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Gas Losing Favour In Electricity Market as Renewables Power On

By Miki Perkins

February 9, 2022 — 9.31pm

Renewable energy generation reached record highs in all Australian mainland states in 2021 as reliance on gas continued to drop across the country.

In the country’s largest grid – the National Electricity Market (NEM) – renewables provided five times more power than gas in 2021, while gas generation reached its lowest level in more than 15 years, according to data released on Thursday by the Climate Council.

Renewable energy generation increased almost 20 per cent in the NEM in 2021, with a 30 per cent jump in Victoria, and 26 per cent rise in Western Australia.

In South Australia, gas generation slumped to its lowest level in more than two decades, while in Victoria it fell 30 per cent in 12 months. In NSW, gas provided just 1.5 per cent of the state’s power, its lowest level in 15 years.

Tasmania matched its previous 2020 record of 99.9 per cent of renewable energy – created through wind, water and solar – in 2021.

Major upgrades to transmission lines across Australia have increased the capacity of the ageing electricity grid to cope with the increase in renewable power, said Dr Madeline Taylor, a senior lecturer at Macquarie University’s school of law and expert spokesperson with the Climate Council, an independent and community-funded organisation.

A flurry of announcements about new “big batteries” had given confidence to investors in renewables and the high price of gas also led to a drop in consumption, she said.

“Gas is so expensive … it’s honestly one of the silliest ways to produce electricity when we have more and more battery storage,” said Dr Taylor

Despite pandemic lockdowns and supply chain problems, householders led a record increase in rooftop solar capacity last year. More than 3000MW was installed in 2021 and almost one-third of Australian households have solar panels, the highest rate in the world.

While reliance on coal has continued to fall, it remains the dominant source of power in the NEM, accounting for 66 per cent of electricity generation, a drop of 4.4 per cent since 2020. Over the past five years, coal’s share of electricity generation has fallen by 15.3 per cent.

Demand on the NEM has been consistent for the past 15 years and did not shift much during the pandemic because although consumers were not using power in offices, they were using it at home, Climate Council senior researcher Tim Baxter said.

“The role for gas in the grid is going to continue to decline over the course of the next 10 years,” Mr Baxter said. “This is where batteries and pumped hydro will help introduce more flexibility.”

Pumped hydro acts like a large battery. When there is excess power in the system, energy is used to pump water up to a storage area. When there is demand for energy, the water is released and used to generate electricity.

Bruce Mountain, from the Victoria Energy Policy Centre, said the drop in gas use also showed that peaking gas generators – only turned on to supply the grid when demand surges – are being driven out of the market.

“This was well known and forecast by any energy sector specialists,” Professor Mountain said.

The federal government has been criticised for its controversial proposal to build a $600 million gas-powered peaking plant at Kurri Kurri. When it was announced, Energy Security Board chair Kerry Schott said nobody would build it from the private sector because “it doesn’t stack up”.

Federal Energy and Emissions Reduction Minister Angus Taylor has said peaking or fast-start gas plants are needed to provide dispatchable power to fill energy supply gaps.

Victorian Minister for the Environment and Climate Change Lily D’Ambrosio said her government was proud to have achieved the largest ever annual increase in renewable power in Australia last year, attributing this to multiple, legislated renewable energy targets and projects such as the 300-megawatt Victorian Big Battery.

Miki Perkins

Miki Perkins is a senior journalist and Environment Reporter at The Age.Connect via Twitter or email.22