victoria have implemented bans on new gas connections. The ACT Parliament passed a law in November 2023, prohibiting new gas connections in residential, commercial, and community facility zones. The ban also applies to major renovation projects and knockdown rebuilds where a gas connection has been removed. The goal of this regulation is to achieve a sustainable, zero-emissions future by 2045.
Similarly, Victoria has banned new gas connections for new apartments, homes, and residential subdivisions starting from 2024. The Victorian State Electricity Commission (SEC) has launched a strategic plan that promotes all-electric homes from 2024. By switching heating, hot water, and other appliances to electric, households can reduce emissions and lower energy bills significantly. This move is particularly significant for Victoria, as it has the highest gas usage in homes compared to any other Australian state.
The trend of transitioning away from gas usage is not limited to Australia. New York has also announced a state ban on gas stoves, starting with small buildings in 2026 and larger buildings in 2029. These bans and regulations reflect the global shift towards cleaner and more sustainable energy sources.
As gas shortages loom in southern Australian states, it is evident that the nation needs to invest in new infrastructure and explore alternative energy options to ensure a reliable and sustainable energy future. Gas-powered electricity generation will continue to play a vital role in reducing emissions and supporting the transition to renewable power. However, it is crucial to adapt to changing energy needs and prioritize the development of cleaner technologies to meet growing demand while minimizing environmental impact.
