Some minor good news for gas today:
Snowy Hydro has struck a 25-year deal for the storage of gas, providing a government-backed contract to underpin an expansion of the east coast’s biggest gas storage plant.
The agreement with the Iona gas storage facility in Victoria underscores Canberra’s expectations that the fossil fuel will remain part of the energy mix past 2050. The plant, near Port Campbell, plays a critical role in keeping gas supply reliable to the east-coast energy market, particularly during periods of high demand.
Iona is operated by Lochard Energy, owned by the Queensland Investment Corporation. It acquired the Iona facility from Energy Australia in 2015.
The proposed expansion is 3Pj. This will lift Iona capacity to 29Pj.
Victoria consumes 180Pj so this is still the bare minimum for the kind of gas storage capacity the state needs.
Worse, when we add NSW’s 120Pj of gas consumption, and virtually no storage, the capacity ratio falls to about 10%.
There is additional, larger storage in QLD and SA, but it belongs to the gas export cartel and is not trustworthy.
European countries have storage equal to anything from 15-30% of annual consumption to ensure adequate winter supplies and stable prices.
Southern storage capacity needs to be doubled.
It’s not like this is rocket surgery. All one has to do is read the AEMO outlooks:
During Australia’s transition to a net zero emissions future, gas will continue to be used by Australian households, businesses and industry, and support the reliability and security of the electricity sector.
The 2024 GSOO continues to forecast risks of shortfalls on extreme peak demand days from 2025 and the potential for small seasonal supply gaps from 2026, predominantly in southern Australia, ahead of annual supply gaps that will require new sources of supply from 2028. Gas consumption by residential, commercial and industrial consumers is forecast to decline, but production in the south is forecast to decline faster.
While the scale of gas consumption remains uncertain through the energy transition, particularly in relation to gas usage for electricity generation, all scenarios identify the urgent need for new investments to maintain supply adequacy. Gas inadequacy risks over the short, medium, and long term include:
• From 2025, risks of shortfalls on some days in winter are forecast in southern Australia under extreme peak demand conditions, if extreme weather conditions drive very high demand for heating, coincident with high demand for gas-powered electricity generation (GPG). Deep and shallow gas storages are vital to meeting peak demands, while also providing seasonal flexibility, and the ongoing availability of stored gas ahead of winter conditions continues to be important to mitigate adequacy risks.
• Northern producers need to deliver anticipated supplies, and from 2026 investments in currently uncertain supply will be needed to meet domestic requirements and export positions.
In short, force the QLD gas export cartel to provide more gas cheaply all year around and stick it in southern storage tanks.
Or, get more of this:
Victorian families and businesses will have to fork out hundreds of dollars more for their gas bills following rate hikes next month.
From August 1, major energy companies are advising households of price rises of up to 12 per cent, or more than $200 annually.
The soaring prices are another blow for people struggling amid the cost of living crisis, with small businesses also facing increases of almost $700 a year on average.
The answers to the energy superidiot crisis are simple.
Only the politics has been made hard.
