April 26, 2020 Read More →

Australian energy minister: Invest in gas as ‘cheap energy’ to lead recovery from pandemic

PV Magazine:

Last week a number of interviews given by Energy and Emissions Reductions Minister Angus Taylor suggested first that the Government is bent on investing in gas projects to provide more “cheap energy” to the market to help lead recovery from COVID-19; and then that the falling price of gas during COVID-19 could be used to support fast-start gas plants that help bring more renewable energy into the grid.

“More gas means more capacity to absorb renewables, because gas is flexible, dispatchable generation,” Taylor told the Sydney Morning Herald over the weekend.

Like so many Government statements, this resonates because it is half right but analysts, and at least one independent politician, disagree that more Australian gas production is needed to support transition.

“I would strongly question that thinking, because at this point there does not appear to be a commercial or market viability,” to investing in gas projects, Independent MP for Warringah, Zali Steggall told pv magazine.

Bruce Robertson, Energy Finance Analyst for Gas/LNG at the Institute for Energy Economics and Financial Analysis (IEEFA) emphatically agrees with Steggall, telling pv magazine, “The surest way to destroy national wealth is to back industries that are proven losers.”

In a new plain-speaking podcast on the subject, he cites write offs since 2014 by major onshore coal-seam gas producers, Santos (nearly $7 billion), Origin Energy ($3 billion plus) and BG Group ($5 billion) as evidence that onshore gas is a proven loser; and adds falling share prices over the past 10 years of such oil and gas companies as further evidence that “they’ve demonstrably destroyed wealth for their shareholders.”

At the same time, he agrees with Taylor on a couple of points: firstly, that gas peaking plants — open-cycle gas turbines that can fire up rapidly — have a place in supporting increasing proportions of solar and wind generation in the grid, because they provide instantly dispatchable electricity supply at times of low renewable resource.

That said, “Gas peaking plants have big capacity, but they don’t have to operate very often,” says Robertson, so they don’t need a lot of gas.

And he points out that, “There is already enough gas in Australia to supply our local economy three times over, yet gas companies are selling that supply overseas,” while paying no royalties for extraction, and paying minimal tax in Australia, and simultaneously selling gas in Australia at a much higher price than they do to overseas buyers. 

[Natalie Filatoff]

More: Stepping on the gas 

Posted in: IEEFA In the News

Comments are closed.